Time for this stock to hunt. This stock has underperformed. After hitting a high of about $1.50 it was crushed by massive selling and underperformed the other oil stocks. Hopefully, the distribution is over and absorbed by the market.
The terms of the debt were disappointing. But that is in the past. With FCF they will be reducing the debt anyway. Athabasca plans to direct at least 75 percent of future free cash flow toward achieving a total outstanding term debt target of $175-million (U.S.) (50-per-cent reduction) in the medium term while maintaining a strong cash liquidity position. The company is targeting to be in a net cash position in 2023.
Don't like the idea of having cash while carrying debt. Just pay down the debt and be done. Get nothing for the cash and pay interest on the debt. Not a smart move.
Some of the hedges are not that great. They further intend to hedge up to 75 percent of its forecasted production, net of its internal light oil production, for the next 18 months to ensure it meets its strategic objectives of protecting a sustaining capital program and achieving free cash flow to meet its debt targets. Oil is trading in backwardation they will not get great hedges if we are in a bull market for the next two years. If they lock their hedges at lower prices and the oil runs up then this stock will underperform again. It is too early to say if this is a bad call only time will tell and it all depends on the future oil trend.
Based on the financial results and their projections this stock needs to catch up.