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Athabasca Oil Corp T.ATH

Alternate Symbol(s):  ATHOF

Athabasca Oil Corporation (AOC) is a Canadian energy company with a focused strategy on the development of thermal and light oil assets. AOC’s segments include Light Oil and Thermal Oil. The Thermal Oil segment includes the Company’s assets, liabilities and operating results for the exploration, development and production of bitumen from sand and carbonate rock formations located in the Athabasca region of Northern Alberta. It also consists of two operating oil sands steam assisted gravity drainage projects and a resource base of exploration areas in the Athabasca region of northeastern Alberta. The Light Oil segment includes its assets, liabilities and operating results for the exploration, development and production of light crude oil and medium crude oil, tight oil and conventional natural gas. Its Light Oil segment consists exclusively of the Duvernay in the Greater Kaybob area with about 155,000 gross acres across Kaybob West, Kaybob North, Kaybob East and Two Creeks.


TSX:ATH - Post by User

Comment by Chris007on Jun 13, 2021 1:51pm
241 Views
Post# 33379430

RE:70% FCF @ $70 WTI...

RE:70% FCF @ $70 WTI...Unfortunately, with the hedging program currently in place, these guys are realizing nowhere near a 70% FCF yield. The 70% FCF is more hypothetical then based on reality at this point, since those numbers assume that company is "naked"/basically entirely unhedged.

For the rest of 2020, anyways, almost 50% of production is in the mid 50s...

This obviously dampens FCF quite substantially.

As per guidance provided on the Q1 MD&A.

At 60WTI, they were basically expecting $55 mill in FCF for 2021 (pg.4 , Q1 MD&A)

Unhedged (using the old breakeven of 45 WTI, with each additional $5 WTI increment generating 70m cash flow)...FCF should be around $110M

60-45=15
15/3=3
3x70=210
210-100=110m

Obviously, there is an opportunity cost to the loss in cash flow due to the current hedges in place. The extra cash flow, were it able to be realized would go a long way in regard to the company's deleveraging efforts.

Is this a problem if we are in a multi-year bull market for oil? Obviously not.

That being said, theres plenty of people out there that don't believe that don't believe in the commodity supercycle narrative, and see the price spikes as a temporary blip due to a temporary  supply chain crunch from Covid.

Regardless, I like the potential of ATH, and I like the fact that it remains relatively cheap, so i'm still holding some.


Todamoon18 wrote: A bit mind boggling to think of the FCF yield here @ $80-$100 WTI.
As cheap as this traded during peak Covid..well I would suggest its trading even cheaper now if WTI stays north of $70. 


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