CALGARY – Athabasca Oil Corp. (TSX:ATH) says its budget for 2015 will be nearly 70 per cent thinner than this year’s as oil prices languish at five-year lows.
The Calgary-based oil and gas explorer said next year’s spending will amount to about $208 million, without taking into account the $58 million that’s being carried over from 2014.
This year’s capital budget is $667 million.
Shares in Athabasca surged as much as 12 per cent on Wednesday. By mid-afternoon, the stock was nearly six per cent higher than Tuesday’s close.
About $167 million is expected to be spent on light oil, with the bulk going toward developing land in Alberta’s promising Duvernay deposit. Athabasca is directing about $93 million toward its thermal oil division, most of which is for the start-up of its Hangingstone project.
“Athabasca’s capital budget aligns with its strategic 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 company said in a release.
Athabasca has enough cash in the bank to fund its winter drilling program, which includes 11 wells in the Duvernay and two appraisal wells in the Montney formation, Desjardins Capital Markets analyst Justin Bouchard wrote in a note to clients.
“Given the prevailing pricing environment, a budget reduction was expected and the pullback in activity amidst declining oil prices is, in our opinion, a prudent move,” he said.