Advantage Energy Ltd. (AAV) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to Advantage Energy Investor Day Conference Call. [Operator Instructions] I would now like to turn the conference over to Brian Bagnell. Please go ahead.

Thank you, Jenny, and good morning, everybody. I'm excited to welcome you to Advantage's 2024 Investor Day, which includes the release of our 2025 budget and updated 3-year plan. Before we get started, I'd like to refer you to the advisories on forward-looking statements that are contained in the news release and our Investor Day presentation as well as the advisories contained in Advantage's MD&A and annual information form which are available on SEDAR and on our website. We expect our presentation today to last about 1.5 hours, with contributions from each of the members of Advantage's executive team, along with an update from Entropy, with the full agenda covered on Slide 3. After we've concluded our presentation, we'll pass it back to the operator for questions. So if you joined our webcast, you can also submit questions to the portal, which we'll answer in turn. With that, I'll turn it over to Mike Belenkie, Advantage's CEO; and Craig Blackwood, Advantage's CFO, to take you through the first segment of our presentation. Mike, please go ahead.

Thank you, Brian. And thanks, everyone, for joining us today. I have the privilege of giving you an update today together with the rest of the team from Advantage and Entropy and to really look for the current path for 2025 through to 2027 and the detailed budget and what to expect over the coming year. So the opening comments here, we'll start with a bit of history. We'll walk through our corporate strategy, and then we'll go into our 3-year plan and budget. And then I'll pass it off to our technical team Darren Tisdale, Geoff Keyser, and Neil Bokenfohr to talk about our portfolio and how we continue to improve things technically and economically. We'll move through how we navigate volatility with John Quaife and Brian Bagnell and then we'll pass it over to our recently appointed CEO of Entropy, Sanjay Bishnoi, together with Chris Hooper, to give you an update on Entropy and then we'll wrap it up and be prepared to take questions. So let's jump into the opening remarks and then lead in the strategy. Page 6 is where we'll get going. We wanted to just make sure that any of our newer investors understand our background because where we're going is in part made possible by -- is mostly made possible by where we've come from. So our first principle is the Advantage and this is our mission statement. We don't typically talk externally about our mission statement, but it's to convert energy to shareholder wealth by delivering exceptional performance. So really, this is about shareholder wealth and how we do that. And of course, starting with high-quality assets, and then executing with operational excellence, exceptional operational performance. While we're managing our financial situation prudently. And then, of course, we've added the additional pillar of carbon capture storage to ensure sustainability, which really is a unique business model made possible by external investments that supplements and is a natural hedge for energy business. So to understand again how we got to where we are today, it's important to think back on Page 7 that we have 23 years of history as a company. Now we've passed through many iterations or many, many business models during that time and the modern advantage really began sometime around 2013, even though our assets of Glacier were acquired in 2007. By becoming a pure-play producer in 2013 with Montney and then walking through several stages of growth, including major investments in infrastructure and very forward-looking investments in land, the team set the entire company up for long-term success. And we have several members of that team that were here as much as 20 years ago, including Craig Blackwood, Neil Bokenfohr. Myself having only joined in 2018. Glacier Gas Plant was expanded to 400 million a day in 2018 and at 425 million a day in 2023. Important to note that through COVID and coming out of COVID, Entropy was created. Our share buyback program was initiated, and we hit our all-time high production very recently. So this is a long-term building process. And what we've been able to build together as a team is really on the backs of very difficult major infrastructure and land investments that are made early on, that would be very difficult to replicate. And what that looks like is on Page 8, it starts with the resource, our world-class resource base. These assets are focused in the heart of the Montney. But thanks to acquisitions of 90 sections last year in the -- this year in the BC Montney and last year. We now span the full resource spectrum from delineation phase, assets like Attachie, all the way through exploitation and development phases like Glacier. Without these land blocks, we would never be able to deliver the unique capital efficiencies that we're able to show you today. And of course, together with great resource, you require great facilities to keep your economics at a high level. So -- the value of these facilities is around $1 billion. With them, we have better cost control, strategic optionality and a structural advantage over our competitors. Notice that we show the partially completed progress gas plant here. If you look carefully on the progress photo -- all the dots on the lower left side are piles that have been driven that are awaiting receipt of brand-new equipment that will be the foundation of the progress gas plants. That gas plant will talk about in a bit. But basically, we -- because of our acquisition last year, we were able to defer the remaining $35 million of spending on that gas plant site by 1 year, reducing our total capital and increasing our free cash flow. Now one more thing. On the bottom right corner, we'd like to introduce you to our brand new to us Northeast BC gas plant, which is in close proximity to Conroy. This establishes our Conroy asset as developed ready. It will help to minimize the major infrastructure spending required to grow that asset from 0 to over 15,000 boe per day. More to come on that later, especially and we want to just highlight the timing of that is not within the 3-year plan. But that asset with that -- the land assets of [indiscernible] sections together with -- 7 sections with this 100 million a day gas plant are a coveted asset, more to come. And then on top of our infrastructure and the resources comes Entropy. Advantage owns 73% with an applied valuation of over $300 million. This is quite the unique complement to our business. We own and control Entropy. It's arguably the world's leading post-combustion CCS developer and technology owner and we are the only operating gas-fired TCS facility in the world with the next phase of Glacier 2 expected to be on stream in the second quarter of 2026. As Glacier Phase 2 comes online, it will be the first and only gas turbine CCS project in the world, which is a critical advancement in low-carbon baseload power, as we all know, low carbon baseload power has become of elevated prominence with various changing dynamics in the macro. And we're lucky to have our Entropy team, including Sanjay Bishnoi here today to get to know you better and to give you some updates on this business as well. And with that, I'll pass it to Craig to talk through some financial foundations and get us going in 3-year plans.

Thank you, Mike, and good morning, everyone. Advantage continues to have a relatively simple capital structure. Our enterprise value is just over $2 billion, 70% of which is equity with 167 million shares outstanding. We've actually reduced our shares outstanding by approximately 38 million in the last 3 years. The other 30% of our capital structure is debt, primarily bank debt on a $650 million revolving facility, and we have about $170 million currently available on that facility, 26%. We have a small amount of 5-year term debt in the form of convertible debentures with a 5% coupon and a conversion price currently about 65% premium on our current trading. Just moving on to environmental, safety and stewardship. I'd like to talk about this just a little bit. It's another foundation of our business, and we believe that you can't have a successful business unless you have respect for the environment in your people, and your stakeholders. Of course, emissions get lots of attention in our emissions benchmark among the best of our peers. We believe that's quite the achievement when you realize our strategy of owning and operating our infrastructure. As you know, many peers may not own their infrastructure and therefore, may not report all associated missions with processing their production. We remain very focused on emissions reduction. You can see that as we have continue to grow, our emissions intensely has been decreasing through initiatives in the field and implementation of Entropy's carbon capture technology. And beyond emissions, we continue to invest in an abandoned and reclaiming sites in excess of regulatory requirements. We donate to charities. We invest in people and the communities in which we live and operate. Before we can really talk about the next 3 years, it's really essential to recognize our achievements are built on the foundation of our 23-year history of resilience, innovation, disciplined execution. Over the more than 2 decades, we've demonstrated our ability to adapt to a dynamic industry, leverage our core values to evolve and thrive. This foundation of experience and expertise has directly contributed to the transformative successes we've seen over the last 3 years. We've increased total production by 52% and liquids production by 168%, a testament to our operational and technical team. Our ability to innovate and maximize productivity has enabled us to significantly increase well productivity and expand Tier 1 inventory, ensuring the longevity of our operations and value creation in our business. Through a commitment to disciplined capital allocation, shareholder returns, we've repurchased approximately 20% of our outstanding shares during this period. That results in that 52% increase in total production actually becoming 74% increase on a per share basis. We've leveraged decades of strategic insight, and we executed a highly accretive synergistic acquisition Charlie Lake assets, which positions us for even greater returns and value creation in the years ahead. In BC, our acquisition of 90 sections of premium Montney assets and the recently acquired 100% -- at 100 million a day gas plant builds on our history of resource development and future value creation. And finally, through the talented individuals that are always looking for ways to create value, we create an Entropy, secured third-party investment in commitments, negotiated first-in-the-world carbon credit offtake agreement and achieved FID at Glacier Phase II. With this, we look forward to the next 3 years. We're excited for the next 3 years, and we expect the same performance of our sales for all of our stakeholders. With that, I'd like to throw it back to Mike.

