Athabasca Oil's Record Cash Flow and Reserves Growth: A Beacon for Investors

Athabasca Oil Corporation (TSX: ATH) has announced its 2024 year-end results, showcasing record cash flow, a strong return of capital strategy, and significant reserves growth. The company's performance highlights its unique positioning in top-tier liquids-weighted assets, focusing on maximizing cash flow per share growth and investing in competitive projects alongside a return of capital framework.

Record Cash Flow and Production Performance

Athabasca reported a record Adjusted Funds Flow of $561 million ($1.02 per share), representing a 102% per share growth year over year. This impressive cash flow was driven by strong production performance across all assets, with annual production of 36,815 boe/d (98% Liquids), representing 7% (14% per share) growth year over year. The company achieved its upwardly revised annual guidance of 36,000 - 37,000 boe/d (July 2024), demonstrating its operational excellence and commitment to shareholder value.

Capital Program and Pristine Balance Sheet

Athabasca's capital program of $268 million was within its annual guidance of $270 million, with key investments in Leismer's expansion project and Duvernay development. The company maintained a Net Cash position of $123 million and Liquidity of $481 million ($345 million of cash), further solidifying its financial strength and flexibility.

Return of Capital Strategy

Athabasca allocated ~100% of its Free Cash Flow ("FCF") to return of capital in 2024, completing $317 million in share repurchases. This commitment to shareholders is part of the company's deliberate return of capital strategy, which has seen ~$400 million of debt reduction and ~$500 million in share buybacks since 2021. The company has reduced its fully diluted share count by ~18% since Q1 2023, further enhancing shareholder value.

Significant Reserves Growth

Athabasca's reserves growth in 2024 was a significant driver of its long-term production outlook. The company holds 1.3 billion boe of Proved Plus Probable ("2P") reserves and ~1 billion barrels of Contingent Resource (Best Estimate), representing a 35% per share increase from 2023. This growth is attributed to well design driving improved capital efficiencies, lower operating costs at both producing projects, and constructive heavy oil pricing. The increased reserves represent a ~30 year 1P and ~90 year 2P reserve life, indicating a strong long-term production outlook.

Athabasca's Duvernay Energy Corporation (DEC) 2P reserves increased by 170% to 73 mmboe, representing a NPV102 value of $614 million. This growth is attributed to establishing development on newly operated lands and accelerated development on previous land positions. DEC has an estimated 444 gross drilling locations (204 net) across its ~200,000 acre (gross) land base, providing a significant inventory for future development and production growth.

2025 Guidance and Free Cash Flow Outlook

Athabasca's 2025 capital program maintains its strong Free Cash Flow outlook, with unchanged production guidance of 33,500 - 35,500 bbl/d for its Thermal Oil division. The program includes tie-in of six redrills and four new sustaining well pairs on Pad 10 at Leismer, along with continued pad and facility expansion work for the progressive expansion to 40,000 bbl/d. For DEC, the 2025 capital program includes the completion of a 100% working interest three-well pad and the drilling and completion of a 30% WI four-well pad, along with spudding two additional multi-well pads in H2 2025. The Company forecasts consolidated Adjusted Funds Flow between $525 - $550 million, including $475 - $500 million from its Thermal Oil assets. Every +US$1/bbl move in West Texas Intermediate ("WTI") and Western Canadian Select ("WCS") heavy oil impacts annual Adjusted Funds Flow by ~$10 million and ~$17 million, respectively.

Athabasca Oil's record cash flow, strong return of capital strategy, and significant reserves growth position the company as a compelling investment opportunity in the energy sector. Its unique liquids-weighted asset portfolio, long-life reserves, and commitment to shareholder value make it an attractive choice for investors seeking exposure to top-tier assets and a strong long-term production outlook.