Athabasca Oil Corporation(“Athabasca” or the “Company”) is pleased to report its second quarter results marked by strong operational performance, consistent financial results and execution on return of capital commitments. With low corporate break-evens, differentiated long-life assets and a pristine balance sheet, the Company is well positioned to advance its strategic priorities.
Q2 2025 Consolidated Corporate Results
Production: Average production of 39,088 boe/d (98% Liquids), representing 4% (15% per share) growth year-over-year.
Cash Flow: Adjusted Funds Flow of $128 million ($0.25 per share). Cash Flow from Operating Activities of $101 million. Free Cash Flow of $66 million from Athabasca (Thermal Oil).
Capital Program: $73 million total capital expenditures including $54 million at Leismer to support the 40,000 bbl/d phased growth project.
Shareholder Returns: Purchased 24 million shares through its buy-back program year-to-date. The Company is committed to returning 100% of Free Cash Flow (Thermal Oil) to shareholders in 2025 and has completed ~$600 million in share buybacks since March 31, 2023, reducing its fully diluted share count by 21%.
Operations Highlights
Leismer: Production currently ~28,000 bbl/d (June 2025) with four sustaining well pairs expected to be placed on production through the balance of the year. The progressive growth project remains on time and on budget. The Company expects production to stay flat until the next growth plateau of 32,000 bbl/d in H2 2026.
Hangingstone: Production currently ~8,900 bbl/d (June 2025) following the start-up of two extended reach well pairs which are outperforming management’s expectations. The asset continues to deliver meaningful free cash flow generation.
Duvernay Energy (“DEC”): A four well pad (30% working interest) with ~5,000 meter laterals was completed in mid July and will be placed on production in August.
Completion operations are expected to commence on a three well pad (100% working interest) in September. DEC is positioned for strong operational momentum into year end with an exit target of ~6,000 boe/d.
Resilient Producer
Pristine Financial Position: The Company has a Net Cash position of $119 million, Liquidity of $437 million (including $304 million cash) and a long-dated maturity of 2029 on its term debt. The Company also has $2.2 billion of tax pools (~80% high-value and immediately deductible).
Low Break-evens: Long-life, low decline assets afford Athabasca with a sustaining capital advantage. The Company’s 2025 Thermal Oil capital program which includes growth initiatives is fully funded within cash flow below US$50/bbl WTI. Long term sustaining capital investment is estimated at ~C$8/bbl (five-year annual average) to hold production flat.
2025 Corporate Guidance
Consolidated Production Outlook: The Company anticipates production at the upper end of guidance of 37,500 – 39,500 boe/d with an exit rate of ~41,000 boe/d. Thermal Oil production is trending at the upper end of its prior guidance of 33,500 – 35,500 bbl/d. Duvernay Energy is expected to average ~4,000 boe/d with an exit target of ~6,000 boe/d following the tie-in of two multi-well pads.
Thermal Capital: The forecast capital budget for Thermal oil is unchanged at ~$250 million, including sustaining capital and the Leismer expansion project. This $300 million expansion project (over three years) is highly economic (~$25,000/bbl/d capital efficiency) and provides flexibility with interim growth targets to ~32,000 bbl/d in H2 2026 and ~35,000 bbl/d in H1 2027 before achieving the regulatory approved 40,000 bbl/d capacity at the end of 2027. Athabasca’s Thermal Oil capital projects are flexible, highly economic and have phased optionality on timing based on the macroeconomic environment. By year-end 2025, the Company anticipates being ~50% complete of total capital exposure for the expansion project.
Duvernay Energy Corporation Capital: The 2025 capital program of ~$75 million will drive production momentum in H2 2025. The capital program in DEC is flexible and designed to be self-funded. The Company has a deep inventory of ~444 gross future drilling locations with no near-term land expiries.
Free Cash Flow Focus: The Company forecasts consolidated Adjusted Funds Flow between $525 - $550 million1, including $475 - $500 million from its Thermal Oil assets. 2025 Thermal Oil Free Cash Flow is forecasted at ~$250 million and is planned to be returned to shareholders through share buybacks. Every +US$1/bbl move in West Texas Intermediate (“WTI”) and Western Canadian Select (“WCS”) heavy oil impacts annual Adjusted Funds Flow by ~$10 million and ~$17 million, respectively.