Thank you, Craig. So before we -- and again, before we jump into the numbers on the 3-year plan, it's important to understand how we think about corporate strategy. And really, how do we think about the value, value of our equity in particular. We've become, through all the analysis of where our value moves. There's 1 key correlation that works best to predict the outcome of our growth, and that is AFF per share. This is essentially cash flow per share, adjusted funds flow per share growth. So the correlation is highest as we grow our AFF per share. And of course, AFF per share is a proxy for net asset value per share. If you apply a higher cost of capital, which, of course, when our share price is trading in value territory like it is today, we would expect a NAV 20% net asset value at a 20% discount rate to be representative of something that aligns with AFF per share as a proxy. So as we think about how do we grow value for shareholders, our goal is to maximize that AFF share growth. And we do this in part by growing a break on our production organically. We capped that growth of 10% per year for a few reasons. We'll talk about that on the next slide. We make sure that our operational performance is absolutely spotless. You can tell our cost structure is higher, productivity is high. We are focused deeply on cost controls. And of course, as we draw off free cash flow when our balance sheet is exactly where we want it to be, we're focused on the buybacks to compound that growth. So Slide 15 is where we jump into the continuum of growth and how to think about growth in an optimized framework. This is a key slide at least conceptually, and it's important to note that this is just for Advantage. We don't think that all companies would say their assets would set themselves up to have a similar outlook on where the optimal growth is. But certainly, for Advantage, this is an important representation. Given the characterization of our assets is, we have huge amounts of high-quality inventory that right now has been pushed out 20 years of Tier 1, 60 years of total inventory. Moving inventory earlier by growing is an important consideration. We have large amounts of infrastructure, including unutilized infrastructure, which sets us up for capital-efficient growth. We have excellent economics at most points of the cycle. And of course, we have the ability to market these molecules of resource in great ways. But if you go with too low growth, which, in some ways, some people may think you end up with higher free cash flow, that's a temporary outcome where the free cash flow becomes stagnant. If you have too high growth, you end up with several problems or you may end up with several problems, the more you exceed that 10%, including not being able to fund the program when the market pricing is low, steeper corporate declines, higher annual infrastructure spending, intensified gas market challenges, of course, getting natural gas outside of AECO is important in many points of cycle. So what we focus on is between 5% and 10%, typically towards the 10% end of that range, which allows us to maximize our free cash flow. Includes -- it allows us to compound our growth via buybacks. And very importantly, we can grow at about 10% per year, fully funded by cash flow when prices are at the bottom decile of the cycle. This is a really important concept, which basically -- every year, we can grow at about 10% without using debt to do so. And that's only made possible by the fact that we have high-quality resource, low-cost controlled infrastructure and lots and lots of inventory, okay? So with that in mind, we move on to Slide 16, which shows 3 years backwards and 3 years forward. And you'll note, total production grows very steadily through all those years on the backs of that exact same principle, fully funded growth at all parts of the cycle, including the weakest years. You'll note a slight extra bump in 2024, that's as a result of the Charlie Lake acquisition that we closed in June. And of course, as you look in the future 3 years, '25, '26 and '27, similar amounts of growth with a minor impact on 2026 of a major [Indiscernible] turnaround. We'll talk more about that as well. So similar growth, similar costs, exceptional ability to do so, especially in light of the amount of liquids growth, which, of course, is more expensive on a pound-to-pound basis. Page 17 shows the capacity for that growth. This dominant infrastructure position is what allows us to grow steadily with small bites of infrastructure investments. You can see on the graph on the lower left side, that we have space to grow into our capacity and move some of that production around depending on whether we think that liquids are most profitable in the near future or whether it's a gas that's the most profitable in the near future. And again, a dominant infrastructure position across all the assets. So an incredible amount of flexibility, okay? So -- and then as we move into the next slide, Slide 18. This is -- these graphs on the right side here that are essentially showing productivity, which is higher productivity further to the right. There's a lot of normal distribution where you order your wells from worst to best. And in nature, you tend to get a straight line on this [logarithmic] scale. What matters most on well performance is not your best wells, it's well that show up as the headline wells, best wells in a month or anything like that. What matters most is where your P50 is. And as you can see in Glacier -- on Glacier and the Greater Glacier area, our wells are the top sample set, the P50 that significantly exceeds our peers. On the Wembley oil prospect, where we're not actually the best, we are a top decile for the Montney oil play. These outcomes are the result of technology innovation and these are technologies that in many cases are developed in-house and applied to new regions and new assets, okay? So the outcomes are key to our incredibly efficient capital production growth. And that's a fundamental kind of value generator, which allows us to deliver that per share value growth. Now on Page 19, let me start to address one of the other pillars of our corporate strategy, which is cost focus. Advantage is well known to have a very low cost structure and we've compared ourselves to all of our peers in the area. And you can see when it comes to capital efficiency as well as PDP, we're best in the basin. And when it comes to PDP recycle ratio we're amongst the best in the basin, noting that reserves can bump up and down from time to time. So again, made possible by our infrastructure and our resource quality. And then last on Corporate Strategy, our share buybacks. While we saw our share buybacks slowing coming into 2024, I think that there was a shift in thinking, which is during the low part of the cycle, including when gas prices were as low as $0.05 during the third quarter, we used the share buybacks as a shock absorber. It's a very powerful tool for companies that are our size and exposed to volatile commodities. When prices are strong, we throw off a lot of free cash flow when prices are weak, we just simply focus on organic growth. Well, in this case, when prices were weak, we were able to actually acquire assets, which