Athabasca Oil Corporation Announces 2017 First Quarter Results

Transcription

1 FOR IMMEDIATE RELEASE May 3, 2017 Athabasca Oil Crpratin Annunces 2017 First Quarter Results CALGARY Athabasca Oil Crpratin (TSX: ATH) ( Athabasca r the Cmpany ) is pleased t prvide its 2017 first quarter results and an peratins update. The first quarter marks the cmpletin and integratin f the transfrmatinal Statil il sands acquisitin, a successful balance sheet refinancing and peratinal mmentum in the Light Oil divisin. The Cmpany is psitined fr strng ecnmic grwth thrugh the secnd half f First Quarter and Recent Highlights Q highlights Prductin f 26,737 be/d (95% liquids), representing 72% per share grwth year ver year Capital expenditures f $78 millin ($67 millin net Light Oil and $11 millin Thermal Oil) Cst discipline drives a 54% year ver year G&A reductin t $2.67/be Successful Placid Mntney winter prgram (70% wrking interest) Current Light Oil prductin is apprximately 7,500 be/d, representing 120% grwth ver Q wells rig released with 11 wells cmpleted and placed n prductin befre break up Initial prductin and pressure data frm the new wells are supprting Athabasca s type curve which is highly ecnmic in the current pricing envirnment (52% IRR & 22 mnth payback at US$50/bbl WTI). Initial free liquids yields are trending between bbl/mmcf Cmmissined the Placid battery and infrastructure prject in April with capacity fr 10,000 bbl/d and 36 mmcf/d Psitined fr strng ecnmic prductin and cash flw grwth thrugh H $200 millin grss Duvernay jint venture prgram in 2017 (30% wrking interest) Murphy perated tw rigs thrugh the winter and rig released eight hrizntal wells Cmpletins peratins underway n tw pads with ten additinal spuds planned fr H Advancing phase windw delineatin and ptimized well design with lnger laterals and larger fracs (up t 3,000 meters and 3,000 lbs/ft) Thermal divisin underpins lw crprate decline and free cash flw generatin Successful integratin f Leismer drives $11 millin f free cash flw thrugh February and March $30 millin capital reductin in 2017 as a result f cntinued strng well pair perfrmance and the prir investment in sustaining infill wells Cmmdity hedging f 13,000 bbl/d at ~$53/bbl WCS prtects near term cash flw Slidified the balance sheet and lng term funding psitin Strng liquidity and financial flexibility with $327 millin f cash, a $203 millin capital carry balance and $103 millin f available credit facilities at quarter end

2 Term debt extended t 2022 thrugh the issuance f US$450 millin f new cvenant light ntes Significant asset value in perated Thermal and Light Oil infrastructure Athabasca s Strategy Athabasca is an intermediate il weighted prducer with expsure t several f the largest resurce plays in Western Canada including the Mntney, Duvernay and il sands. The Cmpany has a fully funded develpment utlk capable f delivering grwth t 60,000 be/d by 2020 (40% prductin per share CAGR) and is guided by a strategy that includes: Light Oil: Defined and Material Grwth A scalable perated Mntney psitin at Placid Funded Duvernay develpment thrugh the jint venture with Murphy Oil Prductin grwth t ver 10,000 be/d by year end 2017 and apprximately 25,000 be/d ver the next five years Thermal Oil: Free Cash Flw with Leverage t Oil prices A large lw decline asset base accelerates free cash flw Free cash flw f apprximately $350 millin ver a five year perid at US$55/bbl WTI Future lw risk expansin ptins Financial Sustainability Maturing cash flw prfile with strng sustainability metrics and a lw verall crprate prductin decline f apprximately 7.5% annually Diverse asset base prvides flexibility in future capital allcatin decisins Net debt t cash flw expected t be less than 2.5x at year end 2018 (US$55/bbl WTI)

