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An Athabasca Oil Corp. operation. (Lenny Lane/Athabasca Oil Corp.)

An Athabasca Oil Corp. operation.

(Lenny Lane/Athabasca Oil Corp.)

Schizas’ Mailbag

Wait for a bottom with this oil producer Add to ...

Hi Lou,

Been watching ATH for a while now for an entry point, and was wondering what your take on it is at this time?

Thanks,

Matt

Hey Matt,

Thanks for the assignment.

Athabasca Oil Corp. has taken a balanced approach to developing its assets with a light oil division and a thermal oil division. I love the thermal oil framing for what at one time was called steam assisted gravity drainage. The company also changed its name from Athabasca Oil Sands in an effort to take the focus off the side of their business that is under pressure. In my day tar sands pretty much nailed the venue, but in the current environment I suppose you have to make it prudy!

More Related to this Story

ATH released its 2013 capital expenditures budget on Dec. 17, 2012, when it announced $789-million would be applied to their efforts. The light oil side of the business would receive $236-million of the allocation and the thermal oil side $533-million. The company expects to exit the first half of 2013 with production of between 11,000 – 13,000 barrels of oil equivalent per day. Management’s strategic vision is to drive production to 220,000 boed by 2020.

A review of the information present in the charts will help determine if there is a good entry point at these levels.

The three-year chart indicates that things haven’t been rosy since 2011 with a short but profitable pop in 2012. What should be of concern is the failure to hold support at $10.00. We are now in the process of trying to find support where it has never existed before. The message here is be cautious! In addition, the MACD and RSI are not indicating a trend reversal at this time.

The six-month chart provides a close up of the selling pressure that has plagued ATH since October. Make note of the MACD and RSI which will have to do some work to give us a better indication that the sellers have been washed out and that buyers are taking control of the market.

The best path at this point is be patient and see if this downtrend is coming to an end. It is always better to confirm the bottom than to anticipate it.

Make it a profitable day and happy capitalism!

Have your own question for Lou? Send it to lschizas@globeandmail.com.

 

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