reduced our per share production and vastly exceeded our 10% growth target, which, again, our first and best priority is always to grow production top line to deliver per share value. You can see the impact of our buyback for the 3 years, we're focused on '22, '24. You go from 10% CAGR production growth without the buyback to 18% with the buyback, okay? That will remain a key focus for us. But of course, we always want to make sure that we don't compromise our balance sheet along the way. And so there will be a blend of our application of free cash in the coming year or so to make sure that we optimize those 2 delevering and buybacks. So now I'll move into the actual 2025 budget and the 3-year plan. So the -- without reading through all the items in the table on Page 22, notable that our capital spending of $270 million to $300 million is lower than we had originally particularly to the market, this was made possible by some creative thinking by the team, where we cut $35 million expense that was unnecessary, not with that progress gas plant construction, where essentially we were to complete that plant by second quarter '25. Thanks to the new infrastructure that we acquired, we were able to move that $35 million in 2026. So that's a lower capital number. And that lower capital number does not impact our total production outlook, which is midpoint 81,500 BOEs per day. Important to note that we are expecting some minor divestitures of about 500 BOEs per day to be announced to be completed right around the end of this year here right now. Okay. liquids cut is now up to about 16%, and our expenses are, for the most part unchanged. On '23, we now show a breakdown of our expected capital allocation asset by asset on the last set. We've been doing this now for a few years. But the added element of this chart is where the Charlie Lake wells come in, both Charlie Lake and nonoperated elements. And as you see, there is a material spending in the Charlie Lake as well as Wembley which represents a significant amount of liquids development. Obviously, capital efficiencies on a dollar per BOE basis are always a little more expensive for liquids, but not on a cash flow turn basis, they have comparable IRRs. We'll talk a bit about that as well. And we shortened 3-year growth range. 2026, you can see it's modestly impacted by a 17-day turnaround at Glacier Gas Plant where 425 million cubic feet per day of capacity comes off-line for a full plant turnaround in '26. And I think that the most important slide, at least as we think about value and where we're going and where the value is expected to increase for the net shareholders is in our free cash flow growth and our adjusted funds flow growth. You know top line here, free cash flow at the strip pricing that we cite is expected to exceed $500 million over the next 3 years. Again, our market cap is only $1.5 billion. So this is an exceptional time in part because of production growth, in part because of our acquisition this past summer and in part because pricing is set up very well for our assets. So it's one of these moments in time where you can look forward and see cash flow per share growth increasing by almost 70% this year before returning to a more typical sort of 16% to 18% range in the more normalized price environment of '26 and '27, okay? We show a breakdown on Slide 25 of what the area by area growth looks like, and of course, most of the growth is happening at Glacier with back-end loaded growth at Valhalla progress, Charlie Lake and Wembley basically stayed flat through the period of time. I think an important slide here, 26. This is a slide that shows the economic -- half cycle economics, including drill complete, equipment tie-in of each 1 of the wells on our 3-year plan. Before we actually drill a pad, we run each pad on updated pricing to ensure that we meet our threshold returns. And you can see there's not a single well in our program at strip pricing today, that's below 40% IRR with the exception of 1 retention drill. So this constantly changes. We have this -- it's a very sophisticated data management system as well as the inputs that are very carefully assembled by the technical team. This is where the efficiency comes from. No waste of money, highly efficient and focused on making sure free cash flow is maximized. And again, Slide 27, we saw there's an incredible amount of detail on this slide, embedded in some simple graphs. For those of you that are interested in understanding what may happen as pricing moves, we show that on the tornado chart on the left side or remarkable slide on the right side, though, our program of $285 million is fully funded on that lowest gray diagonal line, which shows we can deliver $285 million of cash flow to fund that at $55 WTI and $1 AECO or conversely $40 WTI and $1.50 AECO. So the program is fully funded and deeply in the money at current strip price, and you can see the 2025 strip cash flow as well. Okay. And then lastly, before I pass it off to the technical team to talk about the assets. We do have -- our budget, which is almost entirely based on organic program delivery. We do not include inorganic enhancements. And these enhancements include what we would say is an expected outcome of about $15 million here to close around the end of the year, that's the 500 BOEs per day on netback production. That expected to come in within weeks, in fact, 1 got done today, 1 got done on Friday. So that's on the way. We have $35 million we've already talked about the progress deferral. So that is accounted for in the budget, but of course, helped us with our free cash flow in the coming year. And then we had talked about other noncore dispositions, including the BC Montney or nonoperated infrastructure. Important to note that with the BC Montney now becoming development ready at Conroy in particular, with our new Conroy gas plants or if we were to call it the Conroy gas plants, we are going to be very careful about decisions around that divestiture. If the market is -- the market is weak or if there is below a very reasonable -- very well-established value on that asset, we would not plan to sell that. That is not necessarily a sale as an opportunistic consideration. And the nonoperated infrastructure monetization. We do intend to sell down some amount of non-op infrastructure once we no longer need it, which we expect to happen sort of starting midyear, but been at or for the season that is not currently budgeted for. And I think I mentioned this -- we mentioned this in our press release this morning. With every unbudgeted cash flow enhancements, we may allocate some portion of those divestitures to buy back, especially if our share price remains disconnected from fundamentals. So a very exciting program. I'd say that I want to congratulate the whole team on assembling a budget on a 3-year plan, which will deliver a remarkable capital efficiencies, unusually powerful cash flow growth and $0.5 billion of free cash flow with the 3-year program. These are each in their own right, major accomplishments and require a whole -- a lot of fantastic work. So congratulations to the team. With that, why don't I hand to the team to talk about the continuous portfolio improvements. And over to you, Darren.

