Athabasca Oil Corp T.ATH

BMO

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BMO Capital Markets analyst Randy Ollenberger first described energy sector earnings as listless but then unveils some extremely positive cash flow expectations for next year,

“Second quarter results have come and gone and the Canadian oil and gas group has delivered relatively listless share price performance since, largely due to range-bound oil prices. Q2 results were generally in line (or slightly better) than expectations and debt levels continued to fall, translating to more cash in shareholders pockets. The outlook for Q3 is generally positive, with most companies having completed major turnarounds during Q2. However, oil markets continue to grapple with the competing narratives of weakening demand and Middle East unrest. We are not expecting oil prices to move higher anytime soon, but that is OK; we think the group could generate roughly $21 billion of free cash flow in H2/24 compared to $15.2 billion in H1/24. This could grow to $42.3 billion in 2025, with the majority of that ($36.7 billion) being returned to shareholders. That translates to a compelling delivered yield of 10% … At the current strip, we anticipate our coverage group will generate $27.6 billion of free cash flow in 2025 (7.4% yield), returning $26.3 billion of that to shareholders (7% yield). We expect Athabasca, Canadian Natural, Cenovus, and MEG as being the best-suited for returning cash to shareholders amongst the oil-weighted producers in 2025, with the natural gas levered equivalents being ARC and Tourmaline”