3 Financial and Operating Highlights Three mnths ended March 31, ($ Thusands, except per share and be amunts) CONSOLIDATED PRODUCTION Petrleum and natural gas vlumes (be/d) 26,737 13,348 LIGHT OIL DIVISION Petrleum and natural gas sales vlumes (be/d) 3,421 6,319 Light Oil perating incme 1 $ 6,863 $ 4,908 Light Oil perating netback ($/be) 1 $ $ 8.53 Capital expenditures $ 77,646 $ 30,658 Recvery f capital carry thrugh capital expenditures $ (10,680) $ THERMAL OIL DIVISION 2 Bitumen prductin (bbl/d) 23,316 7,029 Thermal Oil perating incme (lss) 1 $ 12,341 $ (23,074) Thermal Oil perating netback 1,2 $ 5.89 $ (35.34) Capital expenditures 3 $ 10,868 $ 916 CASH FLOWS AND FUNDS FLOW Cash flw frm perating activities $ (52,896) $ (38,017) Cash flw frm perating activities per share (basic & diluted) $ (0.11) $ (0.09) Funds flw frm peratins 1 $ (1,649) $ (39,982) Funds flw frm peratins per share 1 (basic & diluted) $ $ (0.10) NET LOSS AND COMPREHENSIVE LOSS Net lss and cmprehensive lss $ (29,162) $ (65,129) Net lss and cmprehensive lss per share (basic & diluted) $ (0.06) $ (0.16) SHARES OUTSTANDING Weighted average shares utstanding (basic & diluted) 472,157, ,511,104 ACQUISITIONS AND FINANCINGS Leismer Crner Acquistin 4 $ (622,076) $ Net prceeds frm sale f assets $ 90,170 $ 163 Net prceeds frm issuance f 2022 Ntes $ 542,554 $ Repayment f 2017 Ntes $ (550,000) $ March 31, 2017 December As at ($ Thusands) LIQUIDITY AND INDEBTEDNESS Cash and cash equivalents $ 212,999 $ 650,301 Restricted Cash $ 113,823 $ 107,012 Capital carry receivable (current & lng term prtin undiscunted) $ 202,789 $ 213,469 Face value f lng term debt (current and lng term prtin) $ 599,490 $ 550,000 1) Refer t "Advisries and Other Guidance" in the MD&A fr additinal infrmatin n Nn GAAP Financial Measures. 2) The Leismer Prject was acquired n January 31, Frm the date f the acquisitin t the end f the first quarter f 2017, the Leismer Prject prduced 22,521 bbl/d. 3) Thermal Oil capital expenditures excludes the cst f the Leismer Crner Acquisitin. 4) Cnsists f cash f $431.3 millin, cmmn shares f $166.0 millin and cntingent payment bligatins f $24.7 millin.

4 Operatins Update Light Oil Greater Placid Mntney (Athabasca perated, 70% wrking interest) At Placid, Athabasca cmpleted an active winter prgram that included rig releasing 20 Mntney wells, the cmmissining f a new battery and the tie in f three multi well pads. Placid is psitined fr flexible and scalable ecnmic grwth ver the next five years. Tw drilling rigs cmmenced peratins last fall and the Cmpany rig released a ttal f 20 hrizntal wells frm five pads. The prgram was designed t accelerate pad drilling peratins targeting tw Mntney cycles. Drilling csts averaged $3.0 millin per well with average lateral lengths f apprximately 2,600 meters and the latest eight wells up t 3,000 meters. The Cmpany maintained its drilling csts year ver year as peratinal efficiencies ffset mdest service cst inflatin. Drilling perfrmance n the latest wells were industry pacesetters reaching ttal depth in apprximately 15 days. The Cmpany is advancing peratinal readiness fr next winter s drilling prgram which will include a cmbinatin f lw risk infill lcatins ff existing pads and step uts frm the cre develpment. A ttal f three pads, 11 wells, were cmpleted this winter with all wells placed n prductin in April thrugh the Cmpany s wned and perated infrastructure (surface lcatins 7 30, & W5). The Cmpany mdified its cmpletin design t a plug and perf frm ball drp with the gal t imprve fracture intensity and ultimately lng term rates and recveries. Cmpletin csts fr the prgram averaged $4.2 millin per well ($124,000 per stage, 34 average stages per well) with prppant intensity up t 1,000 lbs/ft (1.8 T/m). The remaining tw pads are expected t be cmpleted fllwing break up and placed n prductin in the third quarter (surface lcatins W5 & W5). The Placid battery and infrastructure prject was cmmissined in April. The new infrastructure will supprt Athabasca s mid term grwth targets