Athabasca Oil Corporation Reports First Quarter 2015 Financial and Operating Results

by ahnationtalk on May 12, 2015467 Views

May 12, 2015

CALGARY – Athabasca Oil Corporation (“Athabasca” or the “Company”) (TSX: ATH) is pleased to report its first quarter 2015 financial and operating results.

Highlights from the quarter and recent accomplishments:

  • Achieved a significant milestone commencing well pair steaming at Hangingstone in late March. Construction of Hangingstone Project 1 was completed on schedule with a final cost estimate between $740 – $750 million, which is within approximately 5% of the sanctioned budget;
  • First quarter Light Oil production averaged 5,877 boe/d exceeding guidance of 5,000 boe/d;
  • Light Oil capital expenditures totaled $77 million in the first quarter. Athabasca’s 2014/15 winter drilling program concluded in March and the Company has now held 95% of its core 200,000 acre Duvernay land position into the intermediate term;
  • In early March the Company received $303 million from Brion Energy Corporation (“Brion”) as payment on the first of three promissory notes issued to the Company by Brion. As of March 31, 2015, Athabasca had over $1.1 billion of funding in place1 including approximately $660 million of cash, cash equivalents and short-term investments; and
  • Athabasca completed a cost structure review and has reduced costs in most areas including a reduction in the size of its head office workforce by approximately 50% since the beginning of 2014

Select Financial Information

As at and for the three months ended March 31, March 31,
($ Thousands, except per share and boe amounts) 2015 2014
Oil (bbl/d) 2,308 2,402
Natural gas (Mcf/d) 18,126 20,021
Natural gas liquids (bbl/d) 548 560
Total (boe/d) 5,877 6,299
Oil ($/bbl) $46.75 $89.70
Natural gas ($/Mcf) 2.79 6.23
Natural gas liquids ($/bbl) 25.17 79.93
Realized price ($/boe) 29.35 61.12
Royalties ($/boe) (3.52) (8.87)
Operating expenses and transportation(1) ($/boe) (13.37) (15.30)
Light Oil Operating Netback(2) ($/boe) $12.46 $36.95
Petroleum and natural gas sales $15,511 $34,646
Midstream revenue 331 803
Royalties (1,861) (5,028)
Operating and transportation expenses (7,403) (9,478)
$6,578 $20,943
Funds Flow from Operations(2) $3,162 $9,468
Funds Flow from Operations per share (basic and diluted) $0.01 $0.02
Net loss and comprehensive loss ($25,112) ($21,346)
Net loss and comprehensive loss per share (basic and diluted) ($0.06) ($0.05)
Weighted average shares outstanding (basic and diluted) 402,393,806 400,950,225
Light Oil Division $79,241 $77,449
Thermal Oil Division 68,504 157,958
Assets held for sale 4,000
Corporate 1,708 1,455
Net proceeds from sale of investments 300,000
Net proceeds from sale of assets 56,153
Available Funding(2) 1,135,470 1,345,990
Net Debt(2) 68,005 (123,625)

Light Oil

Athabasca’s production averaged 5,877 boe/d (49% liquids) in the first quarter of 2015 exceeding guidance of 5,000 boe/d and compared to 6,299 boe/d (47% liquids) in the first quarter of 2014. Light Oil operating netbacks were $12.46/boe compared to $36.95/boe in the first quarter of 2014, primarily due to lower underlying commodity prices.

The Company deployed approximately $77 million of capital in Light Oil during the first quarter of 2015. The program was predominately focused on Duvernay land retention drilling in the Kaybob region and a Montney appraisal program at Placid.

Duvernay Overview

During the 2014/15 winter program, the Company drilled ten Duvernay wells (seven horizontals, three verticals) in the Greater Kaybob area. Two of these Duvernay horizontal wells were completed and tested. The Company elected to defer one of its program wells and completions operations on three Duvernay horizontal wells until the second half of the year in anticipation of lower service costs.

Over the past three drilling seasons Athabasca has drilled 20 wells (15 horizontals, five verticals) focused on retaining its core acreage, defining the thermal maturity windows and establishing confidence in reservoir performance. Approximately 95% of Athabasca’s core 200,000 acre land position at Kaybob is now held into intermediate term, allowing considerable flexibility in the pace of development going forward.

Duvernay Condensate Rich Gas Window

At Kaybob West, 8-34-62-20W5 was drilled in the condensate rich gas window offsetting strong results from Athabasca and industry. The 8-34 well was completed in Q4 2014 and brought on-stream in February, 2015. It had a restricted IP60 of 570 boe/d (61% liquids, 53⁰API) and is currently producing in excess of 525 boe/d. The well is being produced at a restricted rate with over 16 MPA casing pressure to enhance long term productivity. 8-34 offsets Athabasca’s 2-34-62-20W5 well, which has been on production since December 2012 with cumulative production in excess of 400 mboe (48% liquids, 52⁰API) and is currently flowing at approximately 300 boe/d with free liquids of approximately 100 bbl/mmcf.

At Saxon, 15-15-62-23W5 (50% working interest) was successfully completed in January, and is undergoing a planned soak period with an expected on-stream date in July.

Athabasca continues to gain confidence in the Kaybob West area with extended production data and offsetting industry activity. A number of large operators have commenced multi-well pad development adjacent to Athabasca’s acreage. The Company drilled a two well pad in Section 36-63-20W5 and demonstrated cost efficiencies. Both wells were rig released in approximately 35 days at a cost of approximately $5.9 million each. Completions operations on 8-36-63-20W5 and 1-36-63-20W5 have been deferred to the second half of 2015 in anticipation of lower service costs.

Duvernay Volatile Oil Window

Athabasca continues to be encouraged by its preliminary results in the volatile oil window. The 2014/15 winter program included four new wells (two horizontals, two verticals). At Simonette, 16-36-63-25W5 was completed in October, 2014. Following a planned soak period the well was placed on production in

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