CALGARY, Dec. 17, 2013 /CNW/ – Athabasca Oil Corporation (TSX: ATH) (“Athabasca” or “the Company”) announces its initial 2014 capital budget. Athabasca’s board of directors approved a capital budget of $460 million, comprised of $348 million for Thermal Oil, $106 million for Light Oil and the remainder for Corporate activities, excluding capitalized general and administrative costs and interest.
Athabasca is committed to capital discipline. The Company has undertaken a comprehensive review of its exploration and development priorities with a view to balancing capital expenditures with funding. Accordingly, the completion of Hangingstone Project 1 and Duvernay drilling and completion are the focus of the Company’s 2014 budget.
Athabasca’s growth strategy is to develop its considerable resources with joint venture partners. The Company seeks to put in place such partnerships in both its Light Oil and Thermal Oil assets. Athabasca looks forward to receiving government approval for the Dover Commercial Project, at which time it has the opportunity to exercise a $1.32 billion put option with PetroChina. Athabasca will review its capital spending program as any of the aforementioned events transpire. Athabasca will not sanction any new projects until funding is secured.
The 2014 capital budget is presented in the table below. The primary components of the budget consist of:
- Hangingstone Project 1: $225 million;
- Hangingstone Regional Infrastructure and Production Support: $58 million;
- Hangingstone Expansion: $45 million for regional activities and to advance the regulatory approval;
- Duvernay: $76 million, includes the drilling of two wells and the completion and tie-in of four wells;
- Light Oil Other: $30 million for Montney which includes capital for the recently announced two well program and general costs primarily made up of lease rentals, production optimization and certain facilities capital.
|Athabasca Oil Corporation Initial 2014 Capital Budget|
|Thermal Oil Division||$||348|
|Hangingstone Project 1 (1)||225|
|Hangingstone regional infrastructure and
|Light Oil Division (2)||$||106|
|(1) Approximately $30 million carryover from 2013
(2) Approximately $20 million carryover from 2013
The Company continues to build its organization to effectively execute its light oil development strategy. Athabasca announces a new Vice-President, Light Oil, Kevin Smith reporting directly to the Chief Operating Officer, Rob Broen. Kevin has 25 years of experience leading large resource plays in the United States and Western Canada including Horn River, Montney and the Duvernay.
The Company’s average production expected during the first quarter of 2014 is in the range of 6,000 to 6,500 barrels of oil equivalent per day (boe/d).
With a continued focus on liquidity, Athabasca has taken a number of steps to enhance its capacity to meet current commitments. On December 16, 2013 Athabasca exercised its option to sell a 50% interest in the Kaybob area light oil infrastructure to a third-party for cash consideration of $145 million. Closing of this transaction is anticipated in the first quarter of 2014.
Athabasca retains a 50% interest in its light oil pipeline and other infrastructure assets in the Kaybob area and remains operator of both the Kaybob and Simonette infrastructure assets. The Company has the pipeline capacity needed for the next several years of light oil production growth. This sale is not expected to impact the formal Duvernay joint venture process launched by Athabasca in the third quarter of 2013. Interest in the Duvernay asset is strong and the Company expects the process to conclude in 2014.
On December 16, 2013, the Company entered into an amended and restated credit agreement with a syndicate of financial institutions to replace its existing $200 million credit facilities. The credit facilities, totaling $350 million, consists of $200 million which is available on a revolving basis until December 31, 2014 and which may be extended for 364 day revolving periods, and a $150 million credit facility which has a maturity date of December 31, 2014. The debt to earnings before interest, taxes, depreciation and amortization (EBITDA) covenant has also been extended and will not take effect until December 31, 2014. The principal amount of the additional $150 million credit facility will be reduced to $100 million on August 1, 2014 and to $50 million on November 1, 2014, if the facility has not been previously repaid and cancelled.
“We will only undertake new project commitments when we have the necessary funding to complete them,” says Sveinung Svarte, President and CEO. “This 2014 budget focuses on successfully completing Hangingstone Project 1 to demonstrate that it can reach production of 12,000 bbl/d. We are also excited about our continued Duvernay drilling and completion program designed to unlock the potential that exists on our vast land position.”
All figures are in Canadian dollars.
Conference Call and Webcast, December 17, 2013
7:30 am Mountain Time (9:30 am Eastern Time)
A conference call to discuss the 2014 capital budget will be held for the investment community and media on December 17, 2013 at 7:30 a.m. MT (9:30 a.m. ET). To participate, please dial 1-888-231-8191 (toll-free in North America) or 1-647-427-7450 approximately 15 minutes prior to the conference call. An archived recording of the call will be available from approximately 12:30 p.m. ET on December 17, 2013 until midnight on December 31, 2013 by dialing 1-855-859-2056 (toll-free in North America) or 1-416-849-0833 and entering conference password 99376454.
An audio webcast of the conference call will also be available via Athabasca’s website, www.atha.com or via the following URL: http://www.newswire.ca/en/webcast/detail/1257307/1385773.
About Athabasca Oil Corporation
Athabasca Oil Corporation is a dynamic, Canadian energy company with a diverse portfolio 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. With 10.6 billion barrels of bitumen resources (contingent resources, best estimate) and growing light oil production, Athabasca is positioned to become a major oil producer. Athabasca’s common shares trade on the TSX under the symbol “ATH”. For more information, visit www.atha.com.
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,” “continue”, “estimate”, “expect”, “may”, “will”, “should”, “believe”, “predict”, “pursue” and “potential” 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 financial strategies and 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. In particular, this News Release may contain forward-looking information pertaining to the following: the Company’s ability to secure funding for its projects; estimated average production rates for the first quarter of 2014 and long term production goals; the anticipated timing of the completion of the regulatory process in respect of the Hangingstone Expansion; the timing of the construction of the facilities and infrastructure related to the Hangingstone Project 1; the Company’s capital expenditure programs; expected timing of first steam into HangingstoneProject