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Advantage Energy: Expect A Very Strong 2022 While The Value Of Entropy Gets Unlocked


  • Advantage Energy is a sizable natural gas producer in Canada.
  • The high natural gas price environment will likely allow Advantage to post record results this year.
  • The value of the Entropy carbon storage division will be unlocked thanks to the investment of Brookfield Renewable, a well-respected party.
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It has now been more than two months since I last published an article on Advantage Energy (OTCPK:AAVVF), one of my favorite natural gas players in Canada, and a lot has happened in those months as the company

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This article was written by

The Investment Doctor profile picture

The Investment Doctor is a financial writer, highlighting European small-caps with a 5-7 year investment horizon. He strongly believes a portfolio should consist of a mixture of dividend and growth stocks.

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Analyst’s Disclosure: I/we have a beneficial long position in the shares of AAVVF either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (21)

Dandyruckus profile picture
How quickly we forget that this stock lost 90% over 36 months - not long ago. I am a wait and see this time.
Joe4stocks profile picture
Finally getting back up in price after many, many years ..:-)
River18 profile picture
Currently on the sidelines.
Is there any discussion of re establishment of dividends?
How much of the upside did they hedge away?

At the moment I am only buying unhedged producers. Why would I invest with someone that gave 1/2 upside away

Btw, nice article, and great performance
The Investment Doctor profile picture
@energyguy921 There's a nice image in the article with the ratio of hedged production and the prices they hedged at
@The Investment Doctor thanks
I missed that

Crude at 50 yuck
Ng at 3.50 vs current of 5.75

Wouldn’t you rather invest in someone bring home 100 and 5.75?
The Investment Doctor profile picture
@energyguy921 If a company has a consistent hedge policy, I don't mind it. Natgas for delivery in Q4 this year is $5.8-6.00. I'd be in favor if Advantage would actually increase its hedges at those prices. Only 30% of the Q4 output is hedged, I'd be totally fine if they'd increase that to 50-60% at those prices.Same thing for Q3 2023 at $4 right now.

The one thing I'm allergic about are inconsistent hedging policies. Then you'll see companies starting to hedge during weak price moments. I have no problem with a 'smart' hedging policy locking in guaranteed cash flows.

The $50 Crude was for Q4 2021, so that's no longer an issue. Going forward it's $75/barrel and with an oil production of less than 1,000 barrels per day the crude hedging is relatively irrelevant (but every dollar obviously counts).

Long story short, my exposure to natgas consists of a bunch of producers. Some are hedged, some are unhedged. Spartan Delta is (now) my largest position after it quadrupled since I bought in H1 2020 and is fully unhedged.
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