CALGARY, Alberta — Athabasca Oil Corporation (TSX: ATH) has announced a strong start to 2026, with its first-quarter results demonstrating consistent execution across its funded growth portfolio. The company reported significant progress on its Leismer expansion, robust performance from its Duvernay assets, and a fortified balance sheet, positioning it to capitalize on the current constructive oil price environment.
First Quarter 2026 Financial and Operational Highlights
Athabasca Oil delivered an average production of 40,242 barrels of oil equivalent per day (boe/d) in Q1 2026, with liquids comprising 98% of this volume. This represents a 7% year-over-year growth in production, or 14% on a per-share basis, underscoring the company’s operational momentum.
Financially, the quarter saw Adjusted Funds Flow reach $128 million, translating to $0.27 per share. Cash flow from operating activities stood at $102 million. Notably, the company generated Free Cash Flow of $20 million specifically from its Thermal Oil assets, highlighting the inherent strength and quality of its asset base.
Operating netbacks were robust, with Thermal Oil achieving $46 per barrel and Duvernay Energy reaching $47 per boe. The company also reported significant margin growth in March, with operating netbacks climbing to greater than $65 per boe across all operating areas, a direct benefit of higher oil prices.
Disciplined Capital Allocation and Balance Sheet Strength
Total capital expenditures for the first quarter amounted to $114 million. A substantial portion, $81 million, was allocated to the Leismer expansion project, with an additional $22 million invested in Duvernay development. This capital deployment aligns with Athabasca’s strategy of disciplined growth.
The company continues to maintain a best-in-class balance sheet, reporting a $60 million Net Cash position and $406 million in liquidity, which includes $291 million of cash. This strong financial position provides a solid foundation as operations scale up.
Growth Portfolio Execution and Outlook
Leismer Expansion Progresses
The Leismer expansion project remains on schedule. The winter drilling program concluded in March, successfully completing 12 new well pairs with lateral lengths ranging from 1,300 to 1,600 meters. These wells are slated to commence steaming in the second half of 2026 on a phased basis, following a planned facility turnaround in May. This phased approach is expected to drive substantial production growth in the latter half of 2027. The $300 million expansion project is projected to reach a capacity of 40,000 barrels per day (bbl/d) by late 2027, boasting a capital efficiency of $25,000 per bbl/d. Approximately 90% of the capital for this project is expected to be complete by the end of 2026.
Duvernay Momentum Accelerates
Athabasca’s Duvernay wells continue to demonstrate strong production results and favorable condensate yields. A four-well pad at 7-15-64-17 W5 (30% working interest), completed in March and brought on stream in April, achieved average IP21s of 1,635 boe/d per well, with liquids accounting for 91% of production. Building on this success, the company is accelerating the timing of a three-well 100% working interest pad into Q3 2026, with production anticipated to begin in the fourth quarter. This additional activity is expected to contribute to an exit rate of approximately 6,000 boe/d for the Duvernay. Consequently, the capital budget for Duvernay Energy has been increased to $79 million, encompassing the new three-well pad and operational readiness for continued growth into 2027. The company emphasizes that strong results and a robust commodity price environment are enabling its strategy of self-funded growth.
Hangingstone Resilience and Future Opportunities
Current production at Hangingstone remains resilient, holding steady at approximately 8,900 bbl/d. Athabasca is actively assessing capital-efficient growth opportunities for 2027 to leverage available facility capacity at this asset.
Increased 2026 Outlook and Cash Flow Projections
The company has revised its consolidated 2026 Adjusted Funds Flow forecast upwards to a range of $550 million to $575 million, primarily reflecting higher oil prices. This revised outlook anticipates significant year-over-year growth in Adjusted Funds Flow and Free Cash Flow into 2027, supported by strong operational momentum.
Production growth is expected to materialize in the second half of 2026, leading to an increased exit rate of approximately 45,000 boe/d, bolstered by the Leismer expansion and additional Duvernay activity. Annual production is now projected to be at the high end of the guidance range of 37,000 to 39,000 boe/d (98% Liquids), inclusive of an estimated 2,500 boe/d impact from planned turnarounds across its assets. The company anticipates strong operational momentum to persist into 2027 as Leismer ramps up to 40,000 bbl/d and Duvernay growth continues.
Athabasca also provided sensitivity analysis for its 2027 Adjusted Funds Flow, noting that every US$1 per barrel move in West Texas Intermediate (WTI) impacts it by approximately $19 million, while a similar move in Western Canadian Select (WCS) heavy oil affects it by approximately $24 million. This highlights the company’s leverage to commodity price movements and its potential for further cash flow generation in a favorable market.
