Changes are coming at Athabasca Oil Corp. that will affect everything from its remote northern oilfields to its Calgary boardroom, new CEO Tom Buchanan vowed Friday.
“Over the last month my time has been spent reviewing the assets, the organization, the business plan, listening to shareholders’ concerns and formulating plans needed to deliver strong results and gain back shareholder confidence,” Buchanan said on a conference call.
The company will focus on its two key assets going forward— its Duvernay shale play in northwestern Alberta and its Hangingstone thermal oilsands project in northeastern Alberta — while strengthening governance by adding two new independent directors, Buchanan said.
Sveinung Svarte, who helmed the company since 2006, turned his role as president and chief executive over to Buchanan, the former board chairman, when the third quarter ended on Sept. 30. Svarte is now vice-chairman of the board in charge of business development opportunities.
The company’s shares have fallen from more than $18 in 2011 to a Thursday close of $3.19.
In August, Athabasca completed the much-delayed sale of its 40 per cent stake in the Dover oilsands project to a Canadian unit of PetroChina for $1.184 billion, relieving worries about its ability to fund future growth.
Buchanan said Athabasca now has balance-sheet strength, but he emphasized that doesn’t mean it will spend money as it has in the past.
“As many of you are painfully aware, our Montney program of a few years ago underperformed expectations relative to the number of wells that were drilled,” he said.
“As an early-stage resource play, it is critical to assess the results in conjunction with the pace of development. Quite simply, we were overzealous and did not take the time to understand the results.”
He said the company has new operational leadership and will take a more measured approach as it develops the Duvernay play, spending between $10 million and $15 million per winter drilling season.
Athabasca announced more than a year ago it would seek a Duvernay joint venture, and Svarte said last March he intended to announce a joint-venture partner by July. Buchanan said Friday the company is still willing to take on a partner but will offer no further comment or timeline unless a deal is done.
The company reported a net loss of $20 million and cash flow of $7.2 million for the third quarter, compared with a loss of $30 million on negative cash flow of $5.3 million in the year-earlier period.
Production from its light oil division was 6,400 barrels of oil equivalent per day (51 per cent liquids), up from 5,600 (48 per cent liquids) in the third quarter of 2013. Chief operating officer Rob Broen said its second half average would be toward the lower end of its 6,000 to 6,500 boe/d guidance.
AltaCorp Capital analyst Nick Lupick said in a note to investors that the third-quarter results were neutral to his outlook and the next major news of investor interest will come near the end of the first quarter of 2015, when Athabasca plans to begin steaming at the 12,000-barrel-per-day Hangingstone project. First production is expected about six months later.
He said third quarter production was in line with expectations, adding cash flow per share of two cents beat AltaCorp’s estimate of negative two cents and consensus of negative one cent.
dhealing@calgaryherald.com
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