Athabasca Oil Corp T.ATH

RBC Preview

[retiredcf]

July 19, 2024

Athabasca Oil Corporation
2Q Preview—Dramatic Sequential Increase Expected in Bottom Line Results

TSX: ATH | CAD 5.32 | Sector Perform | Price Target CAD 6.00

Sentiment: Neutral

Athabasca Oil will report its second-quarter results after market close on Wednesday, July 24.

2Q Preview

RBC vs. Consensus (Analyst Survey): RBC sits slightly below Street consensus on FFO/share, while in line on production and capital spending.

Conference Call

• Time: TBA, Thursday, July 25. • Dial-in: TBA

FFO/share Production Capital Spending

RBC

$0.27
36,717 boe/d
$50 million

Street

$0.28
36,673 boe/d
$50 million

Note: Consensus estimates based on ATH’s sell-side analyst survey. FFO/share calculated upon RBC’s estimate for diluted shares outstanding. Source: Athabasca Oil, RBC Capital Markets estimates.

Observations

• Our second-quarter outlook for Athabasca incorporates production of 36,700 boe/d amid oil & liquids production of 36,100 bbl/ d (98% of equivalent production).

• At Leismer, we peg Athabasca’s second-quarter production at 26,500 bbl/d, with production rates of 7,000 bbl/d at Hangingstone.

• We peg second-quarter oil & liquids realizations at about $78/bbl, amid operating costs of $11/bbl and an 11% royalty rate.

• On the shareholder returns front, our outlook factors in $77 million of share repurchases in the second-quarter.

• All said, our second-quarter FFO estimate for Athabasca sits at $150 million ($0.27 per share) with an estimated free funds flow (before working capital movements) of $100 million in the context of $50 million of capital investment. This compares with the company’s first-quarter FFO of $88 million ($0.15 per share).

[Maxmoe]

11 is our lucky number? $11 operating cost. 11% royalty. So why not $11 stock price. The daily buybacks are starting to gain traction. Flippers will get exhausted trying to get back in and we should see a nice gap up to$6 and change. And if $11 operating cost doesn't strike you as fantastic, how about their exploration/finding costs? How about zero?