Mr. Robert Broen reports

ATHABASCA OIL ANNOUNCES 2024 FIRST QUARTER RESULTS, OPERATIONAL MOMENTUM AT LEISMER AND IN THE DUVERNAY, AND RETURN OF CAPITAL EXECUTION

Athabasca Oil Corp. has released its first quarter results, showcasing continued operational momentum and full execution of its inaugural buyback program. Production growth is under way with the commissioning of the Leismer expansion project and the tie-in of new multiwell pads in Duvernay Energy Corp.

Athabasca Oil corporate consolidated Q1 2024 highlights:

• Production: average production of 33,470 barrels of oil equivalent per day (98 per cent liquids);
• Cash flow: adjusted funds flow of $88-million and cash flow from operating activities of $77-million; the company forecasts consolidated 2024 adjusted funds flow of approximately $550-million, with increasing operating scale and strong heavy oil pricing for the balance of the year;
• Balance sheet: net cash of $90-million; liquidity of $433-million (including $307-million in cash).

Athabasca Oil (thermal oil) highlights:

• Production: first quarter production of 31,536 barrels per day (24,143 bbl/d at Leismer and 7,393 bbl/d at Hangingstone); Leismer production is on track to reach approximately 28,000 bbl/d by midyear;
• Cash flow: adjusted funds flow of $84-million with an operating netback of $36 per bbl in the first quarter, with forecasted annual adjusted funds flow of approximately $500-million from the thermal assets;
• Capital program: $42-million focused on completing the Leismer expansion project with facility additions commissioned in late February and new wells currently being brought on stream; Athabasca Oil is on track with original annual guidance of $135-million for its current thermal program;
• Free cash flow: $42-million of free cash flow supporting return of capital commitments; Athabasca Oil expects to generate $1.2-billion in free cash flow during the three-year time frame of 2024 to 2026.

Duvernay Energy highlights:

• Production: first quarter production of 1,934 boe/d; production growth is expected in the second quarter with two 100-per-cent-working-interest wells on stream in late April and a three-well 30-per-cent-working-interest pad expected to be on stream late in June;
• Cash flow and financial position: adjusted funds flow of $4-million with an operating netback of $27 per boe; Duvernay Energy was seeded with $40-million of cash by the equity partners, and the company has a $50-million credit facility;
• Capital program: $34-million focused on drilling, completions and readiness activity for the future; the 2024 capital program of $82-million includes four multiwell pads supporting production momentum with volumes expected to average approximately 6,000 boe/d in 2025.

Return of capital strategy:

• Full execution of inaugural normal course issuer bid: On March 15, the company fully completed its inaugural annual NCIB, returning $225-million to shareholders (58 million shares repurchased and cancelled for an average price of $3.88 per share).
• Two thousand twenty-four return of capital commitment: Athabasca Oil is allocating 100 per cent of free cash flow (not including Duvernay Energy) to share buybacks in 2024. The company renewed its NCIB with the capacity to repurchase up to 55 million shares. Year to date, the company has completed $97-million in share buybacks. The company has reduced its fully diluted share count by 72 million shares or 11 per cent since March 31, 2023.

Athabasca Oil -- strategic update and corporate guidance:

• Value creation: Athabasca Oil's capital allocation framework is designed to unlock shareholder value by prioritizing multiyear cash flow per-share growth. The company's long-life, low-decline asset base provides a differentiated liquids-weighted growth platform supported by financial resiliency to execute on return of capital initiatives.
• Thermal oil assets: Athabasca Oil's top-tier assets underpin a strong free cash flow outlook, with a $135-million 2024 capital budget and production guidance of 32,000 to 33,000 bbl/d. Athabasca Oil has differentiated and significant unrecovered capital balances on its thermal oil assets that ensure a low Crown royalty framework (approximately 7 per cent). Leismer is forecasted to remain prepayout until 2027 (and beyond with incremental project capital) while Hangingstone is forecasted to remain prepayout beyond 2030.
• Leismer expansion: The facility expansion at Leismer was completed in late February with additional wells currently being brought on stream, and the company remains on track to reach approximately 28,000 bbl/d midyear.
• Leismer growth to 40,000 bbl/d: The company is operationally ready for progressive growth up to 40,000 bbl/d over the next three years. These growth steps are flexible and highly economic (approximately $25,000 per bbl/d capital efficiency) and will maximize value creation when executed alongside the company's return of capital initiatives. Incremental capital allocation is anticipated following the ramp-up of the current expansion project and is supported by a constructive multiyear heavy oil pricing outlook.
• Hangingstone activity: The company is preparing to spud two approximately 1,400-metre well pairs in third quarter 2024. Well design with extended-reach laterals is expected to drive project capital efficiencies of approximately $15,000 per bbl/d and will leverage off available infrastructure capacity. These sustaining well pairs will support base production in 2025 and beyond with the objective of ensuring Hangingstone continues to deliver meaningful cash flow contributions to the company and maintain competitive netbacks ($35 per bbl Q1 2024 operating netback).
• Exposure to improving Alberta heavy oil pricing: With the start-up of the Trans Mountain pipeline expansion (590,000 bbl/d) in early May, Western Canadian Select heavy differentials have narrowed significantly with differentials currently reflecting approximately $11 (U.S.) to $13 (U.S.) per bbl for the rest of 2024. Every $5-per-barrel WCS change impacts adjusted funds flow by approximately $85-million annually.
• Managing for free cash flow: Excluding its 70-per-cent equity interest in Duvernay Energy, Athabasca Oil expects to generate $1.2-billion in free cash flow during the three-year time frame of 2024 to 2026.
• Tax-free horizon: As a result of its $2.6-billion in corporate tax pools, Athabasca Oil is not forecasted to pay cash taxes for approximately seven years.

