Athabasca Oil Stock

Good morning, everyone. Thank you for standing by, and welcome to Cenovus Energy's Conference Call regarding the acquisition of Athabasca Oil Corporation. [Operator Instructions] As a reminder, this call is being recorded.

I would now like to turn the meeting over to Mr. Patrick Read, Vice President, Investor Relations and Internal Audit. Please go ahead, Mr. Read.

Thank you, operator. Good morning, everyone, and thank you for joining us to discuss Cenovus' proposed acquisition of Athabasca Oil Corporation announced earlier today.

On the call today are Cenovus' CEO, Jon McKenzie; and CFO, Kam Sandhar. In a moment, I will turn the call over to Jon and Kam to discuss the transaction. We will then open the line for questions. Along with the news release issued this morning, we have posted a presentation with additional details in the Investor Relations section of our website.

Before we begin, I'll refer you to our advisories located at the end of today's news release. These describe the forward-looking information, non-GAAP measures and oil and gas terms referred to today. They also outline the risk factors and assumptions relevant to this discussion. Unless otherwise indicated, all figures discussed today are in Canadian dollars. [Operator Instructions]

I will now turn the call over to Jon. Jon, please go ahead.

Great. Thank you, Patrick, and good morning, everybody. Today, Cenovus announced that we have entered into a definitive agreement to acquire Athabasca Oil Corporation in a cash and stock transaction valued at about $5.7 billion or about $12 per share. This transaction builds on a strategy that has been at the core of Cenovus for decades. We have spent more than 20 years developing, operating and growing SAGD assets at scale. Throughout that time, our operating model has continued to evolve as we have advanced technology, refined our development practices and incorporated new learnings from across our portfolio.

The result is an approach that consistently delivers industry-leading performance that has become one of Cenovus' clearest competitive strengths. That competitive advantage is what underpins our confidence in and excitement for this transaction. The rationale for this transaction for Cenovus is clear and obvious. Athabasca brings a high-quality oil sands resource base with decades of development potential ahead of it. It adds approximately 1.3 billion barrels of 2P reserves and approximately 2.3 billion barrels of 2P plus contingent resource. That implies best-in-class reserve life index of approximately 75 years and a resource life of approximately 140 years.

These are long-life assets located in an area where Cenovus already has a deep operating experience and strong understanding of the resource. They also represent one of the only remaining large-scale opportunities to add meaningful thermal reserves, resource and future development inventory within the core of the oil sands. That combination of quality, scale and long-term growth is particularly compelling.

Our confidence in this transaction is grounded in a track record that has been built over many years. We have consistently demonstrated our ability to improve performance and unlock additional value through the application of Cenovus' operating model and through a proven track record of profitably delivering over 30 phased expansions. We have done that across the assets we have acquired, and we have done that across the assets that have been part of Cenovus since the beginning.

From Foster Creek and Christina Lake to Sunrise, Lloydminster and most recently, Christina Lake North, we have continued to improve the operating performance, enhance capital efficiency and to grow production through disciplined execution. We have also demonstrated the ability to advance major growth projects successfully, integrate acquired businesses and deliver on the commitments we make.

Let me spend a few minutes on how we think about creating value from these assets. Athabasca's thermal assets produce about 40,000 barrels a day. Through a combination of existing asset optimization, Leismer expansion and future development to Corner, we see an opportunity to increase thermal production to approximately 115,000 barrels a day by 2032. That represents one of the most significant organic growth opportunities available in Canadian oil sands today.

In the near term, we see opportunities to increase production through an expanded redevelopment well program and targeted optimization initiatives at Leismer and Hangingstone. We also see an opportunity to increase production from Leismer to more than 60,000 barrels a day through debottleneck and facility expansion. By executing on this plan, we can reduce the steam-oil ratio by about 20% and deliver brownfield growth at an attractive capital efficiency of $35,000 per flowing barrel.

Beyond Leismer, Corner represents a significant future growth opportunity that Athabasca has spent years advancing and derisking. This is where we have the ability to accelerate and execute that development plan. We bring leading SAGD operating expertise, a proven project execution capability and the experience required to advance multiple opportunities at the same time. We also have a strong balance sheet that supports our ability to fund these opportunities through all points in the cycle.

By bringing forward and consolidating multiple phases of expansion, our development plan contemplates advancing Corner to approximately 40,000 barrels a day by 2032, 3 years earlier than the current development plan. When combined with the existing asset optimization opportunities, these projects support thermal production of approximately 115,000 barrels a day by 2032.

By looking at the combined set of opportunities in the thermal business, our fully accelerated development plan would involve approximately $700 million to $800 million of annual capital investment through 2030. That includes about $200 million per year of sustaining capital plus the growth capital that would be required to advance the expansion at Leismer and advancing and accelerating the Corner project.

Another unique aspect of these assets is the proximity to some of the existing undeveloped resource we have in our portfolio, including Thornbury and May River, which together hold an estimated 550 million barrels of recoverable resource. Now when we developed Narrows Lake, we proved out our ability to move steam over long distances to more efficiently capture nearby resource.

This transaction creates the possibility in time to access those resources without building a new greenfield processing facility, opening the door for additional capital-efficient growth options in our portfolio. And we are encouraged by the pace at which the governments have recently moved to support major resource developments in Canada. Both the federal and provincial governments have made positive changes and are working to finalize arrangements to making investing in Canada and the energy business competitive again.

