Source: Athabasca Oil Corporation
  • Calgary-based Athabasca Oil (TSX:ATH) has announced that it will suspend operations at its Hangingstone project
  • The site has an operating break-even point of US$37.50 Western Canadian Select, but as of this morning current prices are just under US$10.00
  • In addition, the company’s corporate staff will be reduce by 15 per cent
  • Athabasca has cut its 2020 capital budget by C$40 million to $85 million, a 30 per cent reduction
  • Athabasca Oil (ATH) is currently up 13.79 per cent to $0.16 per share, with a market cap of $86.4 million

Calgary-based Athabasca Oil (TSX:ATH) has announced that it will suspend operations at its Hangingstone project.

The company operates a number of both light and thermal oil projects in Alberta, but with the continued decline in oil prices, business has been curtailed.

Hangingstone, which uses a steam-assisted gravity drainage system, requires a West Canadian Select oil price of US$37.50 per barrel in order to operate at break-even. However, as of this morning, prices per barrel have dropped to less than US$10.00.

As such, as of yesterday, the sites wells have been shut and steam injection to the reservoir has been halted. Athabasca is also taking measures to preserve the processing facility and pipelines for for future use.

In line with the shutdown, 15 per cent of the company’s corporate staff base has been stood down.

Commissioned in 2015, Hangingstone was Athabasca’s first oil sands project.

Today’s announcement thanked the company’s staff for their efforts over the years and expressed regret at the forced closure.

“It is unfortunate that made‐in‐Alberta assets like Hangingstone cannot continue operations under current prices,” it said.

In addition, Athabasca announced that it has cut its capital budget for 2020 by 30 per cent.

The original budget, which was announced on January 8 this year, accounted for C$125 million in capital expenditure. However, this has been revised down $40 million to $85 million for the year.

Estimated production for the year has also been reduced. Previous forecasts suggested an annual output of between 36,000 and 37,500 barrels of oil equivalent per day. This has now been reduced to between 30,000 and 31,500 barrels per day.

Athabasca Oil (ATH) is currently up 13.79 per cent to $0.16 per share at 9:47pm EST.

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