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Athabasca Oil narrows loss in third quarter, revenue down

An Athabasca Oil Corp. operation.

Lenny Lane/Handout

Athabasca Oil Corp. reported a narrower net loss for the third quarter and said its Hangingstone oil sands projects – a development for which the company has been hoping to find a joint venture partner – is moving ahead as planned.

The net loss of $11.8-million marked an improvement over the $13.2-million Athabasca lost last year. On a per-share basis, the loss amounted to 3 cents a share in both quarters.

Total revenue came it at $5.1-million, down from $6.5-million during the third quarter of 2011.

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The Calgary-based company's financial results show smaller losses on equity investments and income taxes for the quarter compared to the year earlier period.

Athabasca said in August it was in the early stages of forming a joint venture for its Hangingstone and Birch oil sands properties.

The news followed reports that Kuwait's state-owned petroleum company was looking to invest as much as $4-billion in an oil sands partnership.

Athabasca did not confirm who the potential partner was.

Hangingstone, 20 kilometres southwest of Fort McMurray, Alta., is expected to start producing oil in late 2014. Athabasca says the property has the potential to produce more than 80,000 barrels a day.

Early engineering work for the first 12,000 barrel-per-day phase of Hangingstone is complete, and Athabasca's board of directors is expected to formally decide whether to move ahead with the project next month.

Athabasca chief executive officer Sveinung Svarte said in a release that winning regulatory approval for Hangingstone was a "significant milestone" for his company.

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The Birch property, 105 kilometres northwest of Fort McMurray, Alta., is not as far along in its development. Athabasca plans to submit a regulatory application later this year for its first 12,000 barrel per day phase. It says Birch has the potential to produce 155,000 barrels a day.

Athabasca would use steam-assisted gravity drainage technology to extract the bitumen at both sites. SAGD involves injecting steam deep underground, making the bitumen thin enough to flow to the surface through a pipe.

Athabasca has also been testing new technology using electrical cables to heat the bitumen, eliminating the need for water.

Athabasca is no stranger to joint ventures. In 2009, Athabasca sold a 60 per cent interest in its MacKay River and Dover oil sands lands to PetroChina for $680-million.

Earlier this year, Athabasca exercised its option to sell the rest of MacKay River to PetroChina, making it the first oil sands operation to be fully controlled by a Chinese company.

The Dover project is expected to obtain regulatory approval early next year and once it does there will be a similar divestiture option that would see the remaining stake sold for $1.32-billion.

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Earlier this week, PetroChina reached a 50-50 deal with TransCanada Corp. to build a $3-billion pipeline connecting the MacKay and Dover projects to the Edmonton area.

Another Chinese state-owned outfit, China National Offshore Oil Company, has reached a deal to buy Nexen Inc. for $15.1-billion, which would give it full control of the Long Lake oil sands project in northern Alberta. Industry Minister Christian Paradis is set to decide whether that deal is of net benefit to Canada around mid-November, unless the review is extended.

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