Mr. Matthew Taylor reports

ATHABASCA OIL ANNOUNCES ITS 2026 BUDGET FOCUSED ON PRODUCTION AND CASH FLOW PER SHARE GROWTH

Athabasca Oil Corp. has set its 2026 budget, with capital projects driving profitable growth within its core assets, along with a continued return of 100 per cent of free cash flow to shareholders.

Corporate strategy -- differentiated value creation

Thermal oil scale: The company's thermal oil division provides an oil-focused platform underpinning financed growth to greater than 60,000 barrels per day by 2030 with Phase 1 of Corner. The thermal oil assets have a resource base of 1.2 billion barrels of proved plus probable reserves and one billion barrels of contingent resource, providing optionality to reach over 90,000 bbl/d with regulatory approvals in place. The thermal oil assets have an operating break-even of approximately $40 (U.S.) per barrel WTI (West Texas Intermediate) and growth initiatives at Leismer are fully financed within cash flow to approximately $48 (U.S.) per barrel WTI.

Duvernay value proposition: Athabasca's subsidiary company, Duvernay Energy Corp. (DEC), is designed to enhance value for shareholders by providing a clear path for self-financed production and cash flow growth in the Kaybob Duvernay resource play. DEC has an independent strategy and capital allocation framework with production expected at greater than 15,000 barrels of oil equivalent per day by 2030 with approximately 20 years of future drilling inventory. Value crystallization for shareholders is expected once the asset has reached a material scale through its exceptional land base and drilling inventory.

Financial resilience: Athabasca maintains a strong and differentiated balance sheet with a $93-million consolidated net cash position, including approximately $335-million of cash. Athabasca (thermal oil) also has $2.1-billion in tax pools, including $1.6-billion of immediately deductible non-capital losses and exploration pools, sheltering cash taxes beyond 2030.

Exceptional shareholder returns: In 2026, Athabasca will continue to allocate 100 per cent of free cash flow generated in its thermal oil division to share buybacks. The company has returned approximately $1.1-billion to shareholders since 2021, including $386-million of debt reduction and $695-million of share buybacks (22-per-cent reduction in fully diluted shares at an average price of $4.77 per share). The company sees significant intrinsic value in its shares underpinned by its net asset value. A differentiated balance sheet affords the company strategic flexibility to augment its free cash flow return-of-capital framework. Athabasca forecasts $1.1-billion of additional free cash flow over the next five years while financing its growth initiatives at Leismer and Corner.

Focus on per-share metrics: Advancing attractive capital projects concurrently with a strong focus on share buybacks results in a greater-than-20-per-cent compounded annual cash flow per share to 2030 and beyond.

2026 corporate consolidated budget and outlook

Consolidated budget: Athabasca is planning capital expenditures of approximately $310-million with average production of 37,000 to 39,000 boe/d (98 per cent liquids), inclusive of an approximately 2,500-barrel-of-oil-equivalent-per-day impact of planned turnarounds across its assets. Growth will materialize in the second half of 2026 with an exit rate of approximately 43,000 boe/d, driven by the Leismer expansion project. Strong operational momentum is expected to continue into 2027 as Leismer ramps up to regulatory capacity and additional Duvernay production is added.

Cash flow outlook: The company forecasts consolidated adjusted funds flow between $425-million to $450-million in 2026. With operational momentum into 2027, adjusted funds flow and free cash flow are expected to grow significantly year over year. Every move of positive $1 (U.S.) per barrel in WTI and Western Canadian Select (WCS) heavy oil impacts 2026 annual adjusted funds flow by approximately $10-million and approximately $17-million, respectively.

Balance sheet management: Athabasca will prudently manage its capital structure as operations increase in scale. A net cash position currently provides the company strategic flexibility for its business initiatives, including multiyear capital projects and supplementing strategic share buybacks. Athabasca is committed to maintaining a best-in-class balance sheet with a targeted net debt to adjusted funds flow metric less than 0.5 times over the long term.

Athabasca (thermal oil) -- 2026 budget highlights

Capital budget: The thermal oil budget is $273-million, inclusive of $25-million of turnaround capital, with activity focused on advancing the Leismer expansion.

Production outlook: Annual thermal oil production guidance is 32,000 to 34,000 bbl/d, inclusive of an approximately 2,250-barrel-per-day impact of planned turnarounds. The company is positioned for strong operational momentum exiting 2026 and through 2027 when production is expected to reach approximately 48,000 bbl/d.

