Athabasca Oil Corporation (ATH) has executed an amending Hangingstone Transportation and Storage Services Agreement (TSSA).
The amended TSSA resulted in a $44 million prepayment from restricted cash and a ~$5 million reductions to annual tolls.
The amended TSSA reduces Hangingstone’s dilbit financial assurances by ~$44 million to ~$27 million.
The reduction in financial assurances unlocked restricted cash on Athabasca Oil's balance sheet that was concurrently used to fund the amending prepayment.
There is no change to Athabasca Oil's unrestricted cash balance that is expected to grow from $141 million on March 31, 2021, to ~$210 million at year-end. The transaction is effective as of May 7, 2021, and the deal is now closed.
As previously released with Athabasca Oil's first-quarter results, Athabasca executed a commercial arrangement with an industry-leading marketing company to construct a truck-in terminal at no cost to Athabasca.
Operations are expected to commence in July with up to 5,000 bbl/d of third-party truck-in capacity.
The additional volumes are expected to generate up to $5 million in annual savings through a processing fee and by leveraging existing volume commitments under Athabasca’s transportation agreements.
Inclusive of both transactions, Hangingstone’s cost structure is expected to be reduced by up to $10 million annually.
Hangingstone now has improved resiliency and profitability with an estimated US$31.50/bbl WCS operating break-even. Athabasca Oil's corporate operating break-even is approximately US$43/bbl WTI including these transactions.
Athabasca Oil Corporation is a Canadian energy company with a focused strategy on the development of thermal and light oil assets.
Situated in Alberta’s Western Canadian Sedimentary Basin, it has amassed a significant land base of extensive, high-quality resources.
Athabasca Oil Corporation (ATH) is down 2 per cent and is trading at C$0.74 at 1:35 pm ET.