Athabasca Oil Corporation - President and CEO, Robert Broen
President and CEO, Robert Broen
Source: Calgary Herald
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  • Athabasca Oil (TSX:ATH) has cut its 2020 capital budget by 25 per cent in response the decline in global oil prices
  • The revised C$95 million budget primarily fund completion of the company’s winter program
  • All non-essential staff have been released and told to go home
  • At the end of 2019, Athabasca had total liquidity of $340 million
  • Production for 2020 is expected to be between 32,500 and 34,000 barrels of oil per day
  • Athabasca Oil (ATH) is currently up 14.29 per cent, with shares trading at $0.16 and a market cap of $83.79 million

Athabasca Oil (TSX:ATH) has cut its 2020 capital budget by 25 per cent in response to the decline in global oil prices.

However, oil rebounded from a 20-year low on Thursday when President Trump hinted that he may intervene in the current price war. Subsequently, the commodity surged in its largest one-day percentage increase on record.

Despite the turnaround, it’s thought that the climb is more indicative of continued market volatility than a sustained move back to previous levels.

Athabasca’s 25 per cent cut represents a C$30 million reduction to its original budget, which was announced in early January. The revised figure of $95 million will be used primarily to fund completion of the company’s winter program.

Production estimates for the year have also been reduced, from between 36,000 and 37,500 barrels of oil per day to between 32,500 and 34,000 barrels of oil per day

The company says that it has completed the tie-in of ten Placid Montney wells and intends to bring production on-stream in the second quarter of the year.

Athabasca also said that its Kaybob Duvernay program is approaching completion, with 16 wells due to contribute in the second half of the year.

In light of the changes, the company sought to reassure investors by drawing attention to its strong financial standing.

At the end of 2019, Athabasca had total liquidity of $340 million. The total amount was made up of $225 million in cash and equivalents, and $85 million in available credit facilities.

The company said that the sum would provide business flexibility during commodity price volatility and “market egress constraints.”

In response to the current COVID-19 crisis, Athabasca has initiated its Business Continuity Plan. While few details regarding the plan were given, its design is to ensure the safety of all staff and mitigate potential risks to operations.

Athabasca Oil (ATH) is currently up 14.29 per cent, with shares trading for $0.16 at 9:56am EST.

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