Published: March 26, 2024 |

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Athabasca Oil Corporation has closed on transaction agreements to create Duvernay Energy Corporation with Cenovus Energy.

Duvernay Energy is a privately held subsidiary of Athabasca. Athabasca and Cenovus have contributed assets into Duvernay Energy combining Athabasca’s existing Duvernay assets, Athabasca’s new 100 percent working interest Duvernay assets and Cenovus’ 100 percent working interest Kaybob Duvernay assets. Athabasca owns a 70 percent equity interest in Duvernay Energy with Cenovus owning the remaining 30 percent equity interest. The transaction closed on February 6, 2024 with an effective date of January 1, 2024.

The creation of Duvernay Energy is designed to enhance value for Athabasca’s shareholders by providing a clear path for self-funded production and cash flow growth in the Kaybob Duvernay resource play. This will be achieved without compromising Athabasca’s capacity to fund capital in its thermal oil division or its return of capital strategy. Athabasca and Duvernay Energy have independent strategies and capital allocation frameworks.

Duvernay Energy will be managed by Athabasca through a management and operating services agreement.

DUVERNAY ENERGY - 2024 GUIDANCE

Production:
Current production is ~2,000 boe/d (75 percent liquids) and 2024 production guidance is ~3,000 boe/d (75 percent liquids). Development plans are underway and are expected to drive strong production momentum into 2025 with estimated production of ~6,000 boe/d.

Capital:
The 2024 capital program is ~$82 million and includes the drilling of 12 gross (7.1 net) Duvernay wells. The program includes 5 net 100 percent working interest (WI) wells and 2.1 net 30 percent WI wells on the JV lands. Capital will be funded through the initial seed capital and cash flow from existing operations.

Balance Sheet:
Duvernay Energy’s capitalization includes ~$40 million of seed capital (~$21 million contribution from Athabasca after closing adjustments) and a $50 million undrawn credit facility.

Growth Plans:
The plan is to allocate 100 percent of adjusted funds flow from Duvernay Energy to drive near-term production growth. Assuming a constructive commodity price outlook, Duvernay Energy has self-funded growth potential to ~25,000 boe/d (75 percent liquids) by the late 2020s.

Operations Update:
Duvernay Energy recently rig released a two well pad (100 percent working interest) at 03-18-64-17W5 with an average horizontal length of ~4,150 meters per well. Completion operations are planned for Q1 2024 with on-stream timing at the end of Q2 2024. A three well pad (30 percent working interest) is expected to spud in February with completions and tie-in to follow in the spring. Activity through the fall is anticipated to drive strong momentum into 2025.

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.

Cenovus Energy is an integrated energy company with oil and natural gas production operations in Canada and the Asia Pacific region, and upgrading, refining, and marketing operations in Canada and the United States. The company is focused on managing its assets in a safe, innovative and cost-efficient manner, integrating environmental, social and governance considerations into its business plans.

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