Dover approval should bolster Athabasca

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Now that Athabasca Oil Corp. and its Chinese partner have won provincial approval for the Dover northern Alberta oil sands project, a lot of the uncertainty clouding Athabasca's prospects has dissipated.

The government decision means Athabasca is that much closer to being able to sell its 40-per-cent position in the Dover project to its partner, PetroChina Co. Ltd., for about $1.3-billion.

And that means the Calgary-based company will have the financial resources to strike joint-venture deals to develop its holdings in the gas-and-oil-rich Duvernay shale region of Alberta as well as in other areas in the province.

Athabasca has had to cut capital spending and borrow money because of lengthy delays to approval of the Dover development, including earlier opposition from the Fort McKay First Nation.

Athabasca president and chief executive officer Sveinung Svarte is set to field questions about this dramatic turn in the company's fortunes when fourth-quarter earnings results are unveiled on Wednesday.

"There is lots of potential value in the stock that has to be unlocked by certain asset catalysts," Dundee Capital Markets analyst Geoff Ready said in a recent interview.

But he cautioned that it is likely too early in the game for Mr. Svarte to make any major announcements about joint-venture partners or other plans.

National Bank Financial analyst Matthew Taylor said in a recent research note that the final hurdle to clear is environmental approval for the Dover project, expected to take two to four weeks. He is forecasting that Athabasca will be in line to receive proceeds early in its third quarter.

"The company is on a positive trajectory to unlocking deep value inherent within the asset base," he said.

Mr. Taylor said financing concerns have now been allayed and Athabasca is well-positioned to negotiate with potential joint-venture partners.

"We continue to view [Athabasca] as one of the best ways to gain exposure to the Duvernay at an attractive implied price."

For the Athabasca's fourth quarter, analysts are estimating an earnings-per-share loss of seven cents.