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Athabasca Oil Corporation (ATH.TO)
Toronto - Toronto Real Time Price. Currency in CAD
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Hi Terry, thanks for reaching out and your support. I am not sure you have seen our updated presentation (attached for convenience). I have had a few questions on hedges today and its worth highlighting:
- We have line of sight to further and significant deleveraging in the near-term in the current price environment
- US$175MM or 50% term debt reduction target will be achieved in 2023 (US$70 flat WTI); significant value will attribute back to equity holders as they will own a bigger portion of the pie and low leverage drives higher valuation multiples
- The hedge program designed to: 1) fixed price swaps protect sustaining capital program down to US$50 WTI, and 2) additional collars/puts allow for meaningful upside participation; see 2022 funds flow sensitivity below
- The near-term 75% hedge target optically looks high, but we net off internal light oil production (natural hedge to what we consume in Thermal) and it’s pre-blending in Thermal; it actually works out to ~50% hedged on a sales basis; once we achieve our debt targets the hedges will drop to 25-50%
Hope this additional color helps.
Why is ath falling? Now at 1.06 from 1.14 today
The gloom and doomers have had their day. ATH did not go BK, and they are going to pay down debt to nothing in two years. What comes next? How about a 60 cent dividend on a 1.08 stock? Impossible you say? No way, they will still have free cash flow left to expand production. How long can this last? How about 50 years? The greens have created permanent under investment in production by telling the executives they are going to be put out of business, in 15 years, 10 years, 5 years, you name the slogan, it changes every day.
$120 oil here we come in six months. As Covid fades, airlines are coming back and there simply is not enough spare global production to fuel them at the prior levels of flights. What is ATHs FCF at $120 WTI? Over $1.50 a share, easily.
So, tuck your shares away in a TFSA and collect those dividends in the future, all tax free. If you have to cash out at some future price of $10 a share, that's tax free too.
I would advocate purchasing some new production say 15000 boe/day to have a total of 50000 boe/day
imagine the cash flow for the next few years.
I sent a email to the CFO asking when they will do something for the shareholder. This was his response:Hi Terry,
This refinancing is vey positive for our company and go forward operating results. Lower debt = lower interest costs = higher free cash flow. Our prior instrument was US$450MM and the new instrument is US$350MM. We are prioritizing further material debt reduction with free cash flow in the near term and will be in a net negative leverage position in early 2023 at current commodity prices. This will unlock significant value for shareholders!
Stay tuned for a corporate strategic update on closing of the refinancing (Oct 22) and our Q3 results on Nov 3 aftermarket.
Have a nice thanksgiving long weekend
The ramp to $1.50+ is coming! WTI oil in a strong technical position to reach $90ish very soon
The overhang of concern about debt refinancing has been addressed and will be closed out as of October 22nd. Oil is blowing through $80/barrel. So it seem that the solid rocket boosters have been lit on the stock with one of the highest potential torque to oil pricing. It’s go time.
I figured they would get the deal done and I figured it would not be fantastic terms. Right on both accounts. I know oil companies are worst that the plague, but a 9.75% annual return is pretty good compensation alone for a secured investment. Throw in the major warrant sweetener and the private placement firm must be pretty happy. On the other side, hard to swallow as an ATH investor, but I suppose that is the market we are in.
Hedging at $75 WTI looks possible going forward. The company will be out of debt by next June. The share price will be over $2 by then. A resonable dividend that starts after that of 25 cents share will take the stock to $5. The biggest risk is being bought out cheap, #$%$ years from now it could be $10 a share with a 50 cent dividend. Really nice for a retirement plan or education fund. BUY.
Some new money must be coming in.. or.. a certain fund manager has finally dumped some or all of his 10%
Would be nice if 80 dollar oil is the new floor, that's ~450million in FCF for a year!
back on ice for two more year, it would have been nice to see this thing break out with an oil cycle...who cares now
What are we anticipating for earnings here ?
Very balanced approach securing until 2026 yet leaving open many many options.
Wish they were more aggressive on debt but that option is still available.
All in all looking forward is looking good now esp. when/if you look back at 2020!..
At these oil prices we will be headed for cash flows equaling 75% of the market cap of outstanding shares. Immediate share buybacks makes huge sense.
As soon as it goes to $1.13 I'm selling.
Terrible management here By lack of any major news. A note that significant in size being due that short , you’d think this would be done already , or at least updates on the progress. I’m long here but really disappointed
Like Christmas morning as a 9
Year old kid
I suspect Nuttal has been dumping his 10% at $1 for some time now. He admitted he was switching to the big caps the other day. It takes a while to unload 45 million shares.
Is Nuttall selling this and buying back into BTE? Yes
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