Mr. Robert Broen reports

ATHABASCA OIL ANNOUNCES 2023 YEAR-END RESULTS & RESERVES AND PLANS TO RENEW ANNUAL SHARE BUYBACK PROGRAM

Athabasca Oil Corp. has released its audited 2023 year-end results and reserves. Athabasca provides investors unique positioning to top-tier liquids weighted assets (thermal oil and Duvernay) with a capital allocation framework aimed at maximizing cash-flow-per-share growth and returning capital to shareholders.

Year-end 2023 corporate results:

• Production: average production of 34,490 barrels of oil equivalent per day (boe/d) (95 per cent liquids), achieving annual guidance of 34,500 boe/d, after adjusting for the sale of non-core light oil assets;
• Cash flow: adjusted funds flow of $295-million and cash flow from operating activities of $306-million;
• Capital program: $140-million, below annual guidance of $145-million, with $99-million invested at its cornerstone Leismer asset focused on advancing the expansion project with growth expected to 28,000 barrels per day (bbl/d) by midyear 2024;
• Free cash flow: $155-million of free cash flow supporting return of capital commitments;
• Financial strength: net cash position of $131-million; liquidity of $429-million ($343-million of cash).

Return of capital strategy:

• 2023 share buybacks: $159-million of share repurchases between April and December (44 million shares at an average price of $3.58 per share); returned 94 per cent of excess cash flow to shareholders through share buyback program, well in excess of Athabasca's 75-per-cent commitment in 2023;
• 2024 return of capital commitment: Athabasca is planning to allocate of 100 per cent of free cash flow to shareholders through continued share buybacks in 2024. Year to date, the company has completed approximately $24-million of share repurchases (5.4 million shares at an average price of $4.38 per share). The company expects to fully execute its normal course issuer bid (NCIB) approval of 57,967,098 common shares for the 12-month period ending March 15, 2024. The company plans to renew its NCIB with the Toronto Stock Exchange for another 12-month period.

2023 year-end reserves:

• Differentiated long-life reserves: Athabasca holds 1.2 billion barrels of proved plus probable reserves and approximately one billion barrels of contingent resource (best estimate). This represents a $5.3-billion (2) net present value at a discount of 10 per cent (NPV10) of proved plus probable reserves ($9.23 per share), an increase of 14 per cent from 2023, and includes $1.8-billion (2) of proved developed producing reserves ($3.09 per share) and $3.1-billion (2) of total proved reserves ($5.44 per share). Athabasca's proved plus probable reserve life is approximately 100 years.
• Deep inventory of development projects: Leismer and Corner have regulatory approval for up to 80,000 bbl/d and benefit from a prepayout Crown royalty structure, with royalty rates between 5 to 9 per cent. The company also has exposure to an estimated 500 gross Kaybob Duvernay locations through its subsidiary, Duvernay Energy Corp.

2024 guidance:

• Thermal oil: Athabasca's thermal oil division underpins the company's strong free cash flow outlook, with an unchanged $135-million capital budget and production guidance of 32,000 to 33,000 bbl/d. The facility expansion at Leismer is on track to be commissioned during the first half (H1) of 2024, with production expected to reach approximately 28,000 bbl/d midyear following the tie-in of behind pipe wells. Two 1,400-metre well pairs are planned to be drilled at Hangingstone in the second half (H2) of 2024, with the objective of ensuring the project continues to deliver meaningful cash flow to the company.
• Duvernay Energy: The 2024 capital program of approximately $82-million (gross) includes the drilling of 12 gross (7.1 net) Duvernay wells. Capital will be financed through cash balances and cash flow from operations. Two thousand twenty-four production guidance is approximately 3,000 boe/d (75 per cent liquids). Development plans are expected to drive strong production momentum into 2025 with estimated production of approximately 6,000 boe/d.
• Managing for free cash flow: Excluding its 70-per-cent equity interest in Duvernay Energy, Athabasca forecasts adjusted funds flow of approximately $460-million in 2024 ($80 (U.S.) per barrel (bbl) WTI (West Texas Intermediate) and $15 (U.S.) per bbl WCS (Western Canadian Select) heavy differential). Athabasca's 2024 free cash flow forecast is approximately $325-million. The company expects to generate more than $1-billion in free cash flow during the three-year time frame of 2024 to 2026. As a result of its $2.8-billion in corporate tax pools, Athabasca is not forecasted to pay cash taxes for approximately seven years.
• Exposure to improving Alberta 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 Q2 2024. Every $5-per-barrel-WTI change impacts adjusted funds flow by approximately $55-million annually and every $5-per-barrel-WCS change impacts adjusted funds flow by approximately $85-million annually.
• Environmental, social and governance (ESG) disclosure: The company will release its annual ESG update in May of 2024. In 2023, the company maintained a strong safety record with a 0.31 total recordable injury frequency and no reportable hydrocarbon spills.

(1) Pricing assumptions: 2024 -- $80 (U.S.) WTI, $15 (U.S.) WCS heavy differential, $3 (Canadian) AECO, and foreign exchange of 75 Canadian cents to $1 (U.S.); 2025 to 2026 -- $85 (U.S.) WTI, $12.50 (U.S.) WCS heavy differential, $3 (Canadian) AECO and foreign exchange of 75 Canadian cents to $1 (U.S.).

