2024 Budget Highlights
Capital Program. Athabasca is planning capital expenditures of
Profitable and Sustainable Growth. The Company plans to grow production to ~37,500 boe/d by year-end 2024, representing ~14% growth from year-end 2023. Annual production guidance is 35,000 – 36,000 boe/d (~98% Liquids). Growth will be weighted to the second half of the year with the Leismer expansion project expected to be completed mid-year and
Managing for Strong Free Cash Flow. Athabasca anticipates generating
Exposure to Improving Heavy Oil Pricing. Athabasca anticipates tightening of the WCS heavy differentials from current levels as the Trans Mountain Expansion pipeline (590,000 bbl/d) commences operations in 2024. Every
Financial Resiliency. Athabasca’s long reserve life assets and strong balance sheet provide resiliency. The Company estimates 2023 year-end Liquidity of
Footnote: Refer to the “Reader Advisory” section within this news release for additional information on Non‐GAAP Financial Measures (e.g. Adjusted Funds Flow, Free Cash Flow, Net Cash, Liquidity) and production disclosure.
1 Pricing Assumptions: 2024
Return of Capital Update
Athabasca commenced its return of capital commitment to shareholders in 2023 through an inaugural share buyback program. Since April, the Company has completed
In 2024, Athabasca plans to allocate 100% of Free Cash Flow to shareholders through share buybacks. The Company anticipates completing its current Normal Course Issuer Bid on
Capital Efficient Growth at Leismer
Production is expected to increase to ~28,000 bbl/d mid-year through a facility expansion project and the ramp-up of eight behind pipe wells that recently commenced steaming operations. This production level can be held with modest sustaining capital (
The Company will drill an additional eight wells in 2024. Drilling is expected to commence in January with four redrill wells on Pad 4. Redrills target low-risk bypassed pay on mature pads with strong expected capital efficiencies of
Leismer has regulatory approved capacity for 40,000 bbl/d. The Company is operationally ready to execute phased expansions to reach this capacity within approximately three years at competitive capital efficiencies. These future growth projects will be contingent on less volatile WCS heavy differentials that are expected with the completion of the Trans Mountain Pipeline Expansion. Future expansions are expected to provide a continuous growth profile at the asset that is well within corporate cash flow and the Company will maintain its return of capital commitment and focus on balance sheet strength.
Hangingstone Sustaining Operations
Activity at Hangingstone will include drilling two sustaining well pairs utilizing modern ~1,400 meter lateral length design with expected capital efficiencies of
Kaybob Duvernay Drilling
The Company is beginning activity to accelerate the value of its asset position in the
At Kaybob East and Two Creeks, the Company has extended production history from 27 wells derisking an inventory of 290 gross future locations. The wells have consistently supported the Company’s type curve expectations with IP365’s averaging ~550 boe/d per well, ~85% Liquids (latest 12 wells since 2020) demonstrating the significant potential of the asset. The area continues to be active with industry drilling programs underway.
Strategic Positioning
Athabasca is focused on driving shareholder value through strong multi‐year cash flow per share growth. The Company’s long life, low decline asset base provides a platform to drive profitable liquids weighted growth supported by financial resiliency to execute on return of capital initiatives.
Pre-payout Thermal Oil Differentiation. Strong margins and Free Cash Flow are supported by a Thermal Oil pre-payout Crown royalty structure, with royalty rates between 5 – 9% anticipated to last into 20271. Leismer has regulatory approved capacity of 40,000 bbl/d. In addition, Athabasca has a fully de-risked asset at Corner which also has regulatory approval for 40,000 bbl/d with reservoir quality equivalent to or better than Leismer. The Company has updated its Corner development plans and is prepared to explore external funding options with stability in commodity prices.
Light Oil Optionality. Athabasca has exposure to ~155,000 gross
Excellent Exposure to Commodity Upside. Athabasca maintains excellent exposure to upside in commodity prices with 25% of rolling 12-month production volumes hedged in accordance with its debt agreements. The Company has hedged ~9,000 bbl/d in Q1 2024 with an average WTI collar of
Differentiated Tax Pools. The Company has
Emissions Reduction and Carbon Capture. The Company has a target of a 30% reduction in emissions intensity by 2025 from 2015 levels. Athabasca has also partnered with
About
For more information, please contact: | ||
Chief Financial Officer | President and CEO | |
1-403-817-9104 | 1-403-817-9190 | |
mtaylor@atha.com | rbroen@atha.com |
Reader Advisory:
This News Release contains forward-looking information that involves various risks, uncertainties and other factors. All information other than statements of historical fact is forward-looking information. The use of any of the words “anticipate”, “plan”, “forecast”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “target”, “should”, “believe”, “predict”, “pursue”, “potential”, “view” and “contemplate” and similar expressions are intended to identify forward-looking information. The forward-looking information is not historical fact, but rather is based on the Company’s current plans, objectives, goals, strategies, estimates, assumptions and projections about the Company’s industry, business and future operating and financial results. This information involves known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information. No assurance can be given that these expectations will prove to be correct and such forward-looking information included in this News Release should not be unduly relied upon. This information speaks only as of the date of this News Release and, except as required by applicable securities laws, the Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. In particular, this News Release contains forward-looking information pertaining to, but not limited to, the following: the Company’s 2024 capital expenditures, production and financial guidance, 2024-26 Free Cash Flow outlook, financial metrics for Thermal Oil projects, timing for development projects in Thermal Oil and Light Oil Divisions, return of capital strategy, timing for future cash taxes, and other matters.
