CALGARY, ALBERTA–(Marketwired – Jan. 31, 2017) – Athabasca Oil Corporation (TSX:ATH) (“Athabasca” or the “Company”) is pleased to announce the closing of the Thermal Oil asset acquisition from Statoil Canada Ltd. (“Statoil”) establishing the Company as an intermediate oil weighted growth company with a low decline production base. The acquisition complements Athabasca’s strategy and positions the Company for strong growth and financial sustainability:
- Light Oil: Defined and Material Growth – A scalable operated Montney position and funded Duvernay development through the joint venture with Murphy Oil Company Ltd.
- Thermal Oil: Leverage to Oil Prices – A large low decline asset base accelerates free cash flow generation with future low risk expansion options.
- Financial Sustainability – Maturing cash flow profile with strong sustainability metrics. A diverse asset base provides flexibility in future capital allocation decisions.
The acquired assets include the producing Leismer lease, delineated Corner lease and strategic regional infrastructure. Consideration consisted of $431 million cash (after closing adjustments), 100 million common shares and at prices above US$65/bbl WTI annual contingent value payments ending in 2020. The effective date of the acquisition is January 1, 2017.
Leismer immediately drives a larger cash flow base and accelerates the Company’s transition to sustainable free cash flow generation which is expected in 2018 at strip prices. The asset averaged approximately 23,500 bbl/d in Q4 2016 (field estimate) and the Company intends to maintain a stable production base for the foreseeable future. Over the next five years, the Company estimates that Leismer will generate free cash flow in excess of $575 million and $375 million under US$60/bbl WTI and strip commodity forecasts (Dec. 30, 2016). The assets are resilient to lower oil prices with a current operating break-even of approximately US$44/bbl WTI.
The acquisition enhances Athabasca’s financial position and the Company is actively advancing plans to optimize its capital structure. This will include the establishment of a new reserve based credit facility and the term out of the Company’s existing second lien notes with a new term debt instrument for which it has already secured a $125 million anchor commitment. These initiatives are expected to be completed in Q1 2017.
Throughout 2016, Athabasca executed a number of strategic transactions aimed at securing a funding model for its core plays and monetizing long dated resources. These transactions have helped Athabasca transform into a unique intermediate oil company with meaningful exposure to several of the largest resource plays in Western Canada.
About Athabasca Oil Corporation
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, the Company has amassed a significant land base of extensive, high quality resources. Athabasca’s common shares trade on the TSX under the symbol “ATH”. For more information, visit www.atha.com.