Corporate Consolidated Strategy
Value Creation: The Company’s Thermal Oil division provides a differentiated liquids weighted growth platform supported by financial resiliency to execute on return of capital initiatives. Athabasca’s subsidiary company, Duvernay Energy Corporation, 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. Athabasca (Thermal Oil) and DEC have independent strategies and capital allocation frameworks.
Steadfast Focus on Cash Flow Per Share Growth: Athabasca’s disciplined capital allocation framework is designed to unlock shareholder value by prioritizing multi-year cash flow per share growth. The Company forecasts ~20% compounded annual cash flow per share growth between 2025-2029 driven by investing in attractive capital projects and prioritizing share buybacks with 100% of Free Cash Flow. The Company sees significant intrinsic value not reflected in the current share price and intends to remain active with its share buyback strategy.
Athabasca (Thermal Oil) Strategy
Large Resource Base: Athabasca’s top-tier assets underpin a strong Free Cash Flow outlook with low sustaining capital requirements. The long life, low decline asset base includes ~1.2 billion barrels of Proved plus Probable reserves and ~1 billion barrels of Contingent Resource.
Strong Financial Position: Prudent balance sheet management is a core tenet of Athabasca’s strategy. The Company has a Net Cash position of $119 million, Liquidity of $437 million (including $304 million cash) and a long-dated maturity of 2029 on its term debt.
Leismer Progressive Growth: This $300 million expansion project (over three years) is highly economic (~$25,000/bbl/d capital efficiency) and provides flexibility with interim growth targets to ~32,000 bbl/d in H2 2026 and ~35,000 bbl/d in H1 2027 before achieving the regulatory approved 40,000 bbl/d capacity at the end of 2027. On completion of the expansion project, the Company can maintain Leismer at 40,000 bbl/d for approximately fifty years (Proved plus Probable Reserves).
Sustaining Hangingstone: The Hangingstone asset is very competitive and continues to deliver meaningful cash flow contributions to the Company. The objective is to sustain production and maintain competitive netbacks ($36.51/bbl H1 2025 Operating Netback).
Corner – Future Optionality: The Company’s Corner asset is a large de-risked oil sands asset adjacent to Leismer with 351 million barrels of Proved plus Probable reserves and 520 million barrels Contingent Resource (Best Estimate Unrisked). There are over 300 delineation wells and ~80% seismic coverage, with reservoir qualities similar to or better than Leismer. The asset has a 40,000 bbl/d regulatory approval for development with the existing pipeline corridor passing through the Corner lease. The Company has updated its development plans and is finalizing facility cost estimates, with a focus on capital efficient modular design.
Significant Multi-Year Free Cash Flow: Inclusive of the progressive growth at Leismer, Athabasca (Thermal Oil) expects to generate in excess of $1.8 billion of Free Cash Flow1 during the five-year time frame of 2025-29. Free Cash Flow will continue to support the Company’s return of capital initiatives.
Sound Heavy Oil Fundamentals: Canadian heavy oil markets remain strong supported by the Trans Mountain Expansion pipeline and sustained global refining demand. This has resulted in tighter and less volatile WCS heavy differentials with August index pricing at ~US$10/bbl. Athabasca is a direct beneficiary of structurally tighter differentials that are forecasted to hold in the coming years.
Thermal Oil Royalty Advantage: Athabasca has significant unrecovered capital balances on its Thermal Oil Assets that ensure a low Crown royalty framework (~6%1).
Leismer is forecasted to remain pre-payout until late 20271 and Hangingstone is forecasted to remain pre-payout beyond 20301.
Tax Free Horizon Advantage: Athabasca (Thermal Oil) has $2.2 billion of valuable tax pools and does not forecast paying cash taxes this decade.
