RE:After 3 EGRESS MONETIZATIONS, ATH Is SHORT 7,200 Bbls/d !!! Athabasca believes the market for Canadian heavy crude is improving. Expanded basin egress capacity should provide Canadian producers with improved access to the global heavy oil market in the future. At the same time, modest growth forecasts for Canadian oil production are expected to drive excess egress capacity.
As a result, Athabasca believes conditions will emerge for lower volatility compared to what has been experienced in recent years and Western Canadian Select heavy oil in Edmonton may be among the most valuable global crude benchmarks.
Athabasca has assigned its Keystone Base service of approximately 7,200 bbl/d of blended bitumen capacity and the Development Cost Agreement in relation to the Keystone XL pipeline to an industry player.
It has also entered into a seven-year marketing agreement with the counterparty for 15,000 bbl/d of heavy oil that will diversify its sales to the US Gulf Coast once the incremental Keystone Base service becomes available to the industry.
The marketing agreement has customary and additional fees including a flow-through pipeline tariff when the Gulf Coast service becomes available. This transaction increases corporate liquidity by approximately $80 million through the recovery of a deposit and the release of restricted cash that was securing existing letters of credit.
Additionally, Athabasca Oil has executed a sale and assignment agreement of its 20,000 bbl/d TMX pipeline service to a downstream player for a $20 million cash consideration.
Athabasca believes that the timing for monetizing the service is optimal as it receives cash consideration today while still being able to participate in the benefits of the construction of the pipeline through an improved local basin differential outlook.