Athabasca Oil Corporation Takes Further Actions in Response to the Current Environment

CALGARY, Alberta, April 02, 2020 (GLOBE NEWSWIRE) -- Athabasca Oil Corporation (TSX: ATH) (“Athabasca” or the “Company”) is taking further immediate actions in response to the significant decline in global oil prices to bolster balance sheet strength and corporate resiliency.

Shut-in of Hangingstone Asset

Due to the significant decline in oil prices combined with the economic uncertainty associated to the ongoing COVID crisis, Athabasca has decided to suspend the Hangingstone SAGD operation. This suspension was initiated on April 2, 2020 and will involve shutting in the well pairs, halting steam injection to the reservoir, and taking measures to preserve the processing facility and pipelines in a safe manner so that it could be re-started at a future date when the economy has recovered.

The Hangingstone asset has an operating break-even of approximately US$37.50 Western Canadian Select and this action is expected to significantly improve corporate resiliency in the current environment.

As part of this action, Athabasca is reducing its corporate staff count by 15%. Hangingstone was Athabasca’s first operated oil sands project that began construction in 2013 and was commissioned in 2015. The Company would like to thank all staff that have worked hard over the years to bring this asset on stream. It is unfortunate that made-in-Alberta assets like Hangingstone cannot continue operations under current prices.

Revised 2020 Guidance

Annual corporate guidance is 30,000 – 31,500 boe/d and reflects a ~2,500 boe/d reduction related to the shut-in. The Company is prepared to self-curtail additional production volumes as required by the price environment. Production optimization initiatives will be aimed at maximizing corporate funds flow while maintaining the integrity of booked reserves.

Athabasca has now cancelled a total of $40 million of capital expenditures, representing a 30% reduction from the original 2020 budget. The revised $85 million budget includes the recent completion of its winter Light Oil program (10 Montney wells and 16 Duvernay wells). The Company has no additional Light Oil activity planned for the balance of the year. The Company already had a minimal capital program in place and has no additional capital requirements to sustain its remaining liquids weighted production base.