Advantage Oil & Gas Ltd reports 64.7% Net Income decline and 22.6% Revenue decline
03.03.2016 • About Advantage Oil & Gas Ltd (
$AAV) • By InTwits
Advantage Oil & Gas Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Advantage Oil & Gas Ltd is a company in decline: 2015 revenue growth was -22.6%, 5 years revenue CAGR was -10.3%
- EBITDA Margin is quite volatile: 81.8% in 2015, 87.8% in 2014, 66.1% in 2013, 5.2% in 2012, -4.0% in 2011
- Advantage Oil & Gas Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 100.6%. At the same time it's in pair with industry average of 90.1%.
- CAPEX is quite volatile: 0.20 in FY2015, 0.62 in FY2014, 0.27 in FY2013, 9.7 in FY2012, 14.4 in FY2011
- The company has potentially unprofitable business model: ROIC is at 3.1%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Advantage Oil & Gas Ltd ($AAV) key annual financial indicators
| mln. CAD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 302.3 | 234.8 | 132.6 | 205.6 | 159.2 | -22.6% |
| Gross Profit | 213.2 | 145.6 | 112.0 | 190.2 | 140.9 | -25.9% |
| SG&A | 34.6 | 28.2 | 24.4 | 9.6 | 10.6 | 10.3% |
| EBITDA | -12.2 | 12.3 | 87.6 | 180.5 | 130.3 | -27.8% |
| Net Income | -152.8 | -89.1 | -3.4 | 60.6 | 21.4 | -64.7% |
Balance Sheet
|
|---|
| Cash | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 85.9 | 0.0 | -100.0% |
| Long Term Debt | 308.6 | 351.6 | 353.8 | 110.0 | 286.5 | 160.5% |
Cash flow
|
|---|
| Capex | 231.8 | 201.8 | 146.5 | 225.3 | 191.5 | -15.0% |
Ratios
|
|---|
| Revenue growth | 10.6% | -22.3% | -43.5% | 55.1% | -22.6% | |
| EBITDA growth | -110.0% | -201.2% | 610.9% | 106.1% | -27.8% | |
| Gross Margin | 70.5% | 62.0% | 84.5% | 92.5% | 88.5% | -4.0% |
| EBITDA Margin | -4.0% | 5.2% | 66.1% | 87.8% | 81.8% | -6.0% |
| Net Income Margin | -50.5% | -38.0% | -2.6% | 29.5% | 13.4% | -16.1% |
| SG&A, % of revenue | 11.4% | 12.0% | 18.4% | 4.7% | 6.6% | 2.0% |
| CAPEX, % of revenue | 76.7% | 86.0% | 110.6% | 109.6% | 120.3% | 10.7% |
| ROIC | -10.3% | -7.8% | 1.0% | 6.7% | 3.1% | -3.6% |
| ROE | -13.0% | -8.1% | -0.3% | 5.6% | 1.9% | -3.7% |
| Net Debt/EBITDA | | 28.5x | 4.0x | 1.1x | 2.2x | 1.1x |
Revenue and profitability
Advantage Oil & Gas Ltd's Revenue dropped on 22.6% in 2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 6.0 pp from 87.8% to 81.8% in 2015.
Gross Margin decreased on 4.0 pp from 92.5% to 88.5% in 2015. SG&A as a % of Revenue increased slightly on 2.0 pp from 4.7% to 6.6% in 2015.
Net Income marign dropped on 16.1 pp from 29.5% to 13.4% in 2015.
Capital expenditures (CAPEX) and working capital investments
Advantage Oil & Gas Ltd's CAPEX/Revenue was 120% in 2015. Advantage Oil & Gas Ltd showed fast CAPEX/Revenue growth of 34.3 pp from 86.0% in 2012 to 120% in 2015. It's average CAPEX/Revenue for the last three years was 113%.Battling declining revenue Advantage Oil & Gas Ltd made large investments to CAPEX (147% of EBITDA) but that didn't help at least in this year.
Return on investment
The company operates at low ROIC (3.09%) and ROE (1.93%). ROIC decreased on 3.6 pp from 6.7% to 3.1% in 2015. ROE decreased on 3.7 pp from 5.6% to 1.9% in 2015.
Leverage (Debt)
Debt level is 2.2x Net Debt / EBITDA and 2.2x Debt / EBITDA. Net Debt / EBITDA surged on 1.1x from 1.1x to 2.2x in 2015. Debt surged on 46.2% in 2015 while cash didn't change in 2015.
Management team
Andy J Mah is a the company's CEO. Andy J Mah is a founder and has spent 9 years at the company. The company's CFO is Donald Craig Blackwood. Donald Craig Blackwood has 5 years tenure at the company.
