Athabasca Oil sets 2026 capex budget at $310-million

Executive Summary

• Athabasca Oil Corp. announced its 2026 corporate consolidated budget, targeting capital expenditures of approximately $310 million and consolidated adjusted funds flow between $425 million and $450 million.
• The company reaffirmed its commitment to returning 100% of free cash flow from its thermal oil division to shareholders via share buybacks, aiming for greater-than-20% compounded annual cash flow per share growth to 2030.
• Significant operational updates include the Leismer expansion project (substantially complete end of 2026), strong initial production results from Duvernay Energy Corp. (DEC) pads, and secured long-term market access for 57,000 bbl/d of blended capacity.

Key Details

• 2026 Corporate Budget & Production:
  • Capital expenditures: ~$310 million.
  • Average production: 37,000 to 39,000 boe/d (98% liquids), inclusive of ~2,500 boe/d impact from planned turnarounds.
  • Exit rate: ~43,000 boe/d in H2 2026, driven by Leismer expansion.
  • Adjusted funds flow forecast: $425 million to $450 million.
  • Sensitivity: +$1/bbl WTI impacts 2026 adjusted funds flow by ~$10 million; +$1/bbl WCS impacts by ~$17 million.
• Thermal Oil Division (Athabasca) Highlights:
  • Capital budget: $273 million (includes $25 million turnaround capital).
  • Production guidance: 32,000 to 34,000 bbl/d (inclusive of ~2,250 bbl/d turnaround impact).
  • Leismer Expansion: $240 million capital program; includes 12 new wells at pads L10/L11 and facility expansion (steam generators, heat exchangers). Turnaround in May 2026. Project substantially complete end of 2026; production growth to 40,000 bbl/d by end of 2027. Capital efficiency ~$25,000/bbl/d.
  • Hangingstone: $17 million capital program; two-week turnaround in April. Production maintained at ~8,000 bbl/d.
  • Corner Growth: $16 million budget for project readiness. Phase 1 expected to be sanctioned in 2026 (contingent on macro environment). Phase 1 production growth starting 2029. Full development (40,000 bbl/d) capital efficiency $30,000–$35,000/bbl/d.
• Duvernay Energy Corp. (DEC) Highlights:
  • Capital budget: ~$38 million.
  • Production guidance: 4,500 to 5,000 boe/d (78% liquids), representing ~35% annual growth.
  • Recent Well Results:
    • 04-18 Pad (100% WI): Average IP30 of ~1,125 boe/d per well (90% liquids).
    • 16-27 Pad (30% WI): Average IP30 of ~1,040 boe/d per well (89% liquids); Average IP90 of ~945 boe/d per well (86% liquids).
  • Growth Plan: Self-financed via 100% of annual adjusted funds flow and balance sheet. Inventory of 444 gross wells; potential to reach >15,000 boe/d by 2030.
• Financial Position & Shareholder Returns:
  • Net cash position: $93 million (including ~$335 million cash).
  • Tax pools: $2.1 billion (including $1.6 billion immediately deductible non-capital losses).
  • Shareholder Returns: 100% of thermal oil free cash flow allocated to buybacks. ~$1.1 billion returned since 2021 ($386M debt reduction, $695M buybacks). 22% reduction in fully diluted shares at avg price $4.77.
  • Balance Sheet Target: Net debt to adjusted funds flow < 0.5x long-term.
• Market Access:
  • Secured 57,000 bbl/d of blended long-term capacity outside Edmonton.
  • Includes 47,000 bbl/d to U.S. Gulf Coast (PADD III) and 10,000 bbl/d to U.S. Midwest (PADD II).
  • Egress secured at competitive rates without balance sheet encumbrances.
• Management Changes:
  • Appointment of Paul Vander Valk as Vice-President, Projects and Well Delivery.

Notable Quotes

• "Athabasca Oil Corp. has set its 2026 budget, with capital projects driving profitable growth within its core assets, along with a continued return of 100 per cent of free cash flow to shareholders."
• "Advancing attractive capital projects concurrently with a strong focus on share buybacks results in a greater-than-20-per-cent compounded annual cash flow per share to 2030 and beyond."