Q: What are your thoughts on the spin off of light oil assets? In your opinion do you think CVE purchases the oil sands assets at a later date?
5i Research Answer:
We think it makes sense. The spin out will be self funding, and investors have not been attributing value to ATH's Duvernay assets, even though the area remains one of the hottest in the sector. The assets are adjacent to many large peers, so could also be a target down the road. The spin off does not impact ATH's 2024 cash flow, and once at critical mass the spin out could be IPO'd to bring out even more value. We think CVE is probably interested in buying, but with ATH now debt-free we would not expect it to be interested in selling at historically low valuations.