(2) Net present value of future net revenue before tax at a discount rate of 10 per cent (NPV10 before tax) for 2024 is based on an average of McDaniel, Sproule and GLJ pricing as at Jan. 1, 2024.

Thermal oil -- operations update

Bitumen production for Q4 2023 and 2023 averaged 31,059 bbl/d and 30,246 bbl/d, respectively. The thermal oil division generated operating income of $92.2-million ($30.78 per bbl) and $370.7-million ($32.93 per bbl) during these periods. Capital expenditures for Q4 2023 and 2023 were $29.3-million and $113.1-million, respectively.

Leismer

Bitumen production for Q4 2023 and 2023 averaged 23,764 bbl/d (up 9 per cent year over year) and 22,497 bbl/d (up 12 per cent year over year), respectively. Current production is in excess of 24,000 bbl/d (February, 2024). The asset realized continued improvement in the steam oil ratio (SOR) from expansion of the non-condensable gas co-injection and production additions from new wells resulting in an annual average SOR of 3.1 for 2023.

In 2023, five additional new well pairs at pad L8 were brought on production midyear. These well pairs have a combined production rate of approximately 5,000 bbl/d and are expected to maintain a stable production profile for approximately five years. The company also completed drilling the final four well pairs at pad L8S with steaming currently under way and recently placed four infill wells on production at pad L7.

The facility expansion is on track to be commissioned in H1 and production is expected to reach approximately 28,000 bbl/d midyear once all new wells are on production.

Leismer has a significant unrecovered capital balance of $1.4-billion, which ensures a low Crown royalty framework as the asset is forecasted to remain prepayout until 2027 (1).

Hangingstone

Bitumen production for Q4 2023 and 2023 averaged 7,295 bbl/d and 7,749 bbl/d, respectively. Non-condensable gas co-injection has aided in pressure support and reduced energy usage. Hangingstone's steam oil ratio averaged 3.6 for 2023.

Two approximately 1,400-metre well pairs will spud in Q3 2024. Modern well design with extended reach laterals is expected to drive competitive 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.

Duvernay Energy -- operations update

Production from Athabasca's light oil division averaged 2,068 boe/d (71 per cent liquids) and 4,244 boe/d (58 per cent liquids) in Q4 2023 and 2023, respectively. These assets generated operating income of $4.8-million ($25.02 per boe) and $46.3-million ($29.89 per boe) during these periods. Capital expenditures were $9.4-million and $20.9-million in Q4 2023 and 2023, respectively.

In September, 2023, Athabasca closed the sale of approximately 3,000 boe/d of non-core Placid, Saxon and Simonette assets for $160-million (before closing adjustments). In December, the company announced the creation of Duvernay Energy. Duvernay Energy is a privately held subsidiary of Athabasca, combining Athabasca and Cenovus assets. Athabasca owns 70-per-cent equity interest with Cenovus owning the remaining 30-per-cent equity interest. Duvernay Energy is managed by Athabasca through a management and operating services agreement.

Duvernay Energy owns approximately 46,000 acres of 100-per-cent-working-interest-operated lands contiguous to its existing Duvernay joint venture assets. In total, Duvernay Energy has exposure to approximately 200,000 gross contiguous acres in the liquids-rich and oil windows with a management estimate of approximately 500 gross future well locations. Duvernay's initial capitalization includes approximately $40-million cash and a $50-million undrawn credit facility. The plan is to allocate 100 per cent of adjusted funds flow from Duvernay Energy to drive near-term growth potential.

Duvernay Energy recently rig released 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. Completion operations are planned for Q1 2024 with on stream timing at the end of Q2 2024. A three well pad (30-per-cent working interest) is currently drilling with completions and tie-in to follow in Q2 2024.

Duvernay Energy's assets are positioned in the prolific Kaybob Duvernay resource play, primarily in the volatile oil window, and are serviced by extensive operated infrastructure. Current production is approximately 2,000 boe/d (approximately 75 per cent liquids). Assuming a constructive commodity price outlook, Duvernay Energy has self-financed growth potential to approximately 25,000 boe/d (75 per cent liquids) by the late 2020s.

Differentiated long-life reserves

Athabasca's independent reserves evaluator, McDaniel & Associates Consultants Ltd., prepared the year-end reserves evaluation effective Dec. 31, 2023.

The company's proved plus probable (2P) reserves base is 1.2 billion boe, with Leismer/Corner underpinning an additional approximately one billion barrels of low-risk, top-tier, long-reserve-life contingent resources (best estimate). Light oil reserves saw a decrease with the disposition of Placid and Saxon assets in 2023. The light oil reserve report includes 113 future booked development locations relative to a deep inventory of approximately 500 gross estimated development locations. Overall reserve value (NPV10 before tax) of 2P reserves increased 14 per cent year over year, including an increase of 26 per cent from Athabasca's thermal oil assets. Athabasca's proved plus probable reserve life index is approximately 100 years.

For additional information regarding Athabasca's reserves and resources estimates, please see independent reserve and resource evaluations in the company's 2023 annual information form, which is available on the company's website or on SEDAR+.

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's light oil assets are held in a private subsidiary (Duvernay Energy) in which Athabasca owns a 70-per-cent equity interest. Athabasca's common shares trade on the Toronto Stock Exchange under the symbol ATH.

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