Excerpt from Stockwatch Energy-Today Getting its numbers out of the way -- and getting an unsurprisingly ho-hum reaction -- was Alberta gas producer Advantage Energy Inc. (AAV), up 11 cents to $10.94 on 545,300 shares. It patted itself on the back for its first quarter production of 66,000 barrels of oil equivalent a day. This was in line with analysts' predictions, as was Advantage's cash flow of 41 cents a share.
Cash flow was not nearly enough to cover all of Advantage's spending during the quarter, particularly once the tally includes $21.3-million of share buybacks. The breezy explanation from management was that it wanted to be "opportunistic" and "countercyclical" by repurchasing shares while gas prices (and thus the stock) were languishing. The average repurchase price during the first quarter was $8.86 a share. This is a discount to today's close of $10.84, but investors nonetheless raised their eyebrows to see net debt climb to $280-million as of March 31 from $222-million as of Dec. 31. Management shrugged this off too, saying it is within the company's comfort level.
For good measure, management also dangled the possibility of an upgrade to its guidance. This already got an upgrade last month, when Advantage trimmed $40-million from its full-year budget (now $220-million to $250-million) without changing its production target (65,000 to 68,000 barrels a day). Given that recent wells have "continued to exceed expectations," further budget cuts on unchanged production "may be possible," mused management. Investors remained only mildly intrigued. They are more interested in seeing actual increases in production, but Advantage must expand its infrastructure first; its main gas plant is already at capacity. The company is working on another plant that it hopes to bring into service in mid-2025.