Athabasca Oil Corp T.ATH

RE:RE:RE:RE:RE:RE:RE:RE:90.21 CAD WCS Wonderful

[cahclick]

riski wrote: So you're saying you invest on the basis of loyalty (something has been good to you) and unsubstantiated "beliefs"? That's not an investment thesis. That's a hope and a prayer.

I am long CAD O&G because the macro data indicates a supply shortage and increasing demand that looks to continue for the next 3-4 years at a minimum with supply being held in check by green policy. The green movement has created an incredible opportunity for O&G with many of these companies left for dead ("Oil is dead" - Elizabeth May, 2020), though the easy money has already been made. However, there is more money to squeeze from this energy bull.

So ATH will benefit from my thesis as it is an oil name with good assets and relatively cheap operations. I expect the share price to go up, but not for the reasons being cited on this board. The current share price is already anticipating single digit heavy spread. That better happen or there will be a lot of selling. It is wise to consider that it not happen because there are a lot of nuances to the heavy oil market that cannot simply be summarized as "there is a discount becuase of lack of egress". 

I do like heavy oil operators and my favourite is MEG energy which has also had a nice run with the anticipation of narrower spreads. MEG has great managment, ideal assets and is probably the number one CAD target for a takeover, likely by CVE. They have been very disciplined coming out of the pandemic and have transformed the company from an overleveraged pig to a lean, low debt operation with a markedly reduced share count. A+ for management.

ATH is second tier due to their smaller size and lower asset quality, but still a solid choice to ride this energy bull. My biggest knock on ATH is management gifts themselves too many shares. It's painful to take the risk of investing in O&G, have the company buy back millions of shares with the FCF earned through the risk you have taken only to have them turn around and give all those shares out to themselves each year.

My other two favourites are HWX - a growth monster, and BTE due to its extreme value at current share price/production after the merger. 

Good luck to everyone. There is still much money to be made in CAD O&G.

cahclick wrote:

riski wrote: It is rather naive, though not unique, to think we have some secret insight or have done some smart analysis that will impact a company's share price in a way that the rest of the market is not seeing. It's a retail investor's fatal flaw and the reason that retail traders lose on most of their trades. 

Can we really believe that there is no one else anticipating TMX completion and further hasn't pulled out a calculator to determine the impact of the cash flows that a narrowed differential will bring?  After all, there are thousands of financial professionals, each getting paid millions of dollars to come up with ideas and perform such analyses so their firms can make billions. Yet somehow we have a secret insight into the future price action right here on Stockhouse for a pipeline completion that has been telegraphed for years. In reality, this is baked into everyone's analysis and investment decisions already and institutions were all over it months ago which is why the price has moved like it has this year.

The market looks forward 9 months. Retail investors struggle with this concept which is why they are frequently surprised and end up selling low and buying high. Right now, smart investors are contemplating things like the summer 2024 driving season and various data inputs that might affect demand next year's summer demand. Unknowns like the middle east war an Russia are mixed in with new projections being dialed into spreadsheets almost instantly as new information comes out. TMX and a narrower heavy differential is not new and has been sitting on those spreadsheets for a long time. 

What we should be thinking is what happens if TMX is delayed further? What happens if the heavy spread stays wide for some market reasons not yet determined or known? Those are negative inputs that are quite possible. In fact, TMX/heavy differential news that negatively affects the share price is more likely at this point than positive TMX imputs since those cash flows are already being anticipated.

If any of that surprises the market, look out below. 

What will move the share price up is continued strong oil prices which are not baked in at all....to any CAD producer. The market seems to be pricing for $60-70 WTI. So the longer the price stays high, the more cash flow we will receive which can be allocated to buybacks and dividends which will force an eventual re-rate. A spike to $90 is fun, but the market doesn't give that any credit unless it stays high for a prolonged period of time.

It's all about the area under the curve.

MLEWICKIMBA wrote: Disagree 

There is nothing built into the price on ATH for TMX because there is no financial benefit right now.

$5.00 USD move om WCS is $80M CAD for ATH.

$24 USD Spread right now.  When it goes to $12 USD that means $192M CAD per annum potentially in extra cash flow at Current Production.  

Therefore for ATH it means being able to redeem 40M shares per year every year or conduct periodic SIBs.

The stock will move to 8 bucks by December 2024.

This is not built into ATH or any other heavy oil producer.

Do you think ATH management is happy with $4.24?

Happy weekend.

ML

 

riski, I don't know how you go about investing if you believe what you wrote.

ATH has been really good to me and I personally think there's still lots of room to run yet.

My belief is every sector has its day in the sun and oilcos are having their day right now. The trick is to buy in when sentiment is darkest and step off the train when the talking heads are screaming "to the moon".

Anyway, good luck to you

glta longs

go ath go

 

 

When I bought into ATH it was pennies per share.
I didn't get the bottom but close enough for me (sentiment at it's darkest). I'm currently up 25x.
My " hope and a prayer " thesis seems to be working.

glta longs

go ath go