and has capacity f 10,000 bbl/d and 36 mmcf/d (grss). The Cmpany perates all f its reginal infrastructure with liquids pipe cnnected t the Pembina Peace system and gas prcessed thrugh Keyera s Simnette Gas Plant and marketed thrugh the Alliance System. In April, Athabasca s Light Oil prductin was impacted by a 16 day unplanned shutdwn f the Keyera Simnette Gas Plant. The Cmpany was able t partially mitigate the impact by redirecting a prtin f its reginal Kaybb and Placid prductin t the SemCAMS KA plant. During the shutdwn apprximately 50% f vlumes were restricted with an estimated 250 be/d impact t annual vlumes. Current Light Oil prductin is apprximately 7,500 be/d representing 120% grwth ver Q In the Mntney, initial prductin and pressure data frm the new wells are supprting Athabasca s type curve which is highly ecnmic in the current pricing envirnment (52% IRR and 22 mnth payback at US$50/bbl WTI). Reginal prductin is temprarily restricted as a result f spring rad bans limiting the trucking f flwback fluid. Initial free liquids yields have ranged between bbl/mmcf and cmpare favrably t type curve expectatins between bbl/mmcf during the first 30 days f peratin. The

5 Cmpany anticipates increasing gas rates ver time as the wells clean up. Extended prductin rates fr the new wells will be prvided with the Cmpany s Q results. Decisins regarding secnd half activity levels will be finalized in the summer and the Cmpany retains flexibility t adapt the prgram t results and external market cnditins. Greater Kaybb Duvernay (Murphy perated, 30% wrking interest) Jint venture peratins cmmenced in the fall f 2016 with the bjective f driving near term prductin and cash flw grwth, delineatin acrss all phase windws, ptimizing well design and maximizing land retentin. Murphy perated tw drilling rigs thrugh the winter seasn and rig released eight wells frm fur pads. Initial activity has been fcused in the cndensate rich gas windw at Kaybb West and in the vlatile il windw at Kaybb West Nrth. Drilling perfrmance has been cmpetitive with industry peers and wells have averaged apprximately 24 days spud t rig release (5,000 6,000 meters average measured depth). Activity thrugh the secnd half will step ut thrugh the vlatile il windw at Kaybb East, Tw Creeks and Simnette. A tw well pad at surface lcatin W5 was spud in late 2016 and cmpleted and placed n prductin thrugh the first quarter. Utilizing an existing pad, Murphy drilled tw ffsets t the W5 well with average lateral lengths f apprximately 1,400 meters. A restricted flw back technique was emplyed t evaluate cmpletin design and reservir prductin characteristics ver time. A tw well pad at surface lcatin W5 was rig released in early March with average laterals f apprximately 2,800 meters. Cmpletins peratins are underway with tie in expected pst break up. A single well at surface lcatin W5 was rig released in late March with a 2,900 meter lateral. This well is the lngest lateral drilled t date and the mst nrthern well in the vlatile il windw. Cmpletins peratins are planned pst break up. A three well pad at surface lcatin W5 was rig released in April with average laterals f apprximately 2,400 meters. Cmpletins peratins are underway with tie in expected pst break up. The 2017 budget includes spudding 16 grss wells which are a mix f pad develpment lcatins and delineatin wells thrughut the vlatile il windw. Murphy intends t ptimize well design with average lateral lengths increasing t between 2,500 3,000 meters and frac intensity between 2,000 3,000 lbs/ft (3 5 T/m). Ttal lateral drilling fr the prgram is apprximately 45,000 meters and this cmpares t Athabasca s initial 20 well appraisal campaign f apprximately 27,000 meters since Results frm the Duvernay prgram are expected t pick up thrugh H as wells are cmpleted and tied in pst break up with 10 additinal spuds planned fr the balance f the year.