Appendix 1: Peers in Energy
Below you can find Advantage Oil & Gas Ltd benchmarking vs. other companies in Energy industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Petro Rio SA ($PRJ) | -36.3% | -32.1% | -34.9% | 10,977.1% | |
| ONEnergy Inc ($OEG) | | | | 6,002.6% | |
| Sterling Resources Ltd ($SLG) | | -94.8% | 4,514.9% | 2,244.4% | |
| Ikkuma Resources Corp ($IKM) | 22.5% | 17.0% | -4.5% | 1,231.1% | |
| Spartan Energy Corp ($SPE) | -8.2% | 16.6% | 29.9% | 923.7% | |
| |
|---|
| Median (160 companies) | 39.6% | 10.4% | 17.1% | 17.6% | -29.9% |
|---|
| Advantage Oil & Gas Ltd ($AAV) | | -22.3% | -43.5% | 55.1% | -22.6% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| TransAlta Renewables Inc ($RNW) | | | 94.4% | 94.5% | 94.5% |
| Freehold Royalties Ltd ($FRU) | 91.7% | 90.4% | 89.0% | 90.2% | 86.3% |
| MEG Energy Corp ($MEG) | 85.5% | 86.8% | 87.4% | 87.6% | 84.1% |
| NXT Energy Solutions Inc ($SFD) | -43.2% | 65.6% | 36.0% | 87.3% | |
| Serinus Energy Inc ($SEN) | 80.4% | 80.5% | 76.5% | 86.8% | |
| |
|---|
| Median (140 companies) | 33.3% | 29.3% | 31.5% | 29.6% | 30.2% |
|---|
| Advantage Oil & Gas Ltd ($AAV) | 70.5% | 62.0% | 84.5% | 92.5% | 88.5% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Seven Generations Energy Ltd ($VII) | | 56.9% | 54.0% | 106.0% | |
| Tourmaline Oil Corp ($TOU) | 67.4% | 67.9% | 80.0% | 97.6% | |
| Bonavista Energy Corp ($BNP) | 63.8% | 64.6% | 62.6% | 91.6% | 54.5% |
| Bellatrix Exploration Ltd ($BXE) | 42.7% | 58.6% | 83.6% | 89.6% | |
| Peyto Exploration & Development Corp ($PEY) | 83.6% | 86.1% | 83.2% | 86.3% | 84.6% |
| |
|---|
| Median (159 companies) | 25.5% | 25.7% | 30.5% | 28.9% | 12.2% |
|---|
| Advantage Oil & Gas Ltd ($AAV) | -4.0% | 5.2% | 66.1% | 87.8% | 81.8% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Oryx Petroleum Corp Ltd ($OXC) | | | | 1,997.8% | |
| Petroshale Inc ($PSH) | 30.6% | | 346.6% | 865.9% | |
| Toro Oil & Gas Ltd ($TOO) | 192.4% | 139.0% | 39.2% | 808.7% | |
| Athabasca Oil Corp ($ATH) | 176.2% | 2,426.4% | 596.6% | 504.7% | |
| BNK Petroleum Inc ($BKX) | 139.2% | 195.8% | 789.1% | 316.6% | |
| |
|---|
| Median (162 companies) | 42.0% | 47.3% | 39.1% | 47.1% | 22.8% |
|---|
| Advantage Oil & Gas Ltd ($AAV) | 76.7% | 86.0% | 110.6% | 109.6% | 120.3% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Pason Systems Inc ($PSI) | 33.5% | 30.0% | 29.7% | 41.0% | 6.0% |
| Sea Dragon Energy Inc ($SDX) | -10.1% | 8.1% | 21.8% | 32.9% | |
| Raging River Exploration Inc ($RRX) | | | | 29.1% | |
| High Arctic Energy Services Inc ($HWO) | 27.0% | 31.4% | 26.3% | 24.9% | |
| Rooster Energy Ltd ($COQ) | | | | 22.9% | |
| |
|---|
| Median (165 companies) | 4.5% | 3.5% | 4.6% | 5.0% | -6.3% |
|---|
| Advantage Oil & Gas Ltd ($AAV) | -10.3% | -7.8% | 1.0% | 6.7% | 3.1% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Veresen Inc ($VSN) | 22.3x | 16.2x | 14.7x | 30.3x | |
| Lightstream Resources Ltd ($LTS) | | 2.0x | | 27.8x | |
| Petroshale Inc ($PSH) | 0.1x | | | 21.7x | |
| Connacher Oil and Gas Ltd ($CLC) | 9.7x | 16.7x | 8.8x | 17.1x | |
| Pengrowth Energy Corp ($PGF) | 1.5x | 2.9x | 2.1x | 16.8x | |
| |
|---|
| Median (136 companies) | 1.2x | 1.5x | 1.5x | 1.4x | 3.2x |
|---|
| Advantage Oil & Gas Ltd ($AAV) | | 28.5x | 4.0x | 1.1x | 2.2x |
