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Summary Q3 earnings show the company didn’t generate profits despite its low-cost structure. Management announced a three year plan to increase the part of NGL. If the company executes according to the three year guidance, the valuation is low. A bonus section that provides an investment idea in the oil and gas industry. With the Q3 results , Advantage Oil & Gas ( OTC:AAVVF ) reported losses despite its low-cost structure. Considering the difficulties to generate a profit in the current Canadian gas price environment, the company announced a three years plan to increase the part of NGL. At this occasion, management provided a thorough guidance for the next three years. The guidance suggests the company will generate C$75 million of free cash flow in 2021. Considering the current stock price, the market does not believe the company will deliver according to the plan. The reason may be linked to the current WTI/Canadian condensate differential way above the assumptions listed in the plan. But before getting into the valuation and the bonus section, let’s dive into the Q3 results. Image source: anita_starzycka via Pixabay All the numbers in the article (including slides) are in Canadian dollars unless otherwise noted. […]
