Athabasca Oil Corp T.ATH

I want to hear plans with their Great Gobs of Cash

[Rational43]

WIth the great gobs of cash piling up in their coffers, and an even greater pile coming next year when hedges expire, I'd love to see them take the "Nutall Pledge", and codify a return of capital model based on FCF after capex required to keep production flat.  

I'd prefer to see it heavily on Share buybacks at these absurdly cheap prices, but a promise to return 50% of FCF through share buybacks and dividends, and the remainder to reduce debt  would lead to a massive share price jump in this name.  

The market won't react well to increased spending to increase production, unless its tied to a model like this.

[bosstrade]

Agree

[Mindset]

It would be a wonderful surprise if they planned to buyback shares next year, but my gut tells me their focus will be on paying down debt targeting 0.5xD/CF.  Whatever FCF leftover will be carryfoward into 2023, or used to cover increased production targets or costs. It would be great to get an update on Pad L6+L7, and maybe even L8, as well as production guidance overall.  I can also

[ManitobaCanuck]

I agree they should keep debt at 100mill or so and tell the bank to GFY . Plan a NCIB for 5% every year for 3 years to take out the 15% shares dilued by warrants. Approx 30mill needed for NCIB every year . ITs cheaper to buyback the debt which is being paid at 9.75%

[MigraineCall]

If you came this far, and still believe that ATH has a bigger upside than 9.75% per year, it would be most efficient to spend the very first dollars earned to buy back as many shares as soon as possible at a lower level, before starting to pay down the debt. Once debt is paid down, then pay out dividends. The share buybacks and debt repayment should not be too long of a wait with the current FCF.

[ManitobaCanuck]

Your strategy might be good if you expect multi year oil bull market . If Oil crashes again  then we are stuck .Remember banks are difficult to deal with when u have long debt.

[MrICE]

Will be interesting to see how much info they give us now and how much they save for financials on November 3rd 

[Rational43]

Their long term debt will be $350M until the notes are paid off in 2026, but they can certainly keep their line at zero.  I didn't catch whether the notes have an early redemption provision, it would be good if they did.   Their net debt is going to exit 2021 at $225M, meaning they'll have the notes, and $125M cash on hand. ATH should generate ~ $250M FCF at $80 WTI in

[Mindset]

Would love a substantial issuer bid. But that would probably happen in 2023 once they provide guidance for the 2023. Follow that up with NCIB once the SIB is completed.  I wouldn't want a dividend unless the stock is fairly valued. 

[ComradeKomissar]

ATH should generate ~ $250M FCF at $80 WTI in 2022.   Oh I think it is a lil' more than that. Quite a lil' bit more.

[Rational43]

$250M is Free cash flow, after capital investment to sustain production, at $80. That's half their market cap. Every $5 WTI is worth anothe $70M FCF. Not having to pay taxes for a decade or two is awesome.

[ComradeKomissar]

Say wut?