Exploration & Production

Athabasca Ramps Up Reserves 32%; Talks Dover Approval Delay

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Athabasca Oil Corporation has reported its 2013 year-end financial and operating results and also released its 2013 year-end reserve and resource estimates.

2013 Highlights:

• gross proved plus probable reserves increased by 32% year-over-year;
• produced an average of 6,397 barrels of oil equivalent per day comprised of 49% liquids in 2013; fourth quarter production averaged 6,697 boe/d, in line with guidance;
• completed 59% of Hangingstone Project 1, a 12,000 barrel per day steam assisted gravity drainage project;
• capital expenditures totaled $762 million including $282 million in Light Oil, $466 million in Thermal Oil and $14 million for corporate assets;
• at December 31, 2013 , Athabasca had liquidity of approximately $673 million , including cash and cash equivalents, short-term investments and funds available under Athabasca's undrawn credit facility.

The Company is filing its financial statements for the 12 month period and management's discussion and analysis for the three and 12 month periods ended December 31, 2013 . The Company is also filing its annual information form for the year ended December 31, 2013 , which includes the Company's statement of reserves data and other detailed information concerning the evaluations that were conducted by the Company's independent qualified reserves evaluators, GLJ Petroleum Consultants Ltd. and DeGolyer and MacNaughton Canada Limited, effective as at December 31, 2013.

The year-end independent reserve and resource evaluations reported gross proved plus probable reserves to be 482 million barrels of oil equivalent. Athabasca also holds 10.5 billion barrels of contingent resources (best estimate) as of December 31, 2013.

Sveinung Svarte, President and CEO, commented: "The delay of the Dover approval made 2013 a challenging year for Athabasca. However, we also delivered many significant milestones as we continued our transition from a largely exploration stage Company to becoming a producer. Looking forward, and with the Dover Order in Council received, we expect 2014 to be a pivotal year as Athabasca continues to focus on realizing the significant resource potential of its assets."

Light Oil

Athabasca's production averaged 6,397 boe/d (49% liquids) in 2013 compared to 1,684 boe/d (42% liquids) in 2012, representing a 280% increase. The Company also recognized a higher netback of $31.29 /boe during 2013 compared to $23.49 /boe in 2012 due to increasing commodity prices, higher liquids content and reductions in operating costs.

In 2013, the Company deployed $282 million of capital in Light Oil including infrastructure, drilling and completion activities in the Fox Creek area.

Athabasca drilled 20 and completed 22 horizontal Montney wells during 2013. At the end of the year, land tenure for over 95% of the Company's prime Montney land had been extended into the intermediate term, allowing for increased focus on Athabasca's extensive Duvernay position.

In the third quarter of 2013, Athabasca recommenced its Duvernay drilling program with a goal of delineating and continuing its high-graded land position in the Kaybob region. One vertical well and three horizontal wells were rig released by the end of 2013. The horizontal wells will be completed and brought on production by mid-year 2014. Athabasca currently holds 350,000 net acres of potential liquids-rich Duvernay land, including 200,000 net acres which contain greater than 20 meters of shale pay and lie in the heart of the Duvernay Kaybob fairway.

In December 2013 , Athabasca sold a 50% interest in its gas pipeline and two of its batteries in the Kaybob area for gross proceeds of $146 million . Athabasca has fully recovered its initial investment in these facilities, retains operatorship of this key area infrastructure and maintains sufficient capacity to accommodate its anticipated production growth for the next few years.

The Light Oil division now holds proved plus probable reserves of 33 million barrels of oil equivalent, an increase of approximately 48% compared to the prior year.

Thermal Oil

In 2013, the Company spent $466 million of capital in the Thermal Oil division including $404 million on Hangingstone, $38 million on Dover West, $18 million on the Company's 40% interest in the Dover Commercial Project and $6 million on other Thermal Oil projects.

Athabasca made significant progress in the development of Hangingstone Project 1. The central processing facility, well pads, pipelines and area infrastructure are progressing. Construction continues on site with module fabrication and installation on track. The project was 59% complete at year-end 2013 with contracts secured for 80% of the sanctioned value of the project. Construction of Hangingstone Project 1 is anticipated to be complete near the end of 2014, with first steam targeted towards the end of the first quarter 2015.

By the end of 2013, 15 producer wells and 10 injector wells had also been drilled. Drilling was completed on time and within budget. The reservoir quality is consistent with expected results derived from Athabasca's extensive appraisal drilling and reservoir modeling.

The Company submitted an application to the Alberta Energy Regulator in 2013 for the Hangingstone 70,000 bbl/d expansion project. With the filing of this regulatory application, Athabasca now has gross proved plus probable reserves of 450 million barrels in its Thermal Oil division, an increase of 31% compared to the prior year. Within its Thermal Oil division, Athabasca also holds 10.5 billion barrels of contingent resources (best estimate).

Athabasca received regulatory approvals for its Leduc Carbonate thermal assisted gravity drainage pilot and demonstration project in September 2013 . TAGD uses electrical conductive heating rather than steam to enable bitumen recovery.

Dover Commercial Project

In early 2014, outstanding statements of concern from the Fort McKay First Nation regarding the DCP were resolved. Fort McKay discontinued its appeal of the Alberta Energy Regulator's approval of the DCP, and the project received Order in Council on March 13, 2014 . The Company expects final regulatory approval from Alberta Environment in the coming weeks, which will allow Athabasca to exercise its put option to sell its remaining 40% interest in the project.

Corporate

In the fourth quarter of 2013, Athabasca expanded its revolving senior secured first lien credit facility from $200 million to $350 million providing Athabasca with additional borrowing capacity. At December 31, 2013 , Athabasca had liquidity of approximately $673 million , including cash and cash equivalents, short-term investments and the $350 million credit facility, which is currently undrawn.

2014 Outlook

Athabasca's Board of Directors approved an initial 2014 capital budget of $460 million , and subsequently approved an additional $20 million for its 40% interest in the DCP. The 2014 capital budget focuses on the Company's key near term priorities, including the completion of Hangingstone Project 1, preparation for a Hangingstone Expansion and a targeted Duvernay drilling and completion program. Athabasca has set a first quarter production guidance range of 6,000 to 6,500 boe/d. Second quarter production is expected to be in the range of 5,500 to 6,000 boe/d which contemplates a scheduled shut-down of the Keyera Simonette plant in April, 2014.

Upon receipt of the Dover put option proceeds, affirmation of the productivity of Athabasca's new Duvernay wells and determination of the outcome of its Duvernay joint venture process, Athabasca expects to provide an updated capital budget in July.

Athabasca will continue to evaluate additional funding sources, including joint ventures, to advance the development of its portfolio of Light Oil and Thermal Oil opportunities. Athabasca remains committed to a disciplined approach to growth and will only allocate financial resources and personnel to projects that are fully funded.