6 Thermal Oil Leismer Athabasca assumed peratrship f Leismer fllwing clsing f its acquisitin n January 31, The asset is meeting expectatins with an established lw decline prductin base and averaged 22,521 bbl/d thrugh February and March. Over the same perid the asset generated $17 millin f perating incme and $11 millin f free cash flw. Leismer is a Tier 1 thermal asset with a strng free cash flw prfile in the current price utlk. As a result f strng well pair perfrmance and prir investment in sustaining infill wells the 2017 capital budget at Leismer has been reduced by $30 millin t $54 millin (previusly $84 millin) with n impact t planned prductin. Athabasca als sees pprtunities fr perating cst reductins ver the next year including alternate diluent surcing which is expected t be peratinal in mid Near term peratins will fcus n prductin ptimizatin acrss the field and the start up f predrilled infills n Pad L5. Thrugh the mid term the Cmpany intends t expand Pad L2 with five new well pairs and evaluate infill pprtunities n Pads L3 and L4. Hangingstne Hangingstne averaged 8,552 bbl/d fr the quarter and apprximately 9,200 bbl/d fr March. As previusly guided the Cmpany is anticipating facility maintenance in April and May that will impact nearterm prductin grwth. The prject is expected t reach name plate capacity f apprximately 12,000 bbl/d in 2018 with minimal maintenance capital expected within the first five years f peratins. Egress Update In the first quarter Athabasca secured 20,000 bbl/d f blended bitumen capacity n the Kinder Mrgan Trans Muntain Expansin Prject. The pipeline prject is federally apprved and is expected t be inservice in late The Cmpany believes securing term take away capacity t multiple end markets is essential t its lng term strategy. The Trans Muntain pipeline will prvide Athabasca expsure t glbal il demand grwth.

7 2017 Outlk and Budget Light Oil Guidance Athabasca s 2017 Light Oil capital budget is unchanged at $135 millin ($120 millin fr Placid Mntney and $15 millin net pst capital carry fr Duvernay) with prductin guidance f 6,500 7,500 be/d and prductin expected t reach 10,000 be/d befre year end. H Mntney capital will be assessed mid year. Thermal Oil Guidance Athabasca s 2017 Thermal Oil budget has been reduced by $30 millin t $75 millin (apprximately a 30% reductin) with unchanged prductin guidance f 29,000 32,500 bbl/d. The capital prgram nw cnsists f $54 millin at Leismer, $15 millin at Hangingstne and an additinal $6 millin fr maintaining Athabasca s lng dated thermal leases Budget & Guidance Details Full Year CORPORATE (net) Prductin 1 (be/d) 36,000 40,000 Liquids Weighting (%) ~90% Funds Flw frm Operatins ($MM) ~$90 LIGHT OIL Prductin (be/d) 6,500 7,500 Operating Incme ($MM) ~$75 Capital Expenditures ($MM) $135 THERMAL OIL Bitumen Prductin 1 (bbl/d) 29,000 32,500 Operating Incme ($MM) ~$100 Capital Expenditures ($MM) $75 COMMODITY ASSUMPTIONS WTI (US$/bbl) $52.00 Edmntn Par (C$/bbl) $65.00 Western Canadian Select (C$/bbl) $50.00 AECO Gas (C$/mcf) $2.75 FX (US$/C$) 0.75 Ntes: 1) Prductin guidance reflects a January 31, 2017 clsing date fr the Statil acquisitin with Leismer vlumes t be reprted frm February December.

8 Balance Sheet and Risk Management Update In the first quarter Athabasca cmpleted a cmprehensive balance sheet refinancing transactin. This included the issuance f US$450 millin f five year cvenant lite secnd lien ntes t replace the Cmpany s existing $550 millin f secnd lien ntes, and the establishment f a $120 millin reserve based credit facility. Athabasca is well psitined t advance its strategic bjectives with multi year funding certainty, financial flexibility and a strng liquidity utlk. At the end f the first quarter Athabasca had a cash psitn f $327 millin (inclusive f restricted cash) and $103 millin f available credit facilities. The Cmpany als has $203 millin f remaining capital carry that will drive $1 billin f grss Duvernay investment ver fur years, as well as significant asset value in its established and perated Thermal and Light Oil infrastructure. Athabasca anticipates an internally funded capital prgram in 2018 at US$55/bbl WTI with net debt t cash flw f less than 2.5x and trending lwer in subsequent years. The Cmpany has recently cmmenced a cmmdity risk management prgram designed t prtect a base level f cash flw and supprt its capital plans. The Cmpany intends t hedge a minimum f 20,000 bbl/d fr the balance f 2017 with 13,000 bbl/d f Western Canadian Select ( WCS ) hedged at apprximately C$53/bbl and an additinal 7,000 bbl/d f WCS differential hedged at apprximately US$14.75/bbl. Ging frward, a multi year hedging prgram is expected t frm a part f the Cmpany s risk management strategy.

