Athabasca Oil Corp. (ATH) fell to its lowest price in seven months after saying it’s continuing efforts to collect a C$1.32 billion ($1.22 billion) payment from PetroChina Co. (857) for a Canadian oil-sands project.
The shares fell 6.8 percent to C$6.41 at the close in Toronto, the lowest since Dec. 30. The stock was downgraded today to “market perform” from “outperform” by Chris Cox, an analyst with Raymond James Ltd., who also lowered the share price target to C$7.50 from C$10.50.
Athabasca has declined 27 percent since Feb. 21 when the company announced it had reached an agreement with an Alberta aboriginal group, paving the way to complete the deal with PetroChina. A put option exercised by Athabasca on April 17 forces a PetroChina subsidiary to buy the 40 percent it doesn’t own in the undeveloped Dover oil-sands project in northeastern Alberta, based on a 2010 agreement.
“The market will likely continue to be concerned regarding the intentions of PetroChina, at least as it pertains to the Dover put proceeds,” Cox wrote in a note to investors today. “We don’t foresee any improved clarity on this issue for some time.”
The Dover oil-sands project contains reserves of 4.1 billion barrels at a 50 percent recovery rate, Alberta’s energy regulator said in August. Athabasca expects production at the site to reach 250,000 barrels a day at full capacity.
“The company confirms that it continues to work with Phoenix Energy Holdings Ltd. to close the transaction in accordance with the terms of the put/call option agreement,” the Calgary-based company said in a statement today.
PetroChina may be trying to lower its payment for the Dover stake, Cox wrote. Investors have “legitimate reasons to be concerned” about the timing, certainty and value of the payment to Athabasca, he said.
Dover would be part of PetroChina’s planned investment of at least $60 billion this decade in global oil and natural gas assets. Athabasca in January 2012 sold a 40 percent stake in the MacKay River oil-sands project to a PetroChina division for C$680 million.
Athabasca is depending on the payment from Beijing-based PetroChina to fund drilling, including in the Duvernay shale in Alberta where it’s seeking partners.
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