Athabasca Oil Corporation Announces Further Hangingstone Cost Reductions
CALGARY, Alberta, May 10, 2021 (GLOBE NEWSWIRE) -- Athabasca Oil Corporation (TSX: ATH) (“Athabasca” or the “Company”) is pleased to announce that it has executed an amending Hangingstone Transportation and Storage Services Agreement (“TSSA”) that resulted in a $44 million prepayment from restricted cash and a ~$5 million reduction to annual tolls. The amended TSSA reduces Hangingstone’s dilbit financial assurances by ~$44 million to ~$27 million. The reduction in financial assurances unlocked restricted cash on the Company’s balance sheet that was concurrently used to fund the amending prepayment. There is no change to the Company’s unrestricted cash balance that is expected to grow from $141 million at March 31, 2021 to ~$210 million at year-end (US$60 WTI & US$11 WCS differentials). The transaction is effective as of May 7, 2021 and the deal is now closed.
As previously released with the Company’s first quarter results, Athabasca executed a commercial arrangement with an industry leading marketing company to construct a truck-in terminal at no cost to Athabasca. Operations are expected to commence in July with up to 5,000 bbl/d of third party truck-in capacity. The additional volumes are expected to generate up to $5 million in annual savings through a processing fee and by leveraging existing volume commitments under Athabasca’s transportation agreements.
Inclusive of both transactions, Hangingstone’s cost structure is expected to be reduced by up to $10 million annually. Hangingstone now has improved resiliency and profitability with an estimated US$31.50/bbl WCS operating break-even. The Company’s corporate operating break-even is approximately US$43/bbl WTI (US$11 WCS heavy differentials) including these transactions.