Thanks, Mike. And I would like to take the opportunity to detail the high-quality inventory backstopping this 3-year budget Mike's laid out, 3-year plan. Starting with this slide, the ring on the right of this slide shows the current balance of production with essentially 2/3 of our production coming from the Glacier asset, but this reflects the quality and maturity of the Glacier asset at this time has been able to deliver in a way that's kept our $425 million a day facility essentially full through last year. What I find really exciting about this slide is the smaller production coming out of the other assets and the large inventory backstopping those. And this is where we're going to see our growth in the coming years, but these other assets, including Valhalla, Wembley, Charlie Lake can progress. Overall, this gives us a ton of flexibility to drill prolific gas wells at Glacier and balancing with some of these other liquids rich opportunities in the other assets. This slide captures our internal view of the relative development maturity of each core area. What you can see here is kind of low data information in early-stage assets in the bottom left, migrating up to the highest quality developments rated assets in the top right. What we're currently able to do is drive gas and liquids production to meet the corporate targets from our established Glacier and Wembley and Charlie Lake liquid bridge assets which allows the selective allocation of capital to drilling and infrastructure spend to bring these other assets, including Conroy, Progress and Attachie up this curve in certainty and in value. This inventory ring summarizes all of our currently identified inventory locations on all of our active development assets. The outer ring breaks the inventory down into booked locations or locations that are verified by third-party reserve auditors and unbooked inventory for locations where we have potential yet to be validated. The inner ring highlights our internal view of identified Tier 1 inventory locations, locations we're comfortable budgeting and drilling immediately. All of our Montney assets share a common definition for Tier 1 inventory. And this is any location that has high-quality reservoir, identifying through mapping and geotechnical work within 2 miles from an existing Tier 1 producer. The definition for the Charlie Lake is slightly different. We have -- all of our Tier 1 locations are defined as location that's within 1 mile of existing producer and maps to having over 4 million barrels of oil per section or per square mile. You can see the inner location. We've got sufficient Tier 1 inventory on this ring to -- for 10 to 20 years of drilling with no additional Tier 1 being required. Just to quickly highlight the geology through the Advantage core area. This is a schematic of the Triassic resource fairly present in the greater Grand Prairie area. What you can see here is a continuum of deposition from deepwater, fine, silks and sands in the Montney that we've been working for decades, transitioning up through shallower sections into the restricted nearshore reservoirs developed in Charlie Lake. Across our assets, we have a very significant section of Montney. It's anywhere between 200 to 300 meters of section overlaying by the lower Charlie Lake, Braeburn and what we call the Valhalla members. What this has done is set up an additional bench of development in most of our assets in the area where we can layer on liquids-rich Charlie Lake drilling in areas where we're already drilling liquids-rich Montney and gas wells or liquid rich and gas rich Montney wells. So taking back to our inventory ring, we had that interior division of Tier 1 inventory. And this is an example of how we take our inventory. And over time, we are able to prove and identify more Tier 1. I've taken the D1 bench in the Montney at Glacier as a good example and the log on the left shows where it sits in relation to the other benches development. It's sits at the base of our Montney stack in Glacier. The page on the left shows the previous view of Tier 1 inventory with the associated D1 drilling in 2020. At the time, we were focused on the western margin of Glacier with some early attempted delineation drilling on the eastern part of the block. Matthew showed excellent reservoir quality across the asset, particularly in Northeast despite some modest early results. So in 2022, we stepped out in this northeastern portion of Glacier and proved that, that reservoir with modern drilling techniques, modern geosteering techniques and increased completion intensity was able to deliver results comparable or even better than the wells to the west that we previously drilled. Most recently, in 2024, we stepped out to the southwest of the Glacier asset and did the same thing with a new pad testing 2 D1 locations and delivering very comparable results. Methodically, over the entire asset, we continue to define and deliver more Tier 1 inventory. And it's my expectation that with the reservoir quality mapped across Glacier entire asset will prove to be a Tier 1 quality. This translates across all of our assets and all of our benches as shown by this bar chart of the 3 core assets that we've been developing lately, Glacier, Valhalla and Wembley. In each of these areas in 2020, we had an established Tier 1 inventory through additional drilling over the last 4 years, which did include consuming some Tier 1 inventory, we have dramatically increased our overall Tier 1 inventory across all of these assets. I'd like to take a moment to step through each of the areas and some of the benches to highlight how this evolution has taken place in our core development as our core development benches currently. I'll start with the upper Montney, which is shown on the log on the left at the top of our stack. As you can see here, the porosity and the reservoir quality in the upper Montney is excellent. This was the original development bench in the Glacier area due to this outstanding reservoir quality and even in legacy wells has delivered outstanding results. Even with this early success, though, we have been able to drive improvements in overall production and IPs, and we have increased the Tier 1 inventory count across most of Glacier, with almost the entire asset now being Tier 1. Moving down, 1 bench into the D4. This is the most widespread of our identified reservoir exists on all of our land blocks in Alberta. Recent drilling campaigns in Glacier with optimized geological targeting, increased completion intensity have expanded Tier 1 inventory across this asset significantly, stepping out from core drilling locations in the extreme West Edge across more of the land block. The Valhalla delineation campaign has also defined Tier 1 inventory across almost the entire block with room still to grow that as well. Our most recent successful step-out well in Northern Wembley, building on offsetting operators success in the D4 has also established a very significant inventory of Tier 1 liquids-rich Montney wells in the Wembley area. The D2 and the D3, the next 2 assets on the stack. I have not seen the same kind of activity over the last few years, given our focus on our foundation Upper D4 and D1, but their inventory counts are included in the appendix for your reference. As per our earlier example of the tier promotion, the D1 has been a very successful Tier 1 inventory asset. This high-quality D1 reservoir identified across Glacier and Progress, and that's where drilling is focused in the most recent years. Methodical step out drilling at Glacier with optimized geological targeting and increased completion intensity and modern completion designs has expanded the D1 inventory to cover most of the Glacier asset at this point. Success on the southern part of the Progress block is also set up for inventory for the future 421 facility. Now moving on to the new Charlie Lake asset, we acquired this summer. I would like to draw your attention to the Charlie Lake log on the left of the slide. This is a much thinner section of overall reservoir and what we have here represents about 40 to 45 meters of section. In our area, we have -- we are focused on the lower Charlie Lake which is a section below the conformity identified at the top of the type log, and we break it out into 2 target horizons: the Braeburn and what we call Valhalla members. On the map in the center of the slide, you can see a brown dash line across the [Indiscernible] side of that map. This represents the update edge of the Braeburn formation where the [Indiscernible] conformity erodes it away to 0 meters. What we acquired was a concentrated land base in the heart of an established lower Charlie Lake fairway. The predecessor company had drilled over 75 wells spread out across this land, delineating entire land block. And these are the black wells highlighted in the center or across these lands. These -- this early delineation drilling that defined our current Tier 1 inventory shown in green across the area has also allowed us to focus our initial 10-well program into some of the most successful areas. We've utilized previously acquired locations and high graded them to some of the best areas to help initiate our first 10-well program across the area. 7 of these initial 10 wells are targeting the Braeburn formation. Our first 2-well pad was handed over to production, but the pump jack started over this last weekend, and we look forward to updating you on this program as completions early next year. We also have a number of nonoperated wells that we participated in across the fairway. This allows us to learn and experience other operators, Charlie Lake operations in the area, also provides some modest cost delineation on hedges of our land base where we won't be active in the near term. The second bench of development that we've been looking at in the Charlie Lake is what we call the halo member, which is a deeper target located below the Braeburn member, 10 wells were previously drilled by the predecessor operator, establishing an initial fairway shown through the center of the map, the flat wells or the existing wells with the green wells again being are identified Tier 1 inventory count. Three of our first 10 wells are targeting Valhalla member, including a follow-up to our extremely successful [4 and 18] wells drilled in the southwest corner of the fairway. Further technical work is underway to assess the potential for this zone existing on other portions of the Charlie Lake lines that we hold in this area. I'd just like to finish with this slide highlighting, in 2023, we were responsible for delivering 12 of the 15 top gas wells by IP90 in Montney. And I look forward to updating this one following the close of 2024. I'd now like to hand this over to my associate, Geoff Keyser, to review the detail around the economics of our inventory.