Leismer program: The capital program at Leismer is $240-million. Activity includes bringing on 12 new wells at pads L10 and L11 to support growth and facility expansion work consisting of the addition of two steam generators, heat exchangers and increased fluid handling capacity. A three-week facility turnaround will be completed in May (four-year interval) when all tie-ins for the expansion project will also be completed. The new well pairs will begin steaming following the turnaround, positioning the asset for a strong exit rate. The $300-million expansion project will be substantially complete at the end of 2026, with production growth to 40,000 bbl/d by the end of 2027. Overall capital and schedule are on track with original expectations at a capital efficiency of approximately $25,000 per barrel per day.

Hangingstone program: The capital program at Hangingstone is $17-million and activity includes a two-week turnaround (six-year interval) in April and routine maintenance. Hangingstone production will be maintained at approximately 8,000 bbl/d through the midterm by utilizing existing plant capacity with attractive capital efficiencies of less than $20,000 per barrel per day for sustaining wells.

Corner growth preparation: The 2026 budget includes $16-million at Corner to advance project readiness. Development plans are focused on capital-efficient modular design with 15,000-barrel-per-day project phases. The project is expected to be self-financed while maintaining a strong balance sheet and a focus on shareholder returns. The company anticipates phase 1 to be sanctioned in 2026, contingent on a favourable macro environment, with the majority of the capital to follow the current Leismer expansion project. Phase 1 will provide substantial production growth starting in 2029. The full Corner development to 40,000 bbl/d is expected to have a capital efficiency of $30,000 to $35,000 per barrel per day.

Duvernay Energy -- 2026 budget highlights

Capital budget: The DEC budget is approximately $38-million and includes drilling a 100-per-cent-working-interest land retention well, drilling and completing a 30-per-cent-working-interest four-well pad and readiness activity for future development pads. Accelerated operated activity in the second half of the year will be contingent on a favourable macro environment.

Production outlook: Annual DEC production guidance is 4,500 to 5,000 boe/d (78 per cent liquids), representing approximately 35 per cent annual growth.

Strong well results: DEC recently brought on stream a three-well pad (100-per-cent working interest) at 04-18-064-16W5 (04-18 pad) with average lateral lengths of approximately 4,000 metres. The 4-18 pad had an average IP30 (initial production over 30 days) rate of approximately 1,125 boe/d per well (90 per cent liquids, primarily free condensate). A four-well pad (30-per-cent working interest) at 16-27-064-17-W5 (16-27 pad) with average laterals of approximately 5,000 metres was placed on production in August. The 16-27 pad had an average IP30 rate of approximately 1,040 boe/d per well (89 per cent liquids, primarily free condensate) and an average IP90 (initial production over 90 days) rate of approximately 945 boe/d per well (86 per cent liquids, primarily free condensate). DEC is pleased by the strong production results of both pads with initial rates and free condensate yields exceeding management type curves.

Growth plans: Development will be self-financed within DEC through utilization of 100 per cent of its annual adjusted funds flow and its balance sheet. The company has a derisked drilling inventory of 444 gross wells with self-financed growth potential to in excess of approximately 15,000 boe/d (75 per cent liquids) by 2030. DEC provides short-cycle growth opportunities with flexible development plans aligned to commodity prices. Value crystallization for shareholders is expected once the asset has reached a material scale through its exceptional land base and drilling inventory.

Enhanced market access

Athabasca continues to diversify its end market access for its current development plans providing protection to local market differential volatility and certainty for long-term egress. The company has now secured 57,000 bbl/d of blended long-term capacity to markets outside of Edmonton, including 47,000 bbl/d of capacity with exposure to the U.S. Gulf Coast (PADD III) and 10,000 bbl/d to the U.S. Midwest (PADD II).

Egress has been secured at competitive transportation rates, without balance sheet encumbrances, and will support the company's development plans across its thermal oil portfolio. Athabasca anticipates that it will have enough egress capacity to support its growth initiatives, regardless of new pipeline initiatives that are undertaken by industry.

Executive addition

Athabasca is pleased to announce the appointment of Paul Vander Valk as vice-president, projects and well delivery. Mr. Vander Valk is a professional engineer, holds an MBA and has approximately 30 years of major projects and oil and gas industry experience. Mr. Vander Valk has held the role of director, projects and well delivery, at Athabasca for the past three years. Prior to joining Athabasca, he was the chief operating officer for Harvest, and held several positions with Cenovus, including vice-president, production systems. As the company prepares to sanction Corner, its third major thermal development area, it is bolstering its executive team to support the execution of continuing growth initiatives.

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.

We seek Safe Harbor.