Bullboard - Stock Discussion Forum 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... see more

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TSX:ATH - Post Discussion

Athabasca Oil Corp > RBC

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Post by retiredcf on Sep 12, 2024 8:25am

RBC

Their upside scenario target is $7.00. GLTA

September 11, 2024

Athabasca Oil Corporation
Highlights from RBC Desk Presentation

Our view: Our constructive stance towards Athabasca reflects its solid operating performance, strong balance sheet and 100% payout of (thermal) free cash flow to shareholders. We are maintaining a Sector Perform recommendation on Athabasca and our one-year price target of $6.00 per share.

Key points:

Athabasca Oil presented today to RBC Capital Markets’ Sales & Trading team, with Rob Broen (President & CEO) and Matt Taylor (CFO) in attendance. The discussion delved into a number of topics including strategic priorities, the company’s favorable balance sheet positioning and growth opportunities. Please see Page 2 for the highlights from the presentation.

Free Cash Flow. We peg Athabasca’s free cash flow (excluding the Duvernay Energy minority interest and A&D) at approximately $337 million in 2024E (US$79 WTI, US$13.96 WCS-WTI) under our base outlook and $252 million under futures pricing (US$75 WTI, US$15.29 WCS-WTI).

Relative Valuation. Under futures pricing, Athabasca is trading at debt- adjusted cash flow multiples of 5.0x in 2024E (vs. our oil sands weighted peer group avg. of 5.7x) and 6.8x in 2025E (vs. our peer group at 6.2x) and free cash flow yields of 9% (vs. our peer group at 11%) in 2024E and 3% (vs. our peer group at 8%) in 2025E. We think that Athabasca should trade at an average/modest discount valuation vs. our peer group given its strong balance sheet, favorable operating momentum, partly offset by its limited scale.

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