RE:RBC updatesaw that in the globe as well:
RBC Dominion Securities analyst Luke Davis sees Athabasca Oil Corp.’s (ATH-T) “long-awaited debt refinancing constructively as it will allow the company to refocus on the base business.”
On Thursday, the Calgary-based company announced a private placement of US$350-million in senior secured second lien notes at 9.75 per cent, maturing in 2026.
“In our view, the refinancing was the single largest overhang on the stock,” said Mr. Davis. “The resolution will allow management to refocus on core operations. We currently model a $205 million capital program in 2022, driving production volumes of 36,500 barrels of oil equivalent per day (6-per-cent growth). At our current outlook, we expect the company will carry roughly $292/$153-million in net debt at year-end 2021/22, mapping to a D/CF ratio of 1.6 times/0.4 times vs peers at 1.6 times/0.6 times.”
Expecting investors to “now shift focus to increased clarity on future development plans and capital allocation priorities,” he raised his target for Athabasca shares to $1.25 from $1 with a “sector perform” rating. The average is $1.13.
“In our view, Athabasca shares should continue to trade at a discount to the peer group, driven by the capital-intensive nature of the business, though we expect the spread could narrow with clarity on future development plans,” he said.
Only part concerns me is the idea of them upping 2022 capex by essentially 100% for 2022?
First i'm hearing of this. Anyone recall hearing this from the company in the past? browsed through some of the recent new releases and the latest investor presentation and can't seem to find anything about 2022 capital allocation.
Mtklip wrote:
RBC is constructive on the deal. TP raised from $1.00 to $1.25. They believe that the stock should continue to trade at a discount to peers because of higher capital intensity of operations.