This Canadian oil company saw its stock gallop 288% in a year!

Highlights

• The geopolitical tensions between Ukraine and Russia have triggered notable volatility in the global markets, sending oil prices to fly high.
• Some commodity experts are also of the view that oil prices may continue to increase as its demand can exceed its available supply in the coming months.

• A small-cap oil company, for that matter, have seen its stock gallop by over 288 per cent year-over-year (YoY).

 

The geopolitical tensions between Ukraine and Russia have triggered notable volatility in the global markets, sending oil prices to fly high. Some commodity experts are also of the view that oil prices may continue to increase as its demand can exceed its available supply in the coming months.

The TSX oil index climbed over 23 per cent this year, with some oil stocks noting a substantial increase in the last 12 months.

A Canadian small-cap oil company, for that matter, has seen its stock gallop by over 288 per cent year-over-year (YoY).

The company, which currently has a price-to-earnings (P/E) ratio of 39.5, also more than doubled its operating income in its latest quarter.

We are talking about Athabasca Oil Corporation (TSX:ATH), a Calgary, Alberta-based oil firm known to mainly focus on developing light oil and thermal oil assets in the Athabasca region.

How Athabasca (TSX:ATH) saw its free cash flow & profit skyrocket in Q3

The C$ 875-million market cap company noted a free cash flow (FCF) of C$ 56.62 million in the third quarter of fiscal 2021, which was massive increase from that of C$ 2.36 million a year ago.

The oil firm also more than doubled its operating income to C$ 120.58 million in Q3 FY2021, as compared to C$ 50.17 million in the same period a year ago.

The thermal and light oil-focused company produced petroleum and natural gas of 34,255 barrels of oil equivalent per day (boe/d) in the third quarter of fiscal 2021.

Its Q3 operating netback was C$ 36.02 barrels of oil equivalent (boe) in the latest quarter, as compared to C$ 17.17 boe a year ago. 

Athabasca beat its guidance with record production in 2021

In its preliminary results for the year 2021, as posted on February 2, Athabasca reported that its December production averaged approximately 34,900 boe/d at the end of Q4, taking its 2021 annual production to around 34,600 boe/d. This production growth was substantially up from its 2021 production guidance, 31,000 boe/d to 33,000 boe/d.

Athabasca added that it expects its free cash flow to reach around C$ 90 million and adjusted EBITDA to reach approximately C$ 245 million in fiscal year 2021.

Athabasca stock has more than tripled in a year

Since hitting a 52-week low of C$ 0.375 apiece on February 19, 2021, Athabasca has since its stock price more than triple.

Apart from surging by over 288 per cent in the past year, the oil stock has also soared by nearly 39 per cent year-to-date (YTD).

ATH stock spiked by over four per cent to close at a value of C$ 1.65 apiece on Thursday, February 17, with 6.55 million shares exchanging hands.

What is Athabasca planning for 2022?

The oil company has planned an expenditure of approximately C$ 128 million this year to keep its oil projects running. The company expects its 2022 production to range from 33,000 boe/d to 34,000 boe/d. 

While announcing its 2022 guidance, Athabasca also said that it will direct a minimum of 75 per cent of its future free cash flow for debt reduction this year.

Bottomline

If oil prices continue to rise further amid supply constraints, it could lead to an increase in demand for some oil producers like Athabasca. However, COVID challenges, macroeconomic and microeconomic factors, and other market dynamics can also affect the oil business significantly.

Hence, investors should ideally keep an eye what is happening in the global oil and gas industry and how the developments can impact oil stocks like Athabasca (ATH) to make the right call.