Mr. Robert Broen reports

ATHABASCA OIL ANNOUNCES 2024 BUDGET AND RETURN OF CAPITAL UPDATE

Athabasca Oil Corp. has released its 2024 budget focused on profitable production growth and strong free cash flow generation. Athabasca provides investors unique positioning to top-tier oil-weighted assets (thermal oil and Duvernay) with a capital allocation framework aimed at maximizing cash-flow-per-share growth and returning capital to shareholders.

2024 Budget Highlights

• Capital Program. Athabasca is planning capital expenditures of $175 million ($135 million Thermal Oil & $40 million Light Oil) with activity focused on completing the 28,000 bbl/d expansion project at Leismer, sustaining capital at Hangingstone and three Duvernay pads at Kaybob.
• Profitable and Sustainable Growth. The Company plans to grow production to ~37,500 boe/d by year-end 2024, representing ~14% growth from year-end 2023. Annual production guidance is 35,000 - 36,000 boe/d (~98% Liquids). Growth will be weighted to the second half of the year with the Leismer expansion project expected to be completed mid-year and Duvernay production additions into the Fall. The portfolio of long reserve life assets underpins a low corporate decline rate of ~5% annually and the Company estimates sustaining capital at ~$150 million annually.
• Managing for Strong Free Cash Flow. Athabasca anticipates generating ~$500 million of Adjusted Funds Flow and ~$325 million of Free Cash Flow (US$80/bbl WTI & US$15/bbl WCS heavy differential)1. During the timeframe of 2024 - 2026, Athabasca forecasts >$1 Billion in Free Cash Flow1, representing over 50% of its current equity market capitalization.
• Exposure to Improving Heavy Oil Pricing. Athabasca anticipates tightening of the WCS heavy differentials from current levels as the Trans Mountain Expansion pipeline (590,000 bbl/d) commences operations in 2024. Every $5/bbl WTI change impacts Adjusted Funds Flow by ~$55 million annually and every $5/bbl WCS change impacts Adjusted Funds Flow by ~$85 million annually.
• Financial Resiliency. Athabasca's long reserve life assets and strong balance sheet provide resiliency. The Company estimates 2023 year-end Liquidity of ~$455 million, including cash of ~$370 million. The principal balance on the Company's senior secured second lien notes (the "Notes") is US$157 million with an estimated year-end Net Cash position of ~$155 million. The Company's low sustaining capital requirements are fully funded within cash flow to ~US$55/bbl WTI.

Footnote: Refer to the "Reader Advisory" section within this news release for additional information on Non-GAAP Financial Measures (e .g. Adjusted Funds Flow, Free Cash Flow, Net Cash, Liquidity ) and production disclosure.

1 Pricing Assumptions: 2024 US$80 WTI, US$15 Western Canadian Select "WCS" heavy differential, C$3 AECO, and $0.75 C$/US$ FX. 2025-26 US$85 WTI, US$12.50 WCS heavy differential, C$3 AECO, and $0.75 C$/US$ FX.

Return of Capital Update

Athabasca commenced its return of capital commitment to shareholders in 2023 through an inaugural share buyback program. Since April, the Company has completed ~$137 million in buybacks (39 million shares at an average price of $3.51 per share). The Company has reduced its fully diluted share count by ~50 million shares or 7.5% to the end of November. In addition, a total of 92% of the warrants issued in October 2021 in connection with the Notes have been exercised to date with a remaining 6.7 million potential shares issuable (4.9 million potential shares assuming cashless exercise at a $3.50 share price).

In 2024, Athabasca plans to allocate 100% of Free Cash Flow to shareholders through share buybacks. The Company anticipates completing its current Normal Course Issuer Bid on March 15, 2024 with the intention to renew the program with the Toronto Stock Exchange for another 12 month period.

Asset Development

Capital Efficient Growth at Leismer

Production is expected to increase to ~28,000 bbl/d mid-year through a facility expansion project and the ramp-up of eight behind pipe wells that recently commenced steaming operations. This production level can be held with modest sustaining capital (~$6/bbl) for many years into the future.

The Company will drill an additional eight wells in 2024. Drilling is expected to commence in January with four redrill wells on Pad 4. Redrills target low-risk bypassed pay on mature pads with strong expected capital efficiencies of ~$6,500/bbl/d leveraging off existing pad infrastructure. In the second half of 2024, additional well pairs will be drilled on Pad 10 which is expected to accommodate a total of 15 future well pairs in some of the best reservoir in the Leismer development area.

