Worker on an Athabasca Oil rig
The joint venture that Athabasca Oil Corp. must sign to help fund its long-term development plans remains out of reach, but management swears they're still in talks with potential partners.
On the company's year-end conference call Thursday, chief executive officer Sveinung Svarte would only say that Athabasca "continues joint venture discussions with world class E&P companies."
Now it's simply a matter of finding someone to take a stake in the company's Duvernay assets. Last quarter Mr. Svarte laid out his plans very clearly, noting that "we will have to take partners in the future" because the development costs are much too high for Athabasca to absorb on its own. For now, Athabasca's getting by using the cash injection from its high-yield debt offering late last year. At the end of 2012 the company's cash balance was $1-billion and 2013 capital expenditures of $800-million are expected to be funded from both this account and any light oil production.
Athabasca also hopes to bring in $1.3-billion from the put option on its Dover joint venture, but that deal is now hung up in regulatory matters. It's not clear what the holdup initiated by the Energy Resources Conservation Board is about, but there's a chance Athabasca will have to participate in a hearing at the end of April with a decision expected by early August. "We don't know full reasons for the statement of concerns," Mr. Svarte said.
At the moment the company is focusing on developing its capital intensive Hangingstone SAGD oil project. The first phase of this project is expected to produce 12,000 barrels of oil per day, and the second phase, to come onstream in 2017, will add an additional 40,000 barrels per day.
Until then production is being driven by Athabasca's light oil and gas reserves with mid-year guidance of 11,000 to 13,000 barrels per day. However, production was recently hindered by outages at Keyera's nearby gas plant, which forced Athabasca to slow down its operations. Thankfully the company has its high-yield cash injection to rely on.
Athabasca was close to signing a joint venture with partners from Kuwait and Spain in 2012 but the federal government's delay on its foreign takeover ruling for oil sands projects put everything on ice. But the company is hopeful again after Encana signed a $2.2-billion deal in December for a 49.9 per cent interest in 445,000 of its net acres in the Duvernay region.
(Tim Kiladze is a Globe and Mail Reporter.)
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Tim Kiladze