Duvernay Energy -- strategic update and corporate guidance:

• Value creation: Duvernay Energy (DEC) is an operated, private subsidiary of Athabasca Oil (owned 70 per cent by Athabasca Oil and 30 per cent by Cenovus Energy Inc.). DEC accelerates value realization for Athabasca Oil's shareholders by providing a clear path for self-financed production and cash flow growth in the prolific Kaybob Duvernay resource play. This will be achieved without compromising Athabasca Oil's capacity to finance its thermal oil assets or its return of capital strategy.
• Duvernay assets: There is exposure to approximately 200,000 gross acres in the liquids-rich and oil windows with approximately 500 gross future well locations, including approximately 46,000 acres with 100-per-cent working interest. There has been over 1,000 wells drilled in the area in the past 10 years, including many on existing DEC lands, providing for a unique low-risk development outlook.
• Financial capability: DEC was seeded with $40-million of cash by the equity partners, and the company has a $50-million credit facility. The plan is to allocate 100 per cent of adjusted funds flow from DEC to drive near-term production growth.
• Capital program: DEC recently brought on production a two-well pad (100-per-cent working interest) at 03-18-64-17W5 with an average horizontal length of approximately 4,150 metres per well. A second three-well pad at 02-03-65-20W5 (30-per-cent working interest) is expected to be placed on stream in June. The 2024 capital program of $82-million includes four multiwell pads supporting production momentum with volumes expected to average approximately 6,000 boe/d in 2025. The company has self-financed growth potential to approximately 25,000 boe/d (75 per cent liquids) by the late 2020s.

Environmental, social and governance:

• ESG report: Its fourth annual ESG report serves as a platform to demonstrate positive impacts to its stakeholders, explain how sustainability and responsibility are incorporated into every decision it makes, and reaffirm its commitment to ESG amidst an evolving energy landscape. The report is available at the company's website and SEDAR+.
• Environmental targets: Athabasca Oil continues to make strides in reducing its carbon footprint by investing in new technology and in lower greenhouse gas intensity resource developments. The company has reduced its GHG emission intensity by 21 per cent since 2015 and is targeting a total 30-per-cent reduction through 2025. Growth in the low emission intensity Duvernay shale play is expected to keep the company on track with its targets.
• Safety is always a top priority: Its results demonstrate a robust commitment by its teams as evidenced by its 2023 total recordable injury frequency of 0.3 per 200,000 workhours, well below industry average, with no serious injuries. The company is proud to report a fifth consecutive year with zero reportable hydrocarbon spills.

Annual shareholders meeting:

• Athabasca Oil will be hosting its annual general and special meeting of shareholders on Thursday, May 9, 2024, at 9 a.m. MT. The meeting will be hosted virtually, and shareholders and guests can listen by live webcast with details available at the company's website.

About Athabasca Oil Corp.

Athabasca Oil is a Canadian energy company with a focused strategy on the development of thermal and light oil assets. Situated in Alberta's Western Canadian sedimentary basin, the company has amassed a significant land base of extensive, high-quality resources. Athabasca Oil's light oil assets are held in a private subsidiary (Duvernay Energy), in which Athabasca Oil owns a 70-per-cent equity interest. Athabasca Oil's common shares trade on the Toronto Stock Exchange under the symbol ATH.

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