9 Abut Athabasca Oil Crpratin Athabasca Oil Crpratin is a Canadian energy cmpany with a fcused strategy n the develpment f thermal and light il assets. Situated in Alberta s Western Canadian Sedimentary Basin, the Cmpany has amassed a significant land base f extensive, high quality resurces. Athabasca s cmmn shares trade n the TSX under the symbl ATH. Fr mre infrmatin, visit Fr mre infrmatin, please cntact: Media and Financial Cmmunity Matthew Taylr Vice President, Capital Markets and Cmmunicatins mtaylr@atha.cm

10 Reader Advisry: This News Release cntains frward lking infrmatin that invlves varius risks, uncertainties and ther factrs. All infrmatin ther than statements f histrical fact is frward lking infrmatin. The use f any f the wrds anticipate, plan, cntinue, estimate, expect, may, will, prject, believe, cntemplate, target, ptential and similar expressins are intended t identify frward lking infrmatin. The frward lking infrmatin is nt histrical fact, but rather is based n the Cmpany s current plans, bjectives, gals, strategies, estimates, assumptins and prjectins abut the Cmpany s industry, business and future perating and financial results. This infrmatin invlves knwn and unknwn risks, uncertainties and ther factrs that may cause actual results r events t differ materially frm thse anticipated in such frward lking infrmatin. N assurance can be given that these expectatins will prve t be crrect and such frward lking infrmatin included in this News Release shuld nt be unduly relied upn. This infrmatin speaks nly as f the date f this News Release. In particular, this News Release cntains frward lking infrmatin pertaining t, but nt limited t, the fllwing: the Cmpany's five year grwth utlk and that such grwth utlk is fully funded; the Cmpany s expectatin f realizing strng ecnmic grwth thrugh the secnd half f 2017; estimates f, and timing f, sustainable free cash flw generatin, net debt t cash flw levels and cash and cash equivalents and liquidity, fr certain future perids; the Cmpany s 2017 prductin guidance crprately as well as fr each f its Light Oil and Thermal Oil prjects; the Cmpany s expected prductin and ecnmic grwth in 2017 and ver the next five years; the Cmpany s prductin levels by 2020; that the Placid area assets will prvide flexible and scalable ecnmic grwth ver the next five years; the payback timelines expected fr the Cmpany s Mntney wells; the Cmpany s plans with respect t its 2017/2018 winter drilling prgram; the Cmpany s expectatin that it will increase gas rates with well clean up; the benefits expected t be realized frm the Cmpany s mdified well cmpletin design; the benefits expected t be realized frm the Cmpany s new Placid battery and infrastructure; the secnd half 2017 prgram fr the Cmpany s interest in the Murphy perated assets; the expectatin that the Trans Muntain pipeline will be in service by late 2019; the impact f, and the benefits expected t be realized frm, the Statil transactin; and future perfrmance and characteristics f the Leismer and Crner assets including their quality and resilience t lwer cmmdity prices; the Cmpany s expectatin that its lw decline thermal il asset base will accelerate its free cash flw generatin; the Cmpany s expectatin that it will be able t maintain stable prductin frm the Leismer assets fr the freseeable future; the Cmpany s expectatin that its Thermal Oil assets prvide future lw risk expansin ptins; the Cmpany s Leismer prductin ptimizatin plans; the Cmpany s ability t reduce perating and capital csts ver the next five years; the timing fr achievement f name plate capacity at Hangingstne and expectatins regarding maintenance capital within the first five years f peratins; future drilling and cmpletin plans including the number f wells expected t be drilled and timing f spudding, rig releasing and cmpleting such wells; the timing f when such wells will be placed n prductin; the ttal number f lateral meters expected t be drilled in 2017; expectatins with respect t future prductin hedging levels and the benefit expected t be realized frm such hedging; decline rates; estimates f 2017 funds flw frm peratins, perating incme and capital expenditures; the capability f the Cmpany's five year develpment utlk t deliver ptential grwth in per share prductin; the benefits expected t be realized by the Cmpany frm its issuance f the US$450 millin senir secured secnd lien ntes and establishment f the $120 millin credit facility; and ther matters. Infrmatin relating t "reserves" is als deemed t be frward lking infrmatin, as it invlves the implied assessment, based n certain estimates and assumptins, that the reserves described exist in the quantities predicted r estimated and that the reserves can be prfitably prduced in the future. With respect t frward lking