With respect to forward-looking information contained in this News Release, assumptions have been made regarding, among other things: commodity prices; the regulatory framework governing royalties, taxes and environmental matters in the jurisdictions in which the Company conducts and will conduct business and the effects that such regulatory framework will have on the Company, including on the Company’s financial condition and results of operations; the Company’s financial and operational flexibility; the Company’s financial sustainability; Athabasca's funds flow, and free cash flow outlook; the Company’s ability to obtain qualified staff and equipment in a timely and cost-efficient manner; the applicability of technologies for the recovery and production of the Company’s reserves and resources; future capital expenditures to be made by the Company; future sources of funding for the Company’s capital programs; the Company’s future debt levels; future production levels; the Company’s ability to obtain financing and/or enter into joint venture arrangements, on acceptable terms; operating costs; compliance of counterparties with the terms of contractual arrangements; impact of increasing competition globally; collection risk of outstanding accounts receivable from third parties; geological and engineering estimates in respect of the Company’s reserves and resources; recoverability of reserves and resources; the geography of the areas in which the Company is conducting exploration and development activities and the quality of its assets. Certain other assumptions related to the Company’s Reserves are contained in the report of
Actual results could differ materially from those anticipated in this forward-looking information as a result of the risk factors set forth in the Company’s Revised Annual Information Form (“AIF”) dated
Also included in this News Release are estimates of Athabasca's 2024 Outlook which are based on the various assumptions as to production levels, commodity prices, currency exchange rates and other assumptions disclosed in this News Release. To the extent any such estimate constitutes a financial outlook, it was approved by management and the Board of Directors of Athabasca, and is included to provide readers with an understanding of the Company’s outlook. Management does not have firm commitments for all of the costs, expenditures, prices or other financial assumptions used to prepare the financial outlook or assurance that such operating results will be achieved and, accordingly, the complete financial effects of all of those costs, expenditures, prices and operating results are not objectively determinable. The actual results of operations of the Company and the resulting financial results may vary from the amounts set forth herein, and such variations may be material. The financial outlook contained in this New Release was made as of the date of this News release and the Company disclaims any intention or obligations to update or revise such financial outlook, whether as a result of new information, future events or otherwise, unless required pursuant to applicable law.
Oil and Gas Information
“BOEs" may be misleading, particularly if used in isolation. A BOE conversion ratio of six thousand cubic feet of natural gas to one barrel of oil equivalent (6 Mcf: 1 bbl) is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. As the value ratio between natural gas and crude oil based on the current prices of natural gas and crude oil is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.
Initial Production Rates
Test Results and Initial Production Rates: The well test results and initial production rates provided in this News Release should be considered to be preliminary, except as otherwise indicated. Test results and initial production rates disclosed herein may not necessarily be indicative of long‐term performance or of ultimate recovery.
Reserves Information
The McDaniel Report was prepared using the assumptions and methodology guidelines outlined in the COGE Handbook and in accordance with National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities, effective
Reserve Values (i.e. Net Asset Value) is calculated using the estimated net present value of all future net revenue from our reserves, before income taxes discounted at 10%, as estimated by McDaniel effective
The 500 gross total
Non-GAAP and Other Financial Measures, and Production Disclosure
The “Adjusted Funds Flow”, “Free Cash Flow”, and “sustaining capital” financial measures contained in this News Release do not have standardized meanings which are prescribed by IFRS and they are considered to be non-GAAP financial measures. These measures may not be comparable to similar measures presented by other issuers and should not be considered in isolation with measures that are prepared in accordance with IFRS. Net Debt/Cash and Liquidity are supplementary financial measures.
Adjusted Funds Flow and Free Cash Flow are non-GAAP financial measures and are not intended to represent cash flow from operating activities, net earnings or other measures of financial performance calculated in accordance with IFRS. The Adjusted Funds Flow and Free Cash Flow measures allow management and others to evaluate the Company’s ability to fund its capital programs and meet its ongoing financial obligations using cash flow internally generated from ongoing operating related activities. Adjusted Funds Flow is calculated by adjusting for changes in non‐cash working capital and settlement of provisions from cash flow from operating activities. The Free Cash Flow measure is calculated by subtracting Capital Expenditures from Adjusted Funds Flow.
Net Debt/Cash is defined as the face value of term debt, plus accounts payable and accrued liabilities, plus current portion of provisions and other liabilities less current assets and excluding risk management contracts.
Liquidity is defined as cash and cash equivalents plus available credit capacity.
Production volumes details
This News Release makes reference to Athabasca's forecasted total average daily production between 35,000 - 36,000 boe/d for 2024. Athabasca expects that approximately 91% of that production will be comprised of bitumen, 2% shale gas, 6% tight oil, 0% condensate natural gas liquids and 1% other natural gas liquids.
Liquids is defined as bitumen, tight oil, light crude oil, medium crude oil and natural gas liquids.
Source:
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