Athabasca Oil Corp. stock tumbled on Monday on uncertainty over the timing of a joint venture deal to bolster development of the company's Alberta shale resources.
Athabasca, which recently concluded a long-awaited sale of its stake in the Dover oil sands project, aims to bring in a partner into its Duvernay holdings once drilling firms up its resource estimates. The sale of the Dover interest to PetroChina Co. Ltd. netted Athabasca $1.23-billion, giving the company some financial breathing room.
"While the recently released drilling results in the Duvernay are very encouraging, there was a subtle shift in the company's messaging regarding its plans to maximize the value of the Duvernay," GMP Securities analyst Jason Konzuk wrote in a research note on Monday. "The company still states that a joint venture partner could be part of the final development plan for the asset; however, uncertainty has increased with respect to the timeline for securing a partner and the scale of a potential JV."
He reduced his rating to "Hold" from "Buy," and cut his 12-month target to $9 from $10.50. Athabasca stock was off nearly 6 per cent at $7.26 on the Toronto Stock Exchange late in Monday's session.
Mr. Konzuk said the expectation was that Athabasca would finalize the joint venture process in July. There is no current deadline for bids, and the company served notice that it wants results from two more wells by that time, he said.