Great. Thanks, Darren. This slide we're looking at, this is a type curve roster of our generic type curve for a handful of our Tier 1 well inventory, which is the building block of our 3-year-plan. We have a large range of investment opportunities between high recovery gas wells and short oil well -- short payout oil wells, which are highlighted on the screen. These wells and the economics are looking at are run on a May 2025 onstream date. This creates very little arbitrage between our Tier 1 locations on strip pricing on a go-forward basis. So with our deep well inventory of Tier 1 locations, this allows us to steward capital into the best investment opportunities within the portfolio, creating the framework for the 3-year plan. This slide -- this shows the trailing economic results from our plan. So the previous slide was a go-forward forecast, but this is the trailing information from 2021. The top graph shows our short payout track record, which turns our capital investments and deposit free cash flow in the short term. And the bottom graph shows the netback of these wells as well as the capital per well. This also highlights Advantage's consistent repeatable capital delivery of wells. So combine that with a short payout, a higher -- our wells are delivered on a repeatable fashion. This creates exceptional capital efficiencies throughout our development program. The next slide, I'll turn it over to Neil Bokenfohr.

Thanks, Geoff. Good morning, everybody. On this slide, what we wanted to do is highlight some of the successes that we've achieved through the Charlie Lake acquisition. When we looked at the acquisition, we're looking to drive opportunities that were both accretive and synergistic. As an example, on the financial side of that accretion down in the bottom left hand of the corner for Q3, we had a 2x NOI impact relative to the production that was brought in. So that's clearly driving some netback accretion. In terms of the land base on the right-hand side, there's obvious synergies between the overlap of the previous Montney assets and the Charlie Lake plants that we brought in. In addition to the land, we also acquired oil batteries that we can grow our production into and we got access to additional gas processing that allows us to rationalize and improve processing options down the road. In terms of capital with cost synergies, we've realized a fair number already in '24, and we'll look to continue that synergies through '25 and beyond. Mike mentioned previously that it provides the opportunity to allocate capital between liquids and gas. We have a higher liquid content now. So we're able to be flexible and drill our wells, control development wells that are capital efficient and low-risk opportunities. In terms of some actual dollar amounts -- we've been able to realize we've looked at both continuous opportunities short term, long term. And we've also looked at how do we drive additional revenues. In terms of continuous savings, we immediately identified approximately $10 million of opportunity that were spread out between gas and emulsion processing options through our lowest-cost opportunity. We looked at power optimization, rental buyout, labor, all of those plus additional ones drove up to $10 million of annual savings. On the revenue side, we looked at what high H2S wells we're currently shut in. And with our access to infrastructure, we were able to reactivate some of those and drive $8 million of extra revenue during the first 12 months. In terms of onetime synergies that are still to come. We've identified close to $5 million, and that's split between early termination or early contract termination, processing flexibility and elimination of redundant capital infrastructure that's either has pipelines in place already, or is related to the wonderful gas processing complex that we now control. A couple of examples on the synergies that we have here up on the top right-hand side, the plot is showing basically immediately after acquiring the assets, we started to direct gas to our lowest cost processing option, which during the summer with low commodity prices was the Glacier gas plant, we now have possibility to divert gas to a number of different egress points depending on capacity available and commodity price. In terms of production that we brought back on with the infrastructure that we acquired on our own that we previously held. H2S was a limitation for the prior operator. We were able to take advantage of our infrastructure and return high H2S wells back on production, basically capturing 300 to 400 barrels a day of oil. In terms of 2025 and beyond in terms of infrastructure synergies, mike referenced that we've deferred the construction of the progress Phase 1 gas plant that allowed us to move $35 million out of 2025 into 2026, increasing our free cash flow in 2025. It has also allowed us to push out the Phase 2 construction further out into the future, deferring another $100 million of capital. With the synergies that the infrastructure provides on the right-hand side, you can see a plot of the oil batteries and gas plants from key oil batteries, we have the ability to drive gas to up to 3 different gas processing options through Valhalla once Phase 1 is constructed, we have the option to move gas either to Glacier or to the new progress for '21 gas plant. With all that infrastructure, it will provide us the opportunity to monetize and rationalize noncore infrastructure through '25 and into 2026. And another opportunity that we'll be able to realize lower overall emissions corporately with the combination of the 2 infrastructures and the ultimate construction of the 421 gas plant. It provides concentration and the opportunity to lower overall emissions. And with that, I'll turn it over to John and Brian to talk about managing volatility.

Perfect. Thank you, Neil. From a risk management perspective, we target 30% to 50% hedge levels to smooth volatility in adjusted funds flow. This supports free cash flow generation, which is being directed near term to reduce net debt into the target range of $450 million. We diversify our gas markets physically delivering [indiscernible] Dawn, Chicago, Emerson and AECO. We have a comprehensive year-end enterprise risk management framework to assess and mitigate risks while identifying business opportunities. When gas prices are low, we shut in gas and turn loss back on when prices recover. This maximizes our adjusted funds flow and free cash flow, which is a priority over our production growth. Owning and controlling the majority of our infrastructure allows us to utilize this tactical response.

Okay. Thanks, John. So turning to hedging here and diversification. Hedging strategy is an important component of Advantage's overall risk management program, and we have 2 main tenets to our hedging strategy. The first is that we want to have a base layer of hedging to help reduce the volatility around our adjusted funds flow. Before the acquisition, we viewed that base level to be about 20% over the next 12 to 18 months, but we've since increased that to 30%. I'll note that we're currently about 37% hedged on our natural gas volumes through next winter and about 34% hedged on our crude oil and condensate volumes for calendar 2025, all at levels that are well above current market. The second tenet is our fundamental overlay, bringing our hedging for the bottom end of our target range to the top end, depends on our level of confidence around supply-demand balances, particularly for Western Canadian natural gas. Looking ahead into 2025 and 2026. We model that the Western Canadian market will enter a period of relative undersupply that will last for at least 18 months. AECO basis, which is trading currently at historically wide levels right at the forward curve should begin to tighten. That is supported in part, of course, by LNG Canada, which is expected to begin commercial operations sometime in 2025. But that's not the only reason. Intra-Alberta demand has some near-term support from oil sands growth, along with a full year of gas-fired power and the medium-term outlook continues to look brighter through a combination of data centers, petrochemicals and the next wave of smaller LNG projects. That same fundamental overlay that helps guide our hedging decisions also helps guide our diversification strategy. Spreads between AECO and downstream markets like Dawn and Chicago are at historically wide levels, which also makes for historically port to enter into new long-term downstream commitments. At the same time, we're comfortable with the slightly larger floating AECO and Empress position into 2026 as reasonable market balances improve. That said, our significant Empress position gives us the ability to move quickly and layer in diversification to those key markets as spreads contract, and we'll watch closely for those opportunities as the year unfolds. And with that, that concludes our formal presentation material for Advantage. I'd like to take this opportunity to formally introduce Entropy's new CEO, Sanjay Bishnoi along with our CFO, Chris Hooper, who are here to provide an update on Entropy's business and some of the exciting opportunities ahead. But first, we'll take just a couple of minutes as a break from our formal slides to show you a video that brings to life some of the great progress that Entropy has made. [Presentation]

Well, good morning, everybody. This is Sanjay Bishnoi. And I think that video is a really good visual introduction to Entropy. Although I've likely had a chance to meet many of you, both Chris and I are the newest executive additions to an already highly qualified team at Entropy. So we thought we'd give you all some highlights on our backgrounds that are particularly relevant for the Entropy story as we continue on our path to developing a stand-alone team and a stand-alone company. Myself, I have over 25 years of energy experience. Most relevantly, I was a co-founder of -- and the CFO of a highly successful high-growth midstream company in the Permian Basin called Capmark Midstream. I've had a very long technical background in carbon capture. I actually have my PhD in chemical engineering and did my dissertation in carbon capture solvent technologies, and I have both public and private capital markets experience as CFO of CapRock Midstream Enerflex and [indiscernible] resources. I'm going to turn it over to Chris to introduce himself and then to also give you a little bit of an overview of what Entropy accomplished in the last year or so. Chris?

Thank you, Sanjay. Very quickly on my background, 25 years of experience, primarily in private equity and infrastructure investment management. It's my pleasure to be able to provide a 1-year look back on all that was accomplished at Entropy. Behind the scenes, there's been a lot going on, and we've been actively advancing the business. We closed out 2024 with the transaction bringing Canada Growth Fund on as an investor and more importantly, providing revenue certainty for up to 1 million tonnes per annum of carbon credits. The deal eliminates the significant risk of government policy change on carbon pricing and enables us to redouble our focus on Canadian projects. In July, we entered a major -- we reached a major milestone, achieving a final investment decision on the Glacier Phase 2 project, including an investment in decarbonized power from a natural gas-fired turbine with CCS. We also entered into a partnership with Methanex to conduct a pre-FEED at the company's Medicine Hat methanol production facility. In addition, we entered into an agreement to jointly develop a data center, including decarbonized natural gas power generation with CCS. Finally, we took significant steps to build out our management team in 2024, including hiring Adam Bedard to lead our U.S. efforts and of course, Sanjay Bishnoi as CEO. And with that, I'll pass back to Sanjay to share the rest of the end of the story.

