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To: Goose94 who wrote (2033)

12/4/2014 8:34:15 AM

From: Goose94

Read Replies (1) | Respond to of 203627

Athabasca Oil (ATH-T) Dec 2nd 2014 board of directors has approved an initial 2015 capital budget of $266-million, which includes $58-million of carry-over from the 2014 budget. Athabasca's capital budget aligns with its priorities, including delivering near-term production and cash flow growth from its cornerstone Kaybob Duvernay and Hangingstone assets and maintaining a strong balance sheet with flexibility to respond to economic cycles. The 2015 capital program is fully financed, with Athabasca anticipating an ending 2014 financing position of approximately $1.3-billion, including cash, undrawn credit facilities and promissory notes receivable.Light oil division

Maintaining balance sheet strength is a key priority, and Athabasca views its balance sheet as a competitive asset. As a result, and in the context of the current commodity price environment, Athabasca has approved an initial light oil capital budget of $167-million, which is primarily composed of drilling and completion activities for the rest of the 2014/2015 winter program. The program includes a total of 11 Duvernay wells (nine horizontals) and two Montney appraisal wells at Placid. Five rigs are currently active in the field, with four targeting the Duvernay. Initial well results are anticipated toward the end of the first quarter of 2015. Light oil activity levels for the balance of 2015 will be set following an assessment of the winter drilling results and prevailing commodity prices. The primary objectives of this program are to add near-term production and cash flow at Saxon and Kaybob West and to retain Duvernay lands that are prospective for commercial development into the intermediate term. Approximately 95 per cent of Athabasca's core 200,000-acre Duvernay land position at Kaybob will be held into intermediate term at the end of the winter drilling program. As the winter drilling program meets all of the company's near-term land retention objectives, Athabasca has significant flexibility to adapt its light oil capital plans during the rest of the year to respond to market conditions and technical learnings.

Thermal oil division

In the thermal oil division, Athabasca has approved a capital budget of $93-million, with $63-million focused on the commissioning and ramp-up of Hangingstone project 1. This project remains on track with targeted timelines and the sanctioned budget. The company will continue to advance pre-engineering internally for Hangingstone project 2A, an 8,000-barrel-per-day incremental debottleneck project. Sanctioning of expansion phases will only be considered following a successful ramp-up of Hangingstone project 1 and after assessing broader market conditions.

2015 Capital Budget ($ Millions)1,2
LIGHT OIL DIVISION (Winter program)
Duvernay (drill & completion)	$		135
Montney (drill & completion)		13
Other (facilities, equipment and roads)		19
167
THERMAL OIL DIVISION
Hangingstone Project 1		17
Hangingstone Project 1 Start-up Cost		46
Hangingstone Expansion (pre-engineering)		14
Other		16
93
CORPORATE	$		6
TOTAL CAPITAL SPENDING	$		266

Preliminary 2015 guidance

Recognizing that Athabasca's 2014/2015 winter drilling program will not have a material contribution to production until the second half of 2015, first quarter guidance is approximately 5,000 barrels of oil equivalent per day, largely reflecting base declines. Assuming no additional spending beyond the winter program, the company's exit guidance for 2015 is between 7,000 to 8,000 boe per day and only incorporates production from seven of the 11 Duvernay wells. Four of the wells, which are land retention wells, are not included in the exit guidance (two verticals and two horizontals).

The company will provide further details on capital plans and production guidance for the balance of the year in the first quarter of 2015.

Hangingstone project 1 first steam remains on track for the end of the first quarter of 2015, with a production ramp-up, starting approximately midyear and trending into 2016. The company forecasts a 2015 production exit rate of between 3,000 to 6,000 barrels per day from Hangingstone.

Media and Financial Community

Matthew Taylor

Vice President, Capital Markets and Communications

1-403-817-9104

mtaylor@atha.com