Leismer has regulatory approved capacity for 40,000 bbl/d. The Company is operationally ready to execute phased expansions to reach this capacity within approximately three years at competitive capital efficiencies. These future growth projects will be contingent on less volatile WCS heavy differentials that are expected with the completion of the Trans Mountain Pipeline Expansion. Future expansions are expected to provide a continuous growth profile at the asset that is well within corporate cash flow and the Company will maintain its return of capital commitment and focus on balance sheet strength.

Hangingstone Sustaining Operations

Activity at Hangingstone will include drilling two sustaining well pairs utilizing modern ~1,400 meter lateral length design with expected capital efficiencies of ~$15,000 bbl/d. These 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.

Kaybob Duvernay Drilling

The Company is beginning activity to accelerate the value of its asset position in the Duvernay. Activity in 2024 will include nine gross wells at Kaybob. Athabasca has spud a two-well 100% working interest pad at Kaybob East that will be placed on production in Q2 2024. A three-well 30% working interest pad at Kaybob West is expected to spud in Q1 2024 and will be placed on production in Q2 2024. A four-well 30% working interest pad at Kaybob East is expected to spud in Q4 2024 and will be placed on production in 2025. The Duvernay program is expected to drive production and cash flow growth and will offset the volumes associated with the Montney non-core disposition completed in September 2023.

At Kaybob East and Two Creeks, the Company has extended production history from 27 wells derisking an inventory of 290 gross future locations. The wells have consistently supported the Company's type curve expectations with IP365's averaging ~550 boe/d per well, ~85% Liquids (latest 12 wells since 2020) demonstrating the significant potential of the asset. The area continues to be active with industry drilling programs underway.

Strategic Positioning

Athabasca is focused on driving shareholder value through strong multi-year cash flow per share growth. The Company's long life, low decline asset base provides a platform to drive profitable liquids weighted growth supported by financial resiliency to execute on return of capital initiatives.

• Pre-payout Thermal Oil Differentiation. Strong margins and Free Cash Flow are supported by a Thermal Oil pre-payout Crown royalty structure, with royalty rates between 5 - 9% anticipated to last into 20271. Leismer has regulatory approved capacity of 40,000 bbl/d. In addition, Athabasca has a fully de-risked asset at Corner which also has regulatory approval for 40,000 bbl/d with reservoir quality equivalent to or better than Leismer. The Company has updated its Corner development plans and is prepared to explore external funding options with stability in commodity prices.
• Light Oil Optionality. Athabasca has exposure to ~155,000 gross Duvernay acres across Kaybob West, Kaybob North, Kaybob East and Two Creeks with ~500 future well locations serviced by strategic operated infrastructure. The Company has strong confidence in the Duvernay's deliverability with extended production history on its acreage and regional industry results. The Company's development plans are aimed at accelerating the transition of resource value to cash flow growth.
• Excellent Exposure to Commodity Upside. Athabasca maintains excellent exposure to upside in commodity prices with 25% of rolling 12-month production volumes hedged in accordance with its debt agreements. The Company has hedged ~9,000 bbl/d in Q1 2024 with an average WTI collar of US$50 - US$126/bbl. Every $5/bbl WTI change impacts Adjusted Funds Flow by ~$55 million annually and every US$5/bbl WCS differential change impacts Adjusted Funds Flow by ~$85 million annually.
• Differentiated Tax Pools. The Company has ~$2.8 billion in tax pools, including ~$2.3 billion of immediately deductible non-capital loses and exploration pools. The Company does not anticipate paying cash taxes until 2030 ($85/bbl WTI & $12.50/bbl WCS differential flat long-term pricing).
• Emissions Reduction and Carbon Capture. The Company has a target of a 30% reduction in emissions intensity by 2025 from 2015 levels. Athabasca has also partnered with Entropy Inc. to implement carbon capture and storage ("CCS") at Leismer, using Entropy's proprietary CCS technology. This project is not expected to be sanctioned until the Federal government provides fiscal and regulatory policy that ensure CCS projects are economically viable. Our annual ESG report can be found on the Company's website.

About Athabasca Oil Corporation

Athabasca Oil Corporation 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's common shares trade on the TSX under the symbol "ATH".

We seek Safe Harbor.