Athabasca Oil's Exciting Q1 2025 Growth: Key Insights

Overview of Athabasca Oil Corporation's First Quarter Results

As the first quarter of the year unfolds, Athabasca Oil Corporation (TSX: ATH) has presented compelling results marked by remarkable operational performance. The company remains in a strong position with low corporate break-even points, extensive assets with long lifespans, and a solid financial foundation.

Corporate Results for Q1 2025

Athabasca’s average production reached an impressive 37,714 barrels of oil equivalent per day (boe/d), with liquids comprising an astonishing 98%. This represents substantial growth of 13%, equating to a remarkable 24% increase per share compared to the previous year.

The adjusted funds flow amounted to $130 million, translating to $0.25 per share – reflecting a 63% per share growth year-over-year. Cash generated from operational activities totaled $123 million, while the company proudly recorded a free cash flow of $71 million from its Thermal Oil segment.

Capital Investments

The total capital expenditure for the quarter stood at $63 million, with approximately $44 million allocated to advancing the significant 40,000 barrel per day growth project at Leismer.

Operational Highlights

The operational highlights of Q1 further showcase Athabasca's strengths:

• Leismer: Production reached approximately 28,000 bbl/d in April 2025, following the successful initiation of six redrills in the first quarter.
• Hangingstone: Production has surged to around 8,900 bbl/d in April 2025 after starting two well pairs, contributing to solid cash flow for the company.
• Duvernay Energy: Plans are in place for the completion of two multi-well pads to support production growth in the Kaybob Duvernay play.

Navigating Macro Volatility

In a landscape marked by shifts in global oil benchmarks and trade policies, Athabasca is well-prepared to navigate market fluctuations. The company boasts production that complies with USMCA agreements, making it exempt from tariffs.

Additionally, their balance sheet reveals a net cash position of $115 million and a total liquidity of $438 million, including $305 million in cash. With a long-term debt maturity extending to 2029 and approximately $2.2 billion in tax pools, Athabasca is positioned for continued stability and growth.

Asset Longevity

Athabasca’s low base corporate decline allows it to maintain a consistent production rate within its Thermal Oil operations. The company holds an extensive inventory that includes 1,209 million barrels of proven and probable Thermal Oil reserves and around 444 gross locations for future drilling within Duvernay Energy.

Flexible Capital Strategy

The capital projects have been described as flexible and economically viable, allowing Athabasca to adjust strategies as per the economic environment. The company is focused on achieving capital efficiency in its operations, emphasizing a sustainable investment approach.

Strategic Shareholder Returns

On March 17, the completion of Athabasca's second annual Normal Course Issuer Bid (NCIB), which returned $289 million to shareholders and canceled 55 million shares, demonstrates the company's commitment to providing value to its shareholders.

The renewed NCIB in 2025 allows for the repurchase of up to 50 million shares, with $94 million already allocated towards share buybacks this year, ultimately leading to a nearly 20% reduction in the fully diluted share count since March 31, 2023.

Looking Ahead: Corporate Guidance

Athabasca projects a production guidance of 33,500 to 35,500 bbl/d for its Thermal Oil segment, with plans for reaching 40,000 bbl/d through progressive growth approaches at Leismer. The overall consolidated production guidance remains positive, expecting to reach up to 39,500 boe/d by year-end as capital programs advance.

With an anticipated focus on maintaining a steady cash flow per share growth and strategic capital allocation, Athabasca is committed to maximizing its operational potential and shareholder value well into the future.

Frequently Asked Questions

What are the key highlights of Athabasca's Q1 2025 results?

Athabasca Oil reported a production of 37,714 boe/d, with an adjusted funds flow of $130 million, reflecting a 63% growth per share year-over-year.

How does Athabasca plan to manage market volatility?

The company maintains a strong balance sheet with low break-even points, allowing it to withstand fluctuations and ensuring compliance with USMCA for tariff exemptions.

What is the status of Athabasca's capital expenditures?

In Q1 2025, Athabasca invested $63 million, with a significant focus on the growth project at Leismer, which is projected to reach 40,000 bbl/d capacity.

What strategies is Athabasca employing for shareholder returns?

Athabasca has executed its second NCIB, returning $289 million to shareholders and aims to continue buybacks in 2025, targeting a maximum repurchase of 50 million shares.

What does the future look like for Athabasca's production guidance?

The company has provided a production outlook of 33,500-35,500 bbl/d for Thermal Oil and expects consolidated production could reach up to 39,500 boe/d by the year's end.

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