Thanks, Chris. As you can all see, it's been a very productive year at Entropy. Sitting here today, our North Star and ultimate vision is to build North America's premier infrastructure company focused on carbon capture and low carbon power. We've built a team that has full scope capabilities in both of these regards. And as we sit today, we have a full in-house dedicated team to design build, own, operate, maintain and sequester carbon and build the CCS and low-carbon infrastructure business. Through our deal with Brookfield and Canada Growth Fund, we have access to capital and offtake. We've raised over $0.5 billion to fund the business from those 2 well-capitalized sponsors and we have up to 1 million tonnes per annum in guaranteed price offtake for 15 years from the Canada Growth Fund. On the lower left of this chart is the most important aspect of the company, for me, there are many people that are talking about CCS' potential and Entropy's doing. We've been operating our Phase 1 facility at Glacier for over 2 years now, and we're achieving capture rates of approximately 90-plus percent. Earlier this year, on the lower right of this chart, we were excited to take the next step in our evolution in FID Phase 2 of the Glacier CCS project. Phase 2 will be the first gas turbine in the world, operating commercially at scale to generate power, capture and sequester CO2 from its exhaust backed by the incremental capital cost from -- or capital investment from Brookfield and CGF, the plant will be on stream by Q2 2026. The 15 megawatts of power generated will be sold to Advantage under a 15-year PPA. And will help increase the reliability of power at the Glacier gas plant while significantly reducing emissions. A good segue to the next page. Page 62 of main deck goes into a little more detail on Glacier Phase 2 carbon capture. This plant is under construction now. On-site work will start in the spring and summer of 2025 and will be online by Q2 2026, aligned with the scheduled turnaround of the Glacier gas plant. It will capture approximately 160,000 tonnes per annum of CO2 and will be 100% self-powered all process and sequestration power will be self-generated by the turbine and all heat needed to regenerate the solvent will be captured for waste heat. On the right-hand side of this chart, you can see that Phase 2 will have dramatic effects on the emissions at Glacier, reducing the approximately 250,000 tonnes per annum of emissions by 86%. So Glacier is demonstrating that a gas plant submissions can be 86% mitigated at no capital or operating costs to the E&P company with known technology when you partner with Entropy. A good topic of conversations with some of your other investment management teams, several of them, which we're already talking to. While a picture is worth a thousand words. And here you can see the Advantage Glacier site in the yellow and the Phase II expansion on Entropy's Glacier CCS project. It's a stand-alone design to minimize interference with gas plants operations. And as you can see, it not only generates power to provide to our host and increase power and operational reliability at gas plant and captures 86% of the emissions, truly unique and revolutionary. There's a lot to discuss these days about providing baseload power at low emissions, and this next chart demonstrates -- this next chart demonstrates that there are lots of ways to generate baseload power and lots of ways to generate low carbon intensity power, but we believe that natural gas with CCS is the best way to produce baseload reliable power and low carbon intensity. At Glacier, we will be at 60 kilograms of CO2 per megawatt hour as low as solar and wind with firming and that solution is only available 15% to 35% of the time. So it's not really baseload. We're way better than coal or straight natural gas. You'll notice that nuclear is not on this page. However, we are excited about nuclear realizing that it will take a long time to get to market and natural gas with CCS is available today. So a very important solution if you're looking for baseload power and low carbon intensity. On the next chart, we've started derisking the technology, and we're operating reliably. So we're at a point where we are ready to scale the business and excited about our growth prospects. As previously mentioned, we are very well sponsored by Brookfield and CGF with legacy ownership from Advantage. We have a dedicated Board of independent investors and a dedicated executive team and staff. We are looking at projects in both Canada and the U.S. and across a wide variety of industries and applications. And finally, our project funnel continues to look good with 2 operating projects, an exciting turbine project that has been and currently 4 projects in feed. I wanted to conclude with a few comments about growing momentum in CCS and data centers. The latter subject has been in the news a lot. Every day, we hear about new projects that are moving forward to generate more computing power needed for AI and other applications. These projects are all very power-intensive and emissions intensive with hyperscalers being sensitive to both baseload power and emissions, this presents an opportunity for CCS and by extension for Entropy. On the carbon capture side, there has been a lot of announcements and increased interest in the space. So I thought I'd leave you with some data from Bloomberg New Energy Finance showing over 400 million tons per annum of CCS projects that have been announced. Even if only 25% of those move forward and we're only a fraction of that market, this is a very large opportunity for Entropy. So it's a good space to be a world market leader. We've created a stand-alone entity, and we are very growth oriented at the company. And with that, I will turn it back over to Mike for concluding remarks.

Thank you, Sanjay, and thanks to the whole team for your contributions. We happen to be a little bit ahead of schedule, which is great news. I'll offer a few summary remarks first off. The plan ahead is bright. We have continued cash flow per share growth within our focus and our expectations for this year of this coming year versus 2024 or over 60% year-over-year growth for cash flow per share. I think as importantly, our 3-year plan features over $500 million of free cash flow at strip pricing. And it's important to remind you that that's $500 million of free cash flow on a market cap of $1.5 billion. We have no exploration in our plan. We have no major infrastructure projects in the 3-year plan, aside from completion of one that's already done. And the highlight examples of our continuous efforts to do more constantly. Last week, we closed purchase of our Northeast BC 100 million per day gas plant at no material cost. Yesterday, we closed one of our small divestitures. We have a few more we expect to close within weeks. And this week, we're in the process of flowing back a new laser patent our first 2-well Charlie Lake pad and our partners are flowing back a 4-well Charlie Lake pad, all of which have encouraging results. So in some cases, only hours of production. So with all this, it does look like a very strong upcoming 3-year plan. We look forward to, most importantly, executing this plan, delivering on our promises and maintaining that consistent focus of cash flow per share, low-cost structure and only deploying capital into high-value projects. So with that, I'd like to pass it back to Brian and we'll be considering opening the floor for questions. Brian, back to you.

Thank you, Mike and the team. And Jenny, we're ready to go to the phone lines if there are any questions there, and we'll follow that up with any questions on the webcast. Thank you.

[Operator Instructions]

Okay. We'll go to the webcast here. We do have 1 question, and I'll pass the floor to Sanjay Bishnoi.

Yes. Thanks, Brian. So the question is how much power do you anticipate Phase II generating? And can you speak towards low cost of supply of power being produced in Phase 2 and how that might compare back to solar and wind. I guess, I'd start by saying the turbine in Phase II will generate 15 megawatts of power that is a combination. Predominantly, that will be sold to Advantage the price of that PPA, we have disclosed as CAD 85 per megawatt hour. So a very competitive price on that ultra-low carbon power that we're selling back to advantage. I would say that the comparison back to solar and wind is really an apples and oranges comparison because our power that we're generating is baseload and the solar and wind numbers that might be floating around are actually intermittent sources of power. So I think it's not really a direct comparison.

Okay. Thanks, Sanjay. We'll go to our second question here and I'll pass it to Mike Belenkie.