Duvernay Energy Strategy
Accelerating Value: DEC is an operated, private subsidiary of Athabasca (owned 70% by Athabasca and 30% by Cenovus Energy). DEC accelerates value realization for Athabasca’s shareholders by providing a clear path for self-funded production and cash flow growth without compromising Athabasca’s capacity to fund its Thermal Oil assets or its return of capital strategy.
Kaybob Duvernay Focused: Exposure to ~200,000 gross acres in the liquids rich and oil windows with ~444 gross future well locations, including ~46,000 gross acres with 100% working interest.
Self-Funded Growth: Near-term activity will be funded within Adjusted Funds Flow, initial seed capital and the DEC credit facility. The Company has growth potential to in excess of ~20,000 boe/d (75% Liquids) by the late 2020s1.
Athabasca (Thermal Oil) Q2 2025 Highlights and Operations Update
Production: Production of 36,476 bbl/d (27,818 bbl/d at Leismer and 8,658 bbl/d at Hangingstone).
Cash Flow: Adjusted Funds Flow of $122.1 million; Operating Income of $135.8 million with an Operating Netback of $39.79/bbl ($42.02/bbl H1 2025).
Capital: $56.1 million of capital expenditures in Q2, with $53.9 million at Leismer as the Company advances the 40,000 bbl/d progressive growth project.
Free Cash Flow: $66.0 million of Free Cash Flow supporting return of capital commitment.
Leismer
Earlier this year, the Company brought six extended reach redrills on Pad L1 (1,000 – 1,700 meter laterals) on production supporting current production of ~28,000 bbl/d (June 2025). Four well pairs on Pad L10 are expected to maintain production rates at facility capacity for the balance of 2025. The first two wells started steaming in April with production expected in Q3, and the final two will begin steaming this summer with first production expected in Q4. Another six well pairs will be drilled on Pad 11 in H2 2025.
Activity at Leismer remains focused on advancing progressive growth to 40,000 bbl/d by the end of 2027. The project cost is estimated at $300 million generating a capital efficiency of approximately $25,000/bbl/d. The $300 million will be spent between 2025 and 2027 and includes an estimated $190 million for facility capital and an estimated $110 million for growth wells. By year-end 2025, the Company anticipates being ~50% complete of total capital exposure for the expansion project. The project remains on budget and on schedule with the original sanction plans announced in July 2024. The progressive build provides flexibility with interim growth targets to ~32,000 bbl/d in H2 2026 following the next planned turnaround, and ~35,000 bbl/d in H1 2027 before achieving the regulatory approved 40,000 bbl/d capacity at the end of 2027.
Hangingstone
At Hangingstone, two extended reach sustaining well pairs (~1,400 meter average laterals) were placed on production in March with production of ~8,900 bbl/d (June 2025). The well pairs ramped up faster than anticipated, benefiting from favorable reservoir temperatures and pressure supported by offsetting wells. Current well pair performance between 800 – 1,000 bbl/d per well has exceeded management’s expectations. Hangingstone continues to deliver meaningful cash flow contributions to the Company.
Duvernay Energy Corporation Q2 2025 Highlights and Operations Update
Production: Production of 2,612 boe/d (72% Liquids).
Cash Flow: Adjusted Funds Flow of $5.5 million with an Operating Netback of $24.84/boe ($32.03/boe H1 2025).
Capital: $17.0 million of capital expenditures including completions on a 30% working interest four-well pad.
During the quarter completions operations commenced on a four well pad (30% working interest) with average laterals of ~5,000 meters. Completion operations on this pad were completed in mid July and the wells are expected to be on production in early August. A three well pad (100% working interest) is scheduled to be completed in early Fall and on production shortly thereafter. Earlier in 2025, a strategic gathering system was completed connecting the operated wells to existing operated infrastructure.
Production from new wells drilled in 2024 continue to validate DEC’s type curve expectations. The five wells placed on production have averaged IP30’s of ~1,200 boe/d per well (86% Liquids) and IP90s of ~940 boe/d (86% Liquids) per well.
DEC retains significant operational flexibility with no near-term land expiries and the ability to adjust spending in response to commodity price movements.