infrmatin cntained in this News Release, assumptins have been made regarding, amng ther things: cmmdity prices fr petrleum and natural gas; the regulatry framewrk gverning ryalties, taxes and envirnmental matters in the jurisdictins in which the Cmpany cnducts and will cnduct its business and the effects that such regulatry framewrk will have n the Cmpany, including n the Cmpany s financial cnditin and results f peratins; the Cmpany s financial and peratinal flexibility; the Cmpany s financial sustainability, the Cmpany s ability t accelerate develpment when prices recver; Athabasca s cash flw break even cmmdity price; gelgical and engineering estimates in respect f Athabasca s reserves and resurces; the applicability f technlgies fr the recvery and prductin f the Cmpany s reserves and resurces; the Cmpany s ability t demnstrate the quality f its asset base and t build large scale prjects; future capital expenditures t be made by the Cmpany; future surces f funding fr the Cmpany s capital prgrams; the Cmpany s future debt levels; the Cmpany s ability t btain equipment in a timely and cst efficient manner; the gegraphy f the areas in which the Cmpany is cnducting explratin and develpment activities; that Athabasca and its security hlders will btain the anticipated benefits frm the $US450 senir secured secnd lien nte and the $120 millin credit facility and the Cmpany s ability t btain equipment in a timely and cst efficient manner. Actual results culd differ materially frm thse anticipated in this frward lking infrmatin as a result f the risk factrs set frth in the Cmpany s Annual Infrmatin Frm ( AIF ) dated March 9, 2017 that is r will be available n SEDAR at including, but nt limited t: fluctuatins in market prices fr crude il, natural gas and bitumen blend; plitical and general ecnmic, market and business cnditins in Alberta, Canada, the United States and glbally; changes t ryalty regimes, envirnmental risks and hazards; alternatives t and changing demand fr petrleum prducts; the ptential fr management estimates and assumptins t be inaccurate; dependence n Murphy as the Cmpany s jint venture participant in the Cmpany s Duvernay and Mntney assets; the dependence n Murphy as the peratr f the Cmpany s Duvernay assets; the substantial capital requirements f Athabasca s prjects and the ability t btain financing fr Athabasca s capital requirements; peratinal and business interruptin risks assciated with the Cmpany s facilities; failure by cunterparties t make payments r perfrm their peratinal r ther bligatins t Athabasca in cmpliance with the terms f cntractual arrangements between Athabasca and such cunterparties, and the pssible cnsequences theref; lng term reliance n third parties; abriginal claims; failure t btain regulatry apprvals r maintain cmpliance with regulatry requirements; failure t meet develpment schedules and ptential cst verruns; variatins in freign exchange and interest rates; factrs affecting ptential prfitability; risks related t future acquisitin and jint venture activities; reliance n, cmpetitin fr, lss f, and failure t attract key persnnel; uncertainties inherent in estimating quantities f reserves and resurces; changes t Athabasca s status given the current stage f develpment; litigatin risk; risks and uncertainties inherent in SAGD and ther bitumen recvery prcesses; risks related t hydraulic fracturing, including thse related t induced seismicity; expiratin f leases and permits; risks inherent in Athabasca s peratins, including thse related t explratin, develpment and prductin f petrleum, natural gas and il sands reserves and resurces; risks related t gathering and prcessing facilities and pipeline systems; availability f drilling and related equipment and limitatins n access t Athabasca s assets; increases in csts culd make Athabasca s prjects unecnmic; the effect f diluent and natural gas supply cnstraints and increases in the csts theref; envirnmental risks and hazards; failure t accurately estimate abandnment and reclamatin csts; reliance n third party infrastructure; seasnality; hedging risks; risks assciated with maintaining systems f internal cntrls; insurance risks; claims made in respect f Athabasca s peratins, prperties r assets; cmpetitin fr, amng ther things, capital, exprt pipeline capacity and skilled persnnel; the failure f Athabasca r the hlder f certain licenses, leases r permits t meet specific requirements f such licenses, leases r permits; risks related t Athabasca s amended credit facilities and senir secured ntes; and risks related t Athabasca s cmmn shares. Als included in this press release are estimates f Athabasca's 2017 capital expenditures, funds flw frm peratins, perating netbacks and perating incme levels, which are based n the varius assumptins as t prductin levels, cmmdity prices and currency exchange rates and ther assumptins disclsed in this news release. T the extent any such estimate cnstitutes a financial utlk, it was apprved by management and the Bard f Directrs f Athabasca n May 3, 2017, and is included t prvide readers with an understanding f the funding f Athabasca's capital expenditure prgram in 2017