Sure. Thank you, Jamie, for the question. The question is, can you elaborate any further on nonoperated instructure monetization? And any reason for the timing being second half? Yes, it's a simple one. We do have now a smattering of different smaller capacity sort of positions. So really what we have is a level -- we have to levelize our capacity to match where our production grows and where that's happening. So when we talked about potentially selling down some of this nonoperated structure. We have to make sure we do that while we have other options available to us. And of course, you'll note that we have some options coming online, CSP in particular, in the first half. And then tying any of our production into the other infrastructure first will allow us to then divest the Infra at the right price. So hopefully, that answers your question there, Jamie, and feel free to ask follow-ups. Okay I'll roll right into the next question. which is from Aaron Bilkoski. How do you think about 10% growth in context of the basin supply-demand growth? Do you find the basins oversupplied, you pump the brakes. So let me answer that first. We think about this as being stable production growth that is noncyclical. This is not pro cyclical growth we're feeding the cycle of oversupply where prices are crushed, followed by undersupply where prices are spiking. What we're doing is growing at 10% per year in a way where because of our low-cost structure, both capital efficiency and our cash efficiency, cash operating cost efficiency, we make money at low prices through the cycle, not just when prices are in the upper half of the cycle. So what we're looking at now, Aaron, is simply not playing a role in the cyclicality of pricing and making sure that our profitability is in take role for the, call it, 4 to 5 years where prices are low. While we are small enough that we're not going to move the market, we don't want to actually be playing a role in this kind of arms race where prices are high growth surges, okay? So does that make sense. Our returns are based on low price, that sort of baseline value, and our IRRs are driven by that throughout. Okay. So hopefully, that makes sense in the first part. On our debt target, you say you're targeting $450 million in debt is the plan to direct free cash flow of debt until that target is reached, then incremental free cash flow to the NCIB. It's a good question, and I think it's well posed. We do believe in delevering as being our most important priority at a time where we are throwing off a lot of free cash flow. However, when we first set that target of being entirely dedicated to delivering, our share price was at a different place, our valuation was in a different place. We see the current share price is a fantastic opportunity to start layering in some NCIBs. And so when I refer to in some of my earlier comments, referred to the way we think about free cash flow, we'll take the free cash flow from our organic program and dedicate that to delivering, but when we do have a sale or some unbudgeted cash flow enhancement, free cash flow has been we'll take a portion of that potentially and put that to work in a tactical sense on the NCIB. So we may see NCIB at some nominal level reactivated in the near future, especially given that we're in process of doing some of these smaller noncore property divestitures. So we'll see that rolling in a bit earlier and particularly driven by the fact that this is a countercyclical opportunity to be buying our shares back. Okay. Now I might roll into the next question. which is from Jamie , the completion of the process facility in 2026. Contingent on gas pricing being at an acceptable range. If so, can you discuss the price point where you would choose not to proceed? So again, Jamie, this is -- I made comments just to my last answer similarly, we are seeing growth as important to be done steadily in a non-price-sensitive way we have to be prepared to play the long-term price in the market. We may, at any time, change our plan suddenly to optimize IRRs, which essentially has the output of maximizing free cash flow. But finishing the proves gas plant in 2026 is really a part of our full rate of return design. It's part of our capital deployment design where we have this optimized free cash flow number. We can recalculate our plan, defer again if there was some reason to, but the deferral of the progress gas plant to 2026 wasn't really driven by low gas prices. It was opportunistic in that we have enough capacity from the acquired assets and the acquired infrastructure from our acquisition in June that it was no longer necessary. And in any circumstance, there was no reason to complete the progress facility this year, this coming spring. And so it's part of our growth plan. The only circumstance where we would not do that in '26 is if we had a better use of capital that didn't involve that expansion.

Okay. Well, we have lots of questions rolling in here. keep going.

Any updates on Rockies LNG?

Actually, maybe I'll throw that to you.

Sure. And this is from Chris MacCulloch, Desjardins, and thank you for the question. We have no material update to give you today. Continue to be encouraged by the developments that we're seeing, and we'll certainly share those with the market or Rockies well in due course. But at this moment, there's nothing material to disclose. So we have the next question from Mike [indiscernible], and I'll pass it to Sanjay.

Yes. Thanks, Brian. And the question is, can we describe the performance of Entropy Phase I relative to expectations. We're very happy with the performance of Entropy Phase I I'd say this is a prime example of you can design and you can theorize about things, but when you start running things, you learn a lot of a lot of good things about how to most effectively run an asset. As I mentioned, I've got a long history in this field. And I think we've actually learned a lot from an operational perspective. We are currently capturing over 90% of the carbon that is entering the capture column in Phase I and it's so much so that I would say that the performance in Phase I has allowed us to convince our outside investors, Brookfield and CGF FID Phase II. Regarding the 10% IRR, there's a question around an IRR target. I'll turn that over to Mike. But again, before doing that, I would just point out that all of the data that we've seen to date, again, this has been through third-party advisers with our investors. They reviewed the performance, and we've been able to FID Phase 2 at an IRR that is accessible to an infrastructure fund.

Yes. I can go back. So that question is partly unfair for Sanjay, because he wasn't here when we developed the $50 per ton sort of breakeven model. So that is an older number. I think it's safe to say that the expectations for the 10% return in the breakeven carbon price is $50 per ton on day real price. And of course, the only that's really changed. What I will say is that the technology has not changed. The technology is not our technology that has not increased in price. In fact, we've identified a few tools to reduce the total price on a relative basis, a pound. What has changed is simply industrial inflation. And if you were to take an industrial inflation number over the last 3 years, I would sort of assume that you give up the same $1 per ton breakeven price. So for reference, it's worth noting that we think that industrial inflation has been as much as 40% for those 3 years. Hopeful helps answer that more detail. I throw the next one back to Sanjay, you're another answer to the question.

Yes. Thanks, Mike. So the question is, can we elaborate on further potential projects that are advancing in the Q? And I'd say, as mentioned in the discussion, we've got 4 projects that are in seed. We've publicly announced, I think, 2 of those -- and they're -- we're working with Methanex. We're working with California Resource Corporation, in California. We're working with the Western Canadian oil and gas producer. And then we're also working with a data center developer here in the province of Alberta. I would expect that we would complete all of those feeds in 2025. And we're hoping that we advance a portion of those projects to FID in the '25, '26 time frame.

Thanks, Sanjay. Jenny, we may have a line -- we may have a question on the phone line, so I'll pass it back to you for a break here.

Yes. We have a question from Michael Harvey from RBC.

So this has been covered a little bit, maybe for Sanjay or Mike. Just any more financial metrics you can provide for Glacier Phase 1, which is on stream now. Just wondering if you can give us any more color on, I guess, just how much revenue that project is generating. I know it's complicated because you're reducing op costs, et cetera, but just maybe in simple terms, for instance, like the year-to-date figure and millions of dollars you've generated from the credits and offsets the operating costs? Just kind of looking to put some dollars in sense on it.

Yes. I'm actually going to -- this is Sanjay. I'm going to actually ask Chris Hooper to give you a little bit of color maybe just on overall revenue, including all of our different streams. Chris, if you don't mind.

