Summary
Athabasca reported solid Q1 results. Production was close to expectation and will increase. The balance sheet is extremely sound. Profit was as expected. Athabasca is profitable and has a medium PE. Athabasca is robust under low oil prices. The shareholder returns in 2025 are at a decent level and will increase after 2026. Athabasca is robust at low oil prices,
In my 85 oil and gas companies ranking Athabasca ranks in the top 10 at a high 7th position.
Production
• Athabasca production has been flat over the last six years. However, in order to monetize its extensive reserves (445 M BoE), Athabasca is gearing up for a major production increase over the next five years.
• Q1 production (37.7 K BoE/d) was at the low end of the guidance (37.5-39.5 K BoE/d) and just above Q4 (37.2 K BoE/d). It was a bit lower than the 38.0 K BoE/d that I had expected.
• Production consisted of heavy oil from Leismer and Hangingstone (34.7 K BoE/d) and lighter oil, NGL and gas (2.9 K BoE/d) from the Duvernay.
• Production will grow at Leismer and in the Duvernay, whilst production from Hangingstone will remain flat.
• Athabasca did not provide a Q2 outlook. I expect 39 K BoE/d. Production in April was 40 K BoE/d.
• Athabasca reiterated its 2025 outlook of 37.5-39.5 K BoE/d with an exit rate of 41.0 K BoE/d. Athabasca expects production to be at the upper end of the 2025 outlook
• I expect a 2025 production of 39.0-39.5 K BoE/d, 7% above 2024 (36.8 K BoE/d).
• Athabasca is targeting a production of 55-62 K BoE/d for 2029. This is 50% above 2025 levels. I am aligned with this 2029 outlook.
- athabasca - production.jpg (55.84 KiB) Viewed 129 times
Balance sheet
• The Athabasca balance sheet is very strong
• The Q1 equity ratio (=equity/balance sheet total) was a high 76.0%, up 0.7% from the already high 75.3% in late 2024.
• Long-term debt at the end of Q1 (C$ 196 M) was flat versus late 2024 (C$ 196 M).
• The Q1 debt/EBITDA ratio on an annual basis is a very low 0.35.
• I expect the equity ratio to remain high and the debt/EBITDA ratio to fall further.
• The balance sheet allows generous returns to shareholders.
Profitability
• Athabasca is a profitable company.
• Q1 eps, excluding impairment reversals and non-cash hedging results, was C$ 0.14. I had expected an eps of C$ 0.13.
• The Trans Mountain pipeline have had a positive effect on the realized bitumen prices.
• Royalties are a low 5.0-6.0%. Leismer will remain pre‐payout from a royalty perspective until late 2027, Hangingstone until 2030+.
• For 2025 with WTI = US$ 60-65/bbl I expect an eps of C$ 0.47-0.54. The PE is a medium 8.4-9.6. This is inclusive a 5% reduction of oil and gas prices due to the US import tariffs.
• In 2029 the eps can reach C$ 0.49-0.59 (PE=7.6-9.3). The eps increase due to higher production is dampened by higher royalty rates.
• Athabasca is robust under low oil prices.
- athabasca - profit.jpg (53.02 KiB) Viewed 129 times
• Athabasca wants to returns 100% of the FCF in 2025 to shareholders.
• Athabasca does not pay dividends. All shareholder returns are made through means of share buybacks. Q1 share buybacks were C$ 94 M.
• 2025 returns at $ 60-65/bbl can be equivalent to a decent 8-9%%.
• After 2025, still with an oil price of US$ 60-65/, share buybacks can increase to a high 11-14% per year.
• Shareholders returns can continue under low oil price scenarios.
- athabasca - returns.jpg (43.56 KiB) Viewed 129 times
Athabasca reported solid Q1 results. Production was close to expectation and will increase. The balance sheet is extremely sound. Profit was as expected. Athabasca is profitable and has a medium PE. Athabasca is robust under low oil prices. The shareholder returns in 2025 are at a decent level and will increase after 2026. Athabasca is robust at low oil prices,
In my 85 oil and gas companies ranking Athabasca ranks in the top 10 at a high 7th position.