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Athabasca Oil Corporation announces a $129 million Contingent Bitumen Royalty and Repayment of US$221 million Term Loan

Press Release

CALGARY – Athabasca Oil Corporation (TSX: ATH) (“Athabasca” or the “Company”) is pleased to announce that it has granted a Contingent Bitumen Royalty to Burgess Energy Holdings L.L.C. (“Burgess”) on its Thermal assets (the “Royalty”) for total consideration of $129 million. Concurrently, the Company has repaid its US$221 million first lien term loan (“TLB”) which is the first step towards aligning the Company’s capital structure with its go forward operating plans. Both transactions further enhance the Company’s balance sheet and financial sustainability.

Contingent Bitumen Royalty

The Royalty will be calculated on a sliding scale ranging from 0 – 6% of Athabasca’s realized bitumen price (C$) for each Thermal Oil asset (see table below). The realized bitumen price is to be determined net of diluent, transportation and storage costs. The Royalty has been structured so that the assets will not be encumbered at lower pricing levels. For example, at Hangingstone, oil prices would have to reach approximately US$75/bbl WTI (at nameplate capacity of 12,000 bbl/d) before the first 1% Royalty is triggered. At this pricing level, Hangingstone Project 1 is estimated to have an annual operating netback of approximately $120 million (net of a $2 million Royalty). The Royalty is not expected to materially impact economics of future Hangingstone expansion phases or future Other Thermal development projects and there are no associated commitments to develop future expansions or projects.

Hangingstone Project 1

Realized Bitumen Price Royalty Implied WTI
$C/bbl % US$/bbl
Below $50/bbl 0%
$50/bbl to $69.99/bbl 1% $75-91
$70/bbl to $89.99/bbl 2% $91-108
$90/bbl to $109.99/bbl 3% $108-124
$110/bbl to $129.99/bbl 4% $124-141
$130/bbl to $149.99/bbl 5% $141-157
$150/bbl and above 6% >$157

Other Thermal Assets

Realized Bitumen Price Royalty Implied WTI
$C/bbl % US$/bbl
Below $60/bbl 0%
$60/bbl to $79.99/bbl 1% $78-94
$80/bbl to $99.99/bbl 2% $94-110
$100/bbl to $119.99/bbl 3% $110-126
$120/bbl to $139.99/bbl 4% $126-142
$140/bbl to $159.99/bbl 5% $142-159
$160/bbl and above 6% >$159

* WTI based on a 0.8 US$/C$ FX assumption & US$15/bbl heavy differential. Royalties calculated & payable on a monthly basis.

RBC Capital Markets acted as exclusive financial advisor to Athabasca on the Royalty transaction. Torys LLP acted as advisor to Burgess.

Refinancing Update

Athabasca has reduced its outstanding corporate debt by approximately $250 million or 30% through the repayment of its US$221 million TLB and the concurrent unwind of its US dollar foreign exchange hedge. The Company and its lenders have also agreed to certain amendments to the Company’s credit facilities including a reduction of its revolving credit facility to $45 million (currently undrawn), and the establishment of a $110 million cash collateralized letter of credit facility to secure long-term commitments related to its transportation agreements. The reduction in term debt and restructuring of the Company’s credit facilities will result in $24 million of financing and interest expense savings annually.

Maintaining a strong balance sheet continues to be a key priority for the Company and the TLB retirement represents the first step towards aligning the Company’s capital structure with its go forward operating plans. Over the past two years, Athabasca has undertaken several initiatives to streamline operations and improve corporate competitiveness with reductions to G&A and interest costs expected to exceed $90 million annually.

Athabasca’s current liquidity is estimated at $630 million with a net cash position of $85 million (excluding cash collateralized under the Company’s new LC Facility).

The Company anticipates releasing its Q2 2016 results and updated guidance on July 27th, 2016.

About Athabasca Oil Corporation

Athabasca Oil Corporation is a Canadian energy company with a focused strategy on the development of thermal and light oil assets. Situated in Alberta’s Western Canadian Sedimentary Basin, the Company has amassed a significant land base of extensive, high quality resources. Athabasca’s common shares trade on the TSX under the symbol “ATH”. For more information, visit www.atha.com.

For more information, please contact: Media and Financial Community Matthew Taylor

Vice President, Capital Markets and Communications 1-403-817-9104

mtaylor@atha.com

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