Athabasca Oil Sands Corporation Doubles Capital Spending in 2017, After Major Acquisition

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Researched by Industrial Info Resources (Sugar Land, Texas)--Athabasca Oil Sands Corporation (TSX:ATH) (Calgary, Alberta) plans to follow up a transitional 2016 by nearly doubling its capital expenditures for the current year. The Canadian exploration company broadened its foothold in several of the largest resource plays in Western Canada through a major acquisition and increased drilling in prosperous areas, such as the Montney Shale. Industrial Info is tracking $5.19 billion in active projects involving Athabasca Oil Corporation.

Capital expenditures in 2017 are expected to total $240 million, including $105 million in the company's Thermal Oil business and $135 million in Light Oil; capital expenditures in 2016 totaled $122 million, with $111 million in Light Oil. Production is expected to be between 36,000 and 40,000 barrels of oil equivalent per day, roughly 90% of which will be liquids. The Thermal Oil business is expected to account for between 29,000 and 32,500 barrels, and Light Oil for between 6,500 and 7,500 barrels.

Athabasca currently is focused on developing its Hangingstone SAGD Bitumen Production Field and Processing Plant near Fort McMurray, Alberta, including the proposed $1.2 billion second phase and $1.2 billion third phase. The projects involve drilling multiple dual-horizontal well pairs and constructing central processing facilities, which are designed to have production capacities of 40,000 and 30,000 barrels per day (BBL/d) of bitumen. The expansions eventually would bring the site capacity to 82,000 BBL/d, utilizing Steam-Assisted Gravity Drainage (SAGD) technology. For more information, including contact information and current schedules, see Industrial Info's project reports for Phase II and Phase III.

Industrial Info also is tracking the proposed $120 million debottlenecking of the Hangingstone bitumen processing plant, which would focus on the inlet & separation sections to reduce back pressure and current production by 8,000 BBL/d. For more information, see Industrial Info's project report.

Athabasca Oil also proposes a $360 million pilot plant in the Birch production field near Fort McMurray, which holds the company's largest unexplored area. The project includes drilling at least 25 dual-horizontal well pairs and constructing a central processing facility with a production capacity of 12,000 BBL/d of bitumen, to test the reservoir. For more information, see Industrial Info's project report.

Market conditions, especially weak oil prices, have forced many of these projects to face lengthy delays. The company is weighing prospects for a $1.05 billion commercial-scale processing plant and a $1.05 billion second-phase expansion at the Dover West Bitumen Production Field & Processing Plant near Fort McMurray. Each phase is designed to process 35,000 BBL/d of bitumen, utilizing thermal-assisted gravity drainage (TAGD) technology. For more information, see Industrial Info's project reports on Phase I and Phase II.

Earlier this year, Athabasca Oil closed its acquisition of its Thermal Oil subsidiary from Statoil Canada Limited (Calgary), which the company says will boost its position in the Montney and Duvernay shale formations. Last year, Athabasca Oil formed a joint venture with Murphy Oil Company Limited (NYSE:MUR) (El Dorado, Arkansas), in which Athabasca Oil's chief executive office acknowledged that "developing the Duvernay requires significant capital investment beyond our own balance sheet capability." The deal secures $1 billion of gross investment in the Duvernay over the next four years, while minimizing Athabasca's near-term capital exposure, according to a press release from Athabasca Oil.

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