Athabasca Oil Corp. has completed the sale of non-core light oil assets in Placid, Saxon and Simonette to an undisclosed private company for $118.6 million (C$160 million) in cash before closing adjustments.
The assets in the transaction were Athabasca’s 70 percent operating interest in Placid targeting the Montney shale play, its 30 percent non-operating working interest in Saxon and Simonette targeting the Duvernay play, and other associated non-core assets of Placid Montney, the company said in a press release Thursday. During the first half of the year, assets collectively stood at about 3,000 barrels of oil equivalent per day (boepd), which were about 45 percent liquids. The effective date of the transaction is March 1, according to the statement.
The transaction, which was announced in July, was completed “with attractive and accretive metrics, and crystallizes the value of assets that have become non-core due to smaller scale, lower liquid content and the lower relative returns compared to the company’s core assets.portfolio,” Athabasca said.
The Athabasca Light Oil Division now consists exclusively of Duvernay in the Greater Kaybob area with approximately 155,000 gross acres in Kaybob West, Kaybob North, Kaybob East and Two Creeks. The Company plans a Duvernay activity that is expected to offset production from the transaction and support the Company’s multi-year free cash flow outlook. Athabasca said it is “uniquely situated” in the play’s liquids-rich oil window with an unrisked inventory of about 500 crude wells.
Athabasca expects its annual production to be within its previous guidance of 34,500 to 36,000 boepd, adding that the strong performance of the company’s assets to date, including the recent addition of five new sustaining well pairs, is expected in Leimer, it will offset the production. associated with the transaction in the company’s original guidance, according to the release.
Meanwhile, Athabasca said its strong balance sheet gives it significant flexibility for future capital allocation opportunities, forecasting liquidity of approximately $307.4 million (CAD 415 million), including approximately 240.7 million dollars (325 million CAD) in cash, at the end of September.
Athabasca said it is committed to executing its capital return commitment by 2023, which will see a minimum of 75 percent of excess cash flow returned to its shareholders through share buybacks. Since April, the company has completed approximately $59 million (CAD 80 million) in share repurchases, about 25 million shares at an average price of $2.36 (CAD 3.19) per share.
Earlier, Athabasca reported net income of $43 million (CAD 57.1 million) for the second quarter of 2023, up 21.2 percent from $35.5 million (CAD 47.1 million ) of the corresponding quarter of last year. The company’s free cash flow in the second quarter was $30.3 million (C$40.2 million), up 19.7 percent from $25.33 million (C$33, 6 million CAD) in the second quarter of 2022. Cash flow was supported by structurally stronger weighted spreads from Western Canadian Select averaging $15. per barrel in the second quarter, the company said.
Athabasca reported production of approximately 34,000 boepd, consisting of about 29,000 barrels per day of thermal oil and about 5,000 boepd of light oil, according to an earlier news release.
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