Athabasca Oil (ATHOF, Financial) is an energy stock that investors should consider for their portfolios as the company's production is increasing at a lower cost. For instance, the fiscal year 2015 capital allocation schedule of Athabasca Oil is continually focused on implementation in its major assets. The superior activities carried out in the Duvernay are continually transforming the company’s significant land base to resource value.
Impressive cost-reduction efforts
The ongoing efforts of the management at Athabasca to optimize its cost structure by strategic allocation of its capital and reducing non-core expenditures is expected to allow Athabasca smoothly overcome the ongoing decline in the global oil and gas prices.
Athabasca’s capital expenditure program from 2013 until 2015e is expected to decline. The year-over-year fall in liquids and gas productions as well as reduction in the capital spending reflects tough headwinds faced by Athabasca from the global decline in fuel prices.
Going forward, Athabasca expects to resume activity during the second half of 2015 with two major goals. First, It targets illustrating cost efficiencies of pad drilling; and second, additional exploration of the volatile oil window.
Strong liquidity and development program
In addition, Athabasca is continually focused on maintaining a robust balance sheet being its foremost priority. It currently has present funding of over $1.1 billion that includes nearly $660 million of cash, cash equivalents and short-term investments until March 31 of this year.
Athabasca’s keen focus on maintaining a strong balance sheet having elevated cash flow levels and reduced overall debts is estimated to robustly position Athabasca for superior long-term growth.
The impressive forecasted productions at the key regions of the Montney, Duvernay and Hangingstone are forecasted to strategically place Athabasca well ahead of its competitors, delivering improved shareholder returns and excellent profitability.
The cost learning curve of Athabasca is improving, signifying continued reduction in the prospective drilling and completion costs. The other graph demonstrates significant development potential in Boe/d for the key rigs at Duvernay, going forward.
At Simonette, Athabasca concluded the 16-36-63-25 West 5 last October and plans to soon start the operations at the well. The energy major also drilled, concluded and tested two key Montney wells at Placid during the Winter season.
The ongoing drilling activities of the wells by Athabasca at reduced costs position the company strongly for long-term growth and delivering improved shareholder value.
The consensus estimate among 18 polled investment analysts evaluating Athabasca Oil Corp suggests investors to hold their position in the company. This consensus estimate is maintained since the investment analyst’s sentiments declined on Jan. 12, 2015. The earlier consensus estimate suggested that Athabasca Oil Corp will outperform the market.
Conclusion
Overall, the investors who already own the stock are advised to hold their position in Athabasca Oil Corporation and new investors are advised to avoid investing in the stock looking at the deteriorating profit margin of -235.52% and significant total debt of $677.03 million with weak total cash of $551.85 million only on the balance sheet, restricting the company to plan for future growth investments.
