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.

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Athabasca Oil Corp

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Post by retiredcfon Feb 07, 2024 9:24am

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Post# 35867119

RBC

February 6, 2024

Athabasca Oil Corporation Duvernay Energy Transaction Closed

TSX: ATH | CAD 4.15 | Outperform | Price Target CAD 5.50

Sentiment: Neutral

Athabasca announced the close of its recent spin-out of Duvernay Energy Corporation (DEC), in which Athabasca/Cenovus (covered by RBC Capital Markets Analyst Greg Pardy) hold a 70%/30% working interest in the company's Kaybob Duvernay assets. The company reiterated its initial guidance for DEC, and provided a brief operational update. Both DEC and Athabasca's corporate guidance remain unchanged; we expect a neutral reaction to the release and will be looking for incremental detail with year-end results scheduled for February 29th, after market close.

Details:

• Core thermal business updates. Athabasca reiterated its thermal production guidance of 32,000-33,000 boe/d driven by an unchanged $135 million capital budget. At Leismer, the company is currently steaming well pairs at Pad L8 South and infills on Pad 7; further, Athabasca remains on track to commission its facility expansion in the spring and reach ~28,000 bbl/d by mid- year. At Hangingstone, the company expects to spud two 1,400 meter well pairs in Q3/24 to support base production into 2025.

• DEC operational updates. DEC recently rig-released a two well Duvernay pad at Kaybob (average lateral length of ~4,150 meters) with the company planning to complete the wells in Q1/24, bringing them on-stream at the end of Q2/24. Management also highlighted a three-well pad (30% w.i.) is expected to spud in February with completions and tie-in to follow this spring. Guidance for the assets remains unchanged with 2024 volumes of 3,000 boe/d, ramping to 2025E volumes of ~6,000 boe/d; capital guidance remains unchanged at $82 million supporting 12 (7.1 net) Duvernay wells.