Transaction Overview
Duvernay Energy is a privately held subsidiary of Athabasca. Athabasca and Cenovus have contributed assets into Duvernay Energy combining Athabasca's existing Duvernay assets, Athabasca’s new 100% working interest Duvernay assets and Cenovus' 100% working interest Kaybob Duvernay assets. Athabasca owns a 70% equity interest in Duvernay Energy with Cenovus owning the remaining 30% equity interest. The Transaction closed on
The creation of Duvernay Energy is designed to enhance value for Athabasca's shareholders by providing a clear path for self-funded production and cash flow growth in the Kaybob Duvernay resource play. This will be achieved without compromising Athabasca’s capacity to fund capital in its Thermal Oil division or its return of capital strategy. Athabasca and Duvernay Energy have independent strategies and capital allocation frameworks.
Duvernay Energy will be managed by Athabasca through a management and operating services agreement.
Production. Current production is ~2,000 boe/d (75% Liquids) and 2024 production guidance is ~3,000 boe/d (75% Liquids). Development plans are underway and are expected to drive strong production momentum into 2025 with estimated production of ~6,000 boe/d.
Capital. The 2024 capital program is
Balance Sheet. Duvernay Energy’s capitalization includes
Growth Plans. The plan is to allocate 100% of Adjusted Funds Flow from Duvernay Energy to drive near-term production growth. Assuming a constructive commodity price outlook, Duvernay Energy has self-funded growth potential to ~25,000 boe/d (75% Liquids) by the late 2020s.
Operations Update. Duvernay Energy recently rig released a two well pad (100% working interest) at 03-18-64-17W5 with an average horizontal length of ~4,150 meters per well. Completion operations are planned for Q1 2024 with on-stream timing at the end of Q2 2024. A three well pad (30% working interest) is expected to spud in February with completions and tie-in to follow in the spring. Activity through the fall is anticipated to drive strong momentum into 2025.
Athabasca’s Thermal Oil division underpins the Company’s strong free cash flow outlook, with an unchanged
2024 Guidance | Original Budget | 100% Thermal Oil | Duvernay Energy Corporation2,3 | |||
Maintained | ||||||
Production (boe/d) | 35,000 – 36,000 | 32,000 – 33,000 | ~3,000 | |||
Capital Expenditures ($MM) | ||||||
Adjusted Funds Flow ($MM) | ||||||
Free Cash Flow ($MM) | - |
2 Duvernay Energy reflects gross production and financial metrics before taking into consideration Athabasca’s 70% equity interest
3 Duvernay Energy capital program funded by seed capital and Adjusted Funds Flow forecast
Capital Allocation Framework
In 2023, Athabasca completed
Athabasca is committed to executing on its 2024 return of capital commitment with 100% of Free Cash Flow returned to shareholders through share buybacks. The Company intends to renew its Normal Course Issuer Bid with the
Excluding its 70% equity interest in Duvernay Energy, Athabasca forecasts Adjusted Funds Flow of
Athabasca anticipates releasing its 2023 year-end results and reserves on
Footnote: Refer to the “Reader Advisory” section within this news release for additional information on Non‐GAAP Financial Measures (e.g. Adjusted Funds Flow, Free Cash Flow, Excess Cash Flow,
1 Pricing Assumptions: 2024
About
For more information, please contact:
Chief Financial Officer | President and CEO |
1-403-817-9104 | 1-403-817-9190 |
mtaylor@atha.com | rbroen@atha.com |
Reader Advisory:
This News Release contains forward-looking information that involves various risks, uncertainties and other factors. Within this Reader Advisory, references to the “Company” means
With respect to forward-looking information contained in this News Release, assumptions have been made regarding, among other things: commodity prices; the regulatory framework governing royalties, taxes and environmental matters in the jurisdictions in which the Company conducts and will conduct business and the effects that such regulatory framework will have on the Company, including on the Company’s financial condition and results of operations; the Company’s financial and operational flexibility; the Company’s financial sustainability; the Company’s funds flow, and free cash flow outlook; the Company’s ability to obtain qualified staff and equipment in a timely and cost-efficient manner; the applicability of technologies for the recovery and production of the Company’s reserves and resources; future capital expenditures to be made by the Company; future sources of funding for the Company’s capital programs; the Company’s future debt levels; future production levels; the Company’s ability to obtain financing and/or enter into joint venture arrangements on acceptable terms; operating costs; compliance of counterparties with the terms of contractual arrangements; impact of increasing competition globally; collection risk of outstanding accounts receivable from third parties; geological and engineering estimates in respect of the Company’s reserves and resources; recoverability of reserves and resources; the geography of the areas in which the Company is conducting exploration and development activities and the quality of its assets. Certain other assumptions related to the Company’s Reserves are contained in the report of
Actual results could differ materially from those anticipated in this forward-looking information as a result of the risk factors set forth in the Company’s Revised Annual Information Form (“AIF”) dated
Also included in this News Release are estimates of the Company’s 2024 Outlook which are based on the various assumptions as to production levels, commodity prices, currency exchange rates and other assumptions disclosed in this News Release. To the extent any such estimate constitutes a financial outlook, it was approved by management and the Board of Directors of Athabasca, and is included to provide readers with an understanding of the Company’s outlook. Management does not have firm commitments for all of the costs, expenditures, prices or other financial assumptions used to prepare the financial outlook or assurance that such operating results will be achieved and, accordingly, the complete financial effects of all of those costs, expenditures, prices and operating results are not objectively determinable. The actual results of operations of the Company and the resulting financial results may vary from the amounts set forth herein, and such variations may be material. The financial outlook contained in this New Release was made as of the date of this News release and the Company disclaims any intention or obligations to update or revise such financial outlook, whether as a result of new information, future events or otherwise, unless required pursuant to applicable law.
Oil and Gas Information
“BOEs" may be misleading, particularly if used in isolation. A BOE conversion ratio of six thousand cubic feet of natural gas to one barrel of oil equivalent (6 Mcf: 1 bbl) is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. As the value ratio between natural gas and crude oil based on the current prices of natural gas and crude oil is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.
Reserves Information
The McDaniel Report was prepared using the assumptions and methodology guidelines outlined in the COGE Handbook and in accordance with National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities, effective
Non-GAAP and Other Financial Measures, and Production Disclosure
The “Adjusted Funds Flow”, “Free Cash Flow”, “Excess Cash Flow” and “Sustaining Capital” financial measures contained in this News Release do not have standardized meanings which are prescribed by IFRS and they are considered to be non-GAAP financial measures. These measures may not be comparable to similar measures presented by other issuers and should not be considered in isolation with measures that are prepared in accordance with IFRS.
Adjusted Funds Flow and Free Cash Flow are non-GAAP financial measures and are not intended to represent cash flow from operating activities, net earnings or other measures of financial performance calculated in accordance with IFRS. The Adjusted Funds Flow and Free Cash Flow measures allow management and others to evaluate the Company’s ability to fund its capital programs and meet its ongoing financial obligations using cash flow internally generated from ongoing operating related activities. Adjusted Funds Flow is calculated by adjusting for changes in non‐cash working capital and settlement of provisions from cash flow from operating activities. The Free Cash Flow measure is calculated by subtracting Capital Expenditures from Adjusted Funds Flow.
Source:
2024 GlobeNewswire, Inc., source