Athabasca Oil Corp. closed the previously announced light oil joint venture (JV) with Murphy Oil Co. Ltd. in the Kaybob area of the Duvernay Shale, the company said May 16.
Athabasca sold a 70% interest in its Greater Kaybob area assets and a 30% interest in its Greater Placid area assets for gross proceeds of CA$486 million, including closing adjustments.
Athabasca received cash consideration of CA$267 million and an additional CA$219 million commitment, whereby Murphy will fund 75% of Athabasca's share of Duvernay development capital for a five-year maximum period.
Murphy will assume operatorship of the Greater Kaybob area assets, and Athabasca will retain operatorship of the Greater Placid area assets. Joint development agreements are in place to preserve the value of Athabasca’s interests, the company said.
Athabasca has focused the last three years on appraisal and development of its significant Duvernay and Montney land position in Greater Kaybob and Placid, drilling 26 Duvernay wells at Greater Kaybob and five Montney wells at Placid.
At Placid, there are about 25,000 gross acres of prospective Montney land with two separately defined Montney intervals and an estimated inventory of more than 165 Montney locations.
Athabasca said it established the Placid Montney as a core operated area following a successful five-well appraisal program. There is a delineated liquids-rich sweet spot, the company added.
Athabasca will operate a multiyear development plan under the Placid JV, with a current inventory of about 165 gross wells and a 70% working interest. The asset’s gross production potential is more than 8,000 barrels of oil equivalent per day (boe/d)-- 5,500 boe/d net--in 2017 and will be more than 17 Mboe/d--12 Mboe/d net--at the end of five years.
The development plan under the Kaybob JV is structured to result in about CA$1 billion of gross investment over the first four to five years, which is expected to drive gross production potential to about 30 Mboe/d (9 Mboe/d net) at the end of five years.
Athabasca's net capital exposure under this development plan is about CA$75 million. Athabasca retains a 30% working interest in more than 200,000 gross acres and up to 1,500 gross drilling locations.
Regarding finances, Athabasca currently has about CA$880 million of liquidity and a net cash position of about CA$60 million. Liquidity is further bolstered by the CA$219 million Duvernay capital carry commitment.
Athabasca said it will commit to its 2016 priorities of reducing total leverage by CA$300 to CA$400 million and extending its 2017 debt maturities.
Athabasca Oil Corp. is based in Calgary, Alberta.
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