Who would risk buying SAGD plant that hasn't started producing? It's great that they're on budget and time but it's meaningless until first injection. Production is uncertain until this projects gets online. The unconventional land holding is also in development stage. Chevron and Encana work optimism in the area is encouraging but has yet to become derisked enough to get the market excited, there's still alot of uncertainty.
The market hates uncertainty and ATH doesn't even have a capex plan in place yet. What we need is a plan and direction, probably through a JV now that we're freshly capalized. This takes time, another thing the market hates. Add that to the whooping Canadian oil cos have taken the past two months and we're at $5/share.
CALGARY — Chevron Corp.’s agreement to sell a stake in its Alberta Duvernay shale play for $1.5 billion US bodes well for Athabasca Oil Corp.’s two-year search for a partner on its nearby Duvernay lands, an executive says.
Matthew Taylor, vice-president of capital markets for the Calgary-based company, said Athabasca remains committed to finding a partner to help develop its 140,000 hectares in the play, which extends through much of west central Alberta.
“It’s definitely a positive transaction in the space and helps validate that the Duvernay is emerging as a world-class resource,” said Taylor on Monday.
“This is a very big transaction. Chevron had the largest land position in the Kaybob Duvernay. The deal was completed at a very strong metric and it sets the stage here for a major multi-year development plan.”
He said the Chevron lands are in the same area as Athabasca’s and are the focus of industry effort. Taylor said about 80,000 hectares of Athabasca’s lands are considered “high-graded,” with at least 20 metres of thickness in the zone.
Ironically, Chevron’s partner, national oil corporation Kuwait Petroleum Corp., was identified by sources two years ago as one of two prospective partners with Athabasca to partner on its multibillion-dollar Hangingstone and Birch oilsands projects.
Athabasca decided to build Hangingstone on its own and the first 12,000-barrel-per-day phase is expected to begin producing in the middle of next year.
Taylor would not say whether the Kuwaiti company had visited Athabasca’s Duvernay data room.
Energy analyst Chris Cox of Raymond James agreed the Chevron deal is significant but said it doesn’t necessarily apply to the entire play.
“Chevron’s land is located in the heart of the higher-quality part of the play,” he said.
“There’s definitely a read-through from the value they got for this land by selling it to the Kuwaitis — it’s higher than what they paid Alta Energy (Luxembourg S.a.r.l.) to get it — so the implication is that valuations in the Duvernay are moving higher.”
Chevron will be the operator and retain 70 per cent of the working interest in the venture. It bought its 130,000 hectares last year.
Cox pointed out that Shell Canada, one of the biggest players in the Duvernay, has moved management of its Duvernay acreage into its development branch from its exploration team, suggesting commerciality has been accepted.
Other Duvernay players include Encana Corp. (in a joint venture with a subsidiary of PetroChina), Talisman Energy Inc., Apache Canada, EOG Resources Canada and Trilogy Energy Corp.
In a note to investors last week, TD Securities oilfield services analyst Scott Treadwell reported that rig activity in the Duvernay fell during the first half of 2014 but has moved up sharply since June.
“Major players in the region are accelerating, and the prevalence of pad activity indicates a shift to full commercial development,” he wrote.
Athabasca has drilled eight wells in the Duvernay, and the play accounts for most of its current 6,000-plus barrels of oil equivalent per day of production.
Taylor said the company will put four rigs to work there this winter to add 25 more wells, including some on two- or three-well pads, funded in part by the $1.184-billion sale of its stake in the Dover oilsands project to PetroChina this summer.
It expects 2015 exit production of 15,000 to 20,000 boe/d, most from Duvernay, but including some oilsands and Montney formation output, even if a joint venture partnership is not realized, he said.
The Duvernay holds an estimated 443 trillion cubic feet of gas and 61.7 billion barrels of oil, according to a report last year by the Energy Resources Conservation Board.
dhealing@calgaryherald.com