11 and an utlk fr the Cmpany's activities and results and readers are cautined that the infrmatin may nt be apprpriate fr ther purpses. Management des nt have firm cmmitments fr all f the csts, expenditures, prices r ther financial assumptins used t prepare the financial utlk r assurance that such perating results will be achieved and, accrdingly, the cmplete financial effects f all f thse csts, expenditures, prices and perating results are nt bjectively determinable. The actual results f peratins f the Cmpany and the resulting financial results may vary frm the amunts set frth herein, and such variatins may be material. The financial utlk cntained in this New Release was made as f the date f this press release and the Cmpany disclaims any intentin r bligatins t update r revise such financial utlk, whether as a result f new infrmatin, future events r therwise, unless required pursuant t applicable law. Oil and Gas Infrmatin BOEs" may be misleading, particularly if used in islatin. A BOE cnversin rati f six thusand cubic feet f natural gas t ne barrel f il equivalent (6 Mcf: 1 bbl) is based n an energy equivalency cnversin methd primarily applicable at the burner tip and des nt represent a value equivalency at the wellhead. As the value rati between natural gas and crude il based n the current prices f natural gas and crude il is significantly different frm the energy equivalency f 6:1, utilizing a cnversin n a 6:1 basis may be misleading as an indicatin f value. Initial Prductin Rates The initial prductin rates prvided in this News Release shuld be cnsidered t be preliminary. Initial prductin rates disclsed herein may nt necessarily be indicative f lng term perfrmance r f ultimate recvery. Nn GAAP Financial Measures The "Funds Flw frm Operatins, "Light Oil Operating Incme", Light Oil Operating Netback, "Thermal Oil Operating Incme" and "Thermal Oil Operating Netback" financial measures cntained in this MD&A d nt have standardized meanings which are prescribed by IFRS and they are cnsidered t be nn GAAP measures. These measures may nt be cmparable t similar measures presented by ther issuers and shuld nt be cnsidered in islatin with measures that are prepared in accrdance with IFRS. Funds Flw frm Operatins is nt intended t represent cash flw frm perating activities, net earnings r ther measures f financial perfrmance calculated in accrdance with IFRS. The Funds Flw frm Operatins measure allws management and thers t evaluate the Cmpany s ability t fund its capital prgrams and meet its nging financial bligatins using cash flw internally generated frm nging perating related activities. Funds Flw frm Operatins per share (basic and diluted) is calculated as Funds Flw frm Operatins divided by the number f weighted average basic and diluted shares utstanding. The Light Oil Operating Incme and Light Oil Operating Netback measures in this MD&A are calculated by subtracting ryalties and perating and transprtatin expenses frm petrleum and natural gas sales and midstream revenues received. The Light Oil Operating Netback measure is presented n a per be basis. The Light Oil Operating Incme and the Light Oil Operating Netback measures allw management and thers t evaluate the prductin results frm the Cmpany s Light Oil assets. The Operating Incme and Operating Netback measures in this MD&A with respect t the Leismer Prject and Hangingstne Prject are calculated by subtracting the cst f diluent blending, ryalties, perating expenses and transprtatin expenses frm blended bitumen sales. The cnslidated Thermal Oil Operating Incme and Operating Netback measures als include realized gains n cmmdity risk management cntracts. The Thermal Oil Operating Netback measure is presented n a per bbl basis. The Thermal Oil Operating Incme and the Thermal Oil Operating Netback measures allw management and thers t evaluate the prductin results frm the Cmpany s Thermal Oil assets. The Net Debt measure is calculated by summing the face value f utstanding term debt with current liabilities and subtracting current assets adjusted fr the capital carry receivable and risk management cntracts. The Net Debt measure is nt intended t represent ther measures f financial psitin n the Cmpany s balance sheet that are calculated in accrdance with IFRS. The Net Debt financial measure allws management and thers t evaluate the Cmpany s funding psitin and utilizatin f debt within its capital structure.