Athabasca Oil Company is promoting its non‐core mild oil belongings for $120.45 million (CAD 160 million) in money to an undisclosed personal firm, previous to changes, in a transfer to cut back debt.
Athabasca has agreed to promote its 70-percent operated working curiosity in Placid concentrating on the Montney shale play, its 30-percent non‐operated working curiosity in Saxon and Simonette concentrating on the Duvernay play, and different related non‐core Placid Montney belongings, the corporate mentioned in a information launch Monday. Within the first half of 2023, the belongings collectively averaged round 3,000 barrels of oil equal per day (boed), which had been round 45 p.c liquids, it mentioned.
The transaction is efficient March 1 and is anticipated to shut late within the third quarter, topic to customary situations, together with receipt of regulatory approvals underneath the Competitors Act of Canada, Athabasca mentioned.
Athabasca mentioned the belongings being offered generated important free money movement following the COVID disaster, supporting the corporate’s deleveraging targets. The transaction is being accomplished “at enticing and accretive metrics, and crystallizes the worth of the belongings which have turn out to be non‐core because of the smaller scale, decrease liquids content material and decrease relative returns versus core belongings throughout the firm’s portfolio”, Athabasca mentioned.
In the meantime, Athabasca is executing an growth venture at its cornerstone Leismer asset that can drive progress to twenty-eight,000 barrels per day (bpd) in mid‐2024 and is conserving its choices open for extra growth tasks that might assist Leismer progress to its regulatory-approved capability of 40,000 bpd, it mentioned. Athabasca’s thermal oil division has 1.2 billion barrels of proved plus possible reserves, the corporate mentioned.
After the transaction, Athabasca’s mild oil division will now consist solely of Duvernay within the Larger Kaybob space with round 155,000 gross acres throughout Kaybob West, Kaybob North, Kaybob East, and Two Creeks.
The corporate’s three way partnership has seen over $1 billion in invested capital since 2016, it mentioned within the information launch.
Athabasca mentioned it’s “uniquely positioned within the liquids‐wealthy and shallower oil window” of the Duvernay play with a de‐risked stock of round 500 gross wells. The corporate expects further growth within the play within the upcoming drilling season and past. The Duvernay asset “additionally offers a synergistic pure hedge for condensate and fuel utilization in its thermal oil operations”, the corporate mentioned.
Second Quarter Earnings
In a separate launch, Athabasca reported manufacturing of roughly 34,000 boed, consisting of round 29,000 bpd of thermal oil and round 5,000 boed of sunshine oil. The corporate’s mild oil amenities had been briefly shut‐in throughout Could as a consequence of wildfires in Alberta. No harm was sustained and manufacturing was totally restored in June, it mentioned. The corporate is sustaining annual steerage of 34,500 boed to 36,000 boed, underpinned by a manufacturing enhance at Leismer all through the rest of 2023.
Athabasca reported a web revenue of $43 million (CAD 57.1 million) for the second quarter of 2023, up 21.2 p.c from $35.5 million (CAD 47.1 million) within the corresponding quarter final yr. The corporate’s free money movement for the second quarter was $30.3 million (CAD 40.2 million), growing 19.7 p.c from $25.33 million (CAD 33.6 million) within the second quarter of 2022. Money movement was supported by structurally stronger Western Canadian Choose (WCS) heavy differentials averaging $15 per barrel within the second quarter, Athabasca mentioned.
Wanting ahead, Athabasca expects the availability‐demand outlook for heavy barrels to be supported by continued OPEC+ manufacturing cuts, the beginning‐up of the Trans Mountain Enlargement pipeline with a 590,000 bpd capability, and the beginning‐up for brand new international heavy oil refining capability, particularly Pemex’s Dos Bocas 340,000 bpd refinery. These components are anticipated to enhance the power of WCS costs into the second half of 2023 and 2024, the corporate mentioned.
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