Athabasca considers Duvernay partner
One of the largest drilling rights holders in the Alberta Duvernay says it is considering taking on a joint venture partner there following a $1.18-billion investment by PetroChina in Encana Corp.’ s part of the play last week. Athabasca Oil Corp. said Monday it plans to invest $798 million overall in capital spending in 2013, with most of that going to its thermal oilsands projects.
“With the Duvernay results coming in, with the industry interest in the Duvernay increasing a lot lately, it’s a place with our 350,000 net acres (140,000 hectares), we will have to take partners in the future, just too much cost,” chief executive Sveinung Svarte said on a conference call with analysts.
“But we’re going to wait now over the next half year, to see how the type curves play out so we actually know the real value.”
Athabasca aims to spend $236 million in its Alberta light oil division in 2013, but most of that — 60 per cent — will go to its Montney acreage.
It said it will assess its first three Duvernay wells’ performance and decline rates during the next six to nine months before establishing a development strategy for the play.
Having achieved its 2012 exit rate of more than 10,000 barrels of oil equivalent per day, the company is guiding to 11,000 to 13,000 boe/d by June 30, with a possible increase in spending in the second half if warranted. Athabasca had nothing to report on the long-awaited quest to sign joint venture partners in two thermal oilsands projects.
It said it will spend $533 million in 2013 to advance thermal oilsands projects, including construction of the recently sanctioned 12,000-barrel-per-day first phase of its Hangingstone project.
It is to come on stream before the end of 2014.
The company said last month the steam-assisted gravity drainage project will cost $536 million, plus $27 million for infrastructure to be shared with the next two phases, which will take it to 80,000 bpd of capacity.
It and another oilsands project called Birch are to be 50 per cent funded through a joint venture partnership — Athabasca has said it has a tentative deal with two international partners, one of which is believed to be Kuwait’s national oil company, but is waiting for finalization before revealing details.
It said Monday its capital expenditures next year will be financed from cash on hand, low-interest debt and cash flow from production.
Athabasca said it has over $900 million of cash and short-term investments on hand, and a $200-million undrawn revolving credit facility.
Andrew Potter of CIBC World Markets said in an early note that the company’s light oil production guidance to mid-2013 instead of the full year was odd and the number was in line with CIBC estimates but lower than consensus.
“We note that the lower production is due primarily to much more conservative spending than we had anticipated,” he wrote.“We believe that strong results in 2013, and an improvement in the commodity environment, could see Athabasca revise the light oil division budget upward, which would equate to a potential increase in 2013 production guidance.”
The company said it expects its Dover oilsands project to win regulatory approval in the second quarter, which would trigger a put/call option allowing partner PetroChina to buy the 40 per cent it doesn’t already own.
Lower production is due ... to much more conservative spending ANDREW POTTER