Athabasca Oil Corp T.ATH

Alternate Symbol(s): ATHOF

Energy Oil & Gas E&P

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

Athabasca Oil Corp

<< Previous

Bullboard Posts

Next >>

Post by retiredcfon Jun 08, 2023 9:58am

176 Views

Post# 35486289

RBC

June 7, 2023

Athabasca Oil Corporation
Highlights from the RBC Global Energy, Power & Infrastructure Conference

TSX: ATH | CAD 2.93 | Sector Perform | Price Target CAD 3.50

Sentiment: Neutral

Our view: We hosted Athabasca Oil at the 2023 Global Energy, Power, & Infrastructure Conference with Rob Broen (President and CEO), and Matt Taylor (CFO) presenting. The company continues to optimize Leismer and remains focused on capital efficient growth, return of capital, and continued efforts to further improve the company's ESG profile. We reiterate our Sector Perform rating and $3.50/share target price.

Details:

Thermal portfolio slated to deliver on near- to medium-term growth. Management remains confident in reaching 24 kboe/d by year-end and 28 kboe/d by mid-2024 at Leismer; Athabasca noted plans to redrill 4 wells near the end of the year to help drive growth to 28 kboe/d. The team reiterated it has regulatory approval for Leismer to grow to 40 kboe/d, though no formal plans for expansion at his point. The company plans to maintain current volumes at Hangingstone (roughly 8 kboe/d).
Corner provides long-term optionality. As noted earlier in the year (note here), management continues to outline Corner as a high quality asset with regulatory approval in place, which is unique in Canada. Management does not have near-term plans to develop the asset, but the team indicated that the first phase of a potential development plan would cost roughly $800 million to $1.0 billion on 40 kboe/d of volumes. Management noted that this would require external financing through a joint venture or other financing structures.
Light oil offers natural diversification. Athabasca currently guides for ~5,500 boe/d in Light Oil volumes and $25 million in capital spend for the year; management reiterated significant runway across the Kaybob Duvernay and Placid Montney. The company has a JV with Murphy Oil and reiterated that a bi-lateral agreement is required for all allocation decisions; management looks to find solutions toward ensuring capital can be efficiently allocated to these assets.
Delivering on FCF, returning capital to shareholders. Management remains confident in its 2023-25 outlook of ~$1B in cumulative FCF on a flat US$85/bbl WTI price deck (US$17.50/US$12.50 WCS differentials in 2023/2024-25). Athabasca is now poised to return 75% of excess FCF to shareholders through the NCIB and ensuring additional flexibility to support further debt repayments or pursuing high return growth projects. Furthermore, Athabasca provides significant torque to heavy oil and the potential cash flow outlook; a US$5/bbl difference in the WCS differential amounts to an $80 million impact on cash flows.
Entropy a key component of corporate ESG strategy. Athabasca's Entropy modular CCS project is awaiting additional fiscal clarity before the project is fully sanctioned. Entropy supports previously implemented technologies including non-condensable gas co-injection at Leismer and Hangingstone, along with 50% longer thermal oil development wells, supporting the company's 2025 emissions intensity targets of a 30% reduction from 2015 baseline levels.