Sure. Absolutely. Thank you. Entropy generates revenue in a number of ways, including storing carbon that is captured at the Glacier facility from Phase Ia and Ib. There's also a waste heat component where there is an emission savings for Advantage that is revenue generation as well. In rough terms, those revenue lines had up to low single-digit millions per year. So in 2024, we will be roughly $4 million of revenue. The operating costs associated with that would be roughly $2.5 million. So is NOI positive. Obviously, those are small-scale projects, Glacier Phase 2 will add significantly to the top line numbers as well as the OpEx number. And we'll make Entropy significantly cash flow positive. But where we are today, we are generating positive NOI.

Okay. That's great. So maybe $1.5 million NOI.

Okay. Thank you. We'll go back to the webcast here. We have a few more questions, one from Jackson Buckle at AFT Capital.

Yes, I will be happy to take that. Thanks for your question, Jackson. The question is in line Paramount's asset sale, is there any interest for management in monetizing some of the Montney assets like what also a portion of the sale proceeds will be directed towards share buybacks versus debt reduction. Okay. So 2 questions. First question is, I mean, I think that as a management team, we try to be dispassionate about value. And really, our ultimate goal, again, is to maximize cash flow per share for shareholders or NAV per shareholders. So that's the goal and the driving principle. If someone were to come along and offer us an overpriced sort of sort of an over intrinsic value offer for an asset, we have to consider that. Want to note that our assets do tend to grow value and grow cash flow. So we have to make sure that any offer today for an asset that might be more valuable next year needs to balance out mathematically based on our cost of equity. So we think very dispassionately about these assets and our job to simply maximize value for shareholders. And then the second part of the question, in terms of proportion of sale proceeds, we're going to try to avoid being very specific about what proportion we would be. It would not be the majority. So -- and of course, it's going to be partly driven by 2 things. What is our outlook on share pricing, i.e., how quickly do we see delevering happening? And how confident we that this is a done deal at our delevering targets reached. And secondly, how underpriced are our shares. So there's a balance of priorities. Obviously, if we have a steeply discounted share price, we want to be more aggressive on buybacks. If we're concerned about share pricing and our ability to lever on schedule, be more compelled to put the money more promptly towards delivery. Hopefully, that's enough detail. We probably don't want to tip our cards too much on our trading plans. I guess you can put it that way.

Okay. Thanks, Mike. Next question from Chris at Desjardins. What inning are you in with Glacier well improvements? How much harder can you push production rates and efficiencies?

Maybe I'll do a quick -- I'll start with a quick answer, and I'll pass it to Darren. So a quick answer. Thanks, Chris, for the question. Realistically, we're probably in the fourth inning on Glacier. We have not seen any sort of degradation at all in well quality and resource quality. Our wells continue to be as good as we hoped or better. You'll note there's a trend we continue to increase our type curve and the wells that keep coming on continue to be type curves. So with that, maybe I'll pass it to Darren and techno team to address at what point you get to dimension returns or increasing?

Yes. I agree with you, Mike, on your characterization of where we're at with the current completion evolution. I think there's room to improve there. Certainly, certain benches have started to kind of roll over. But we do have additional benches and additional areas in Glacier where we haven't drilled new wells. So that's where I would look to kind of pushing development and improvements in Glacier, particularly in the D2 and the D3 ventures we haven't drilled for a couple of years there. So that's where I would see us pushing kind of new well improvements and new results in the coming years.

Thanks, Darren. Okay. Thank you. We move to one, I think this is an important one because it's maybe not that well understood. But walk us through the net equity ownership, net of Brookfield and Canada Growth Fund financing and back in rates to equity. Mike, I'm not sure if you want to take that one?

Yes. This was not -- it's actually complicated in some ways and simple in some ways. I think it's important to note that, first of all, Advantage owns about 25 million shares of Entropy and those are common shares. So the most recent financing was done at a $12.75 per share value. That equates to that just over $300 million of value. The moving parts in this, though, the complexity are twofold. Brookfield and CGF are investing via what it looks like an equity line of credit. So we constantly draw down that equity line of credit, which increases their ownership. And so as we draw more, we will see our working interest fall, not our value by our working industrial fall as the company grows. And then the extra complexity is that these are comparable to ventures. These are equity-like in most ways where they have a fixed conversion price, but because they have the venture, they have a coupon of 8%. That's -- I think that's public information from some of our filings. So you can't necessarily take our common equity to be simply a face value of the most recent raise or some escalation based on our advancement of business. Hopefully, that helps to explain it. Most importantly, if you want to oversupply 25 million shares and to which we think the common equity value is from $1,2.75 anchor.

Thank you, Mike. I think maybe time for 1 more question here, we've been pretty encouraged by everything we've been seeing. And this one is an important one. I think -- can you talk about the Conroy facility acquisition a little bit further? Is there additional spending required to bring it into service? And when could Conroy production feasibly be part of the Advantage profile.

Yes. Great. So I'll start with that as well. Conroy facility is -- we haven't named it yet, and we could call Conroy facility, it's a little further west. It's only a short pipeline away from the pipeline network that came with the plant. So this is really quite an incredible opportunity. I'm very lucky to have this opportunity, especially given the timing of the asset acquisition last year. There is some additional spending required to tie Conroy gas plant. reasonably, we have a rough estimate of $25 million depending on the size of the pipeline and depending on the application compression of the field. So basically, the asset sits kind of 10 kilometers away from the tail end of the pipeline network that we now own. So a tie-in to that pipeline network and then some reactivation costs just to basically deorball as plant to modern plants well designed. It does have a 100 million a day of capacity sour as handling for liquids. Perfect fit for us. And really, what does it do to our feasibility when does that come into our actual to planning. While it's not in our 3-year plan, and to go back to 1 of the questions about long-term vehicle pricing and supply to the balance. We don't really have a strong viewpoint on what 2028 gas pricing is going to look like at AECO or Western Canada. So prior to us being really specific about developing that asset, we intend to sit, watch and gather information on supply-demand fundamentals on LNG Canada Phase 2. On Cedar, on the Pacific -- Wood fiber projects, as well as some of the other major developments in the basin, which include the Dow pipeline, and power generation uptick. So as these moving parts kind of settle out in the coming couple of years, we'll give you a better feel for how important it is for us to develop that asset. But as it stands right now, it will be an incredibly efficient concept to develop. Derisked, it's development level. And the moment we start putting money to work drilling, we have facilities, $100 million of space to grow into. So we are excited about it and just help to make sure that we do it the right time. Okay. There's probably enough time to just answer one last question on progress. And I think it's important to note, this question is really a clarification question. At progress, can you please give a bit of color on what 2025 activity looks like on both E&C on the insertion side. So we do have the scatter plots showing IRRs versus time and that's found on Page 26 of the slide deck. And you'll see that there is no drilling progress in the Montney within '26 and '27. The drills this start to happen, progress in 2027 and will result in some growth at that point. And again, part of the reason for that is because -- we have no urgency on drilling those lands and the prospects that are currently lower risk, higher rate of return fall earlier in the life of the asset. Throw it back to you. If you'd like to up here, Brian?

That's great. Great Q&A session. Thank you, everybody, for tuning in to our Investor Day, a great conversation. And if I didn't get any questions or if you have any follow-ups with us, please reach out to me or the team, and we'll get back to you. Again, thanks, everybody, and that wraps up our session today.

Thanks, everybody.

Thank you. Ladies and gentlemen, the conference has now ended. Thank you all for joining. You may all disconnect your lines.