ATH Status and outlook 1-3 months.Why I own ATHABASCA OIL Corp.
1. Debt 162M USD as indicated by the ATH CEO -- 10% x162 = 16.2 Approx -- 16.2x1.36 = 22M in annual interest payments. Divide 22M CAD by 1,200,000,000 in Sales and this is 1.8% of sales. This means less than seven days of sales to cover the annual interest expense to carry the debt. LOWEST in the INDUSTRY. ATH is Fully DELEVERED..... TVE is about 25 days.
2. Cash on hand is at the level it was before they did the debt refinancing. This is absolutely an achievment in managing the company and no firm in the sector has 400M++ Liquidity for 1.2B in Sales. Absoltely no firm!!!!
3. Production and Sales have not skipped a beat because the new production assets are producing 4,200 BPD EST. versus the loss of 2,500 BPD from the asset sale on September 14, 2023.
4. Last year Q3 had over 37K++ in BPD production. This year in Q3 it could be similar. We will watch out for this soon.
5. As of September 14, 2023 ATH had repurchased 25M shares for 80M CAD Cash Outlay YTD starting April 1, 2023. The target for 2023 has been reduced to 140M CAD from 150M CAD so easier to achieve in the next 86 days, This is important I will admit.
6. I expect in the latest price surge ATH bought back more shares than they were or the cash is on hand and now with the price dip they can use that cash to buy and retire shares. Good for supporting the price at this level.
7. Even with the price correction ATH is still generating about 900,000 CAD everyday in Cash Flow or more depending on BPD Output.
8. I think most or all of the CAPEX and Maintanenance costs for 2023 have been spent so a higher amount of FREE CASH Flow is being generated in SEPT and into Q4. This gives ATH a lot of freedom on what to do with that money. The CEO talks about that in the video. They are essentially unencumbered as a firm.
9. Warrants should be gone after the recent share price rise. We will have what we have soon and hence the importance of share buybacks in 2023 and beyond.
Conclusions:
ATH still undervalued. 4.60 target once this selloff subsides.
ATH has one of the best management teams in Canada
Because of the Management the firm sits with a clean and solid balance sheet for Q4 and 2024.
A price rally cometh soon. This time to 4.60.