Recent announcements around tax policy, royalties, new pipelines and regulatory efficiency are important steps in the right direction. These steps will have a meaningful impact on our ability to advance growth projects like the ones we are contemplating at Leismer and Corner. We remain committed to working constructively with governments to reach definitive arrangements later this year, which support production growth by implementing competitive regulatory and policy reforms.

While the thermal assets are the primary driver of this transaction, Athabasca also brings the opportunity to consolidate ownership of the Duvernay Energy Corp., strengthening our position in a high-quality oil-weighted resource play. Duvernay Energy Corp. has assembled an attractive inventory within the Kaybob fairway and full ownership gives us more control over the pace of development going forward. The Duvernay asset is currently self-funding and producing about 5,000 barrels a day with the potential to grow and sustain 20,000 BOE per day with additional investment. Together, this transaction adds high-quality reserves, significant growth potential and a development runway that extends for decades.

We've also identified about $85 million of annual corporate and commercial synergies, which we expect to capture promptly following the close of the transaction. These are expected to come from reduced G&A and financing costs along with optimization of transportation and marketing arrangements. We believe that Athabasca is a natural fit with our strategy and a strong addition to the Cenovus portfolio.

I'll now turn it over to Kam to walk through the financial aspects of the transaction.

Thanks, Jon, and good morning, everyone. Before I walk through the details of the transaction, I want to briefly touch on our current financial position.

Cenovus' business performance remained stable and consistent through the third quarter with production throughput continuing to perform well through to the end of September. This strong operational performance and favorable commodity price environment put the company in a position where net debt at September -- at the end of September ended at approximately $3 billion. We continue to not only strengthen our balance sheet, but also returned $1.9 billion to shareholders through dividends and share repurchases through the third quarter.

Our continued operational performance, coupled with strong commodity prices, has resulted in significant debt reduction complemented with returning cash to shareholders while positioning us well to move forward with this transaction.

Turning to the transaction itself. We have structured the acquisition to balance 3 important priorities: first, maintaining a strong balance sheet and investment-grade credit ratings; second, minimizing dilution to our existing shareholders; and third, preserving flexibility to continue to return cash to shareholders and fund attractive growth opportunities across the combined portfolio.

The transaction is valued at approximately $5.7 billion. The consideration will be composed of up to maximum 75% in cash or a maximum of 35% in Cenovus shares with the final split determined by shareholder elections. Assuming the 75% cash consideration, this equates to approximately $4.3 billion of cash and the issuance of 32 million shares. The cash portion of the transaction will be funded through cash on hand and existing Cenovus credit facilities.

Following completion of the transaction, at current strip pricing, we would expect net debt to fall between $5 billion and $5.5 billion by the end of 2026. That equates to well under 0.5x net debt to adjusted funds flow at strip pricing. There is no change to our commitment to maintain strong liquidity and our mid-BBB investment-grade credit ratings.

And with share buybacks totaling 34 million shares during the third quarter, we've already offset the shares we expect to be issued through the transaction. We believe the structure appropriately utilizes the strength of our balance sheet while limiting dilution to existing shareholders.

The transaction is expected to be accretive to adjusted funds flow per share in 2027, including the impact of synergies. Importantly, this acquisition does not change our approach to capital allocation. We remain committed to maintaining a strong balance sheet, investing in high-return opportunities and returning excess cash to shareholders.

I'll now turn the call back to Jon for some closing remarks.

Great. Thank you, Kam. When I step back and look at this transaction, what stands out is the quality and the duration of the opportunity. Athabasca brings approximately 1.3 billion barrels of 2P reserves and a thermal asset base with a reserve life in excess of 75 years. I'm confident that we can put our people and operating model to work across this asset base, accelerate development and maximize its potential over the coming years. It adds meaningful opportunity to our long-term growth plans and expands the opportunity set available to Cenovus and our shareholders. Combined with our existing assets, it further strengthens our position as Canada's leading SAGD producer. We believe it's a natural fit with our strategy and a strong addition to the Cenovus portfolio.

And with that, we'll be happy to answer your questions.

[Operator Instructions] The first question comes from Neil Mehta with Goldman Sachs.

Congratulations on the transaction. I guess, Jon, how much of this was about getting access to existing production in PDP versus the growth initiatives here? And to the extent part of what you're paying for is the growth optionality, can you spend a little time unpacking both the opportunity at Leismer and at Corner?

Sure. And you're right. I think one of the things that I would note, not only is this a really high-quality set of assets with resource depth. But one of the things we like about both Leismer and Corner is just the quality of the asset in there. We talked about rich pay in this company, and this is a set of assets that have deep quality resource potential going forward. So it's not just about the magnitude of the resource, quality is a key differentiator.

And one of the things that we find in this basin, Neil, is you sometimes end up with these scenarios where companies own a significant resource and they've undercapitalized it over the years for a variety of reasons. And then we have the ability to come in and accelerate that growth. And when we apply our operating model, we can take advantage of some efficiencies as well.

So when we look at Leismer right now, there is a debottleneck that is largely paid for and in place that will take that asset to 40,000 barrels a day, and we expect to get there in early to mid-2027. And then beyond that, we have an opportunity to take that to 60,000 barrels a day through brownfield debottlenecking of the existing plant as well as accelerating some future well pads.

And one of the things that excites us about Leismer, as we go forward, we kind of see the SOR in those well pads being somewhere around the 2.5 range, which is kind of best-in-class. So that is a tremendous resource. We've identified 60,000 barrels of potential production over a reasonably short period of time. And again, that resource is something of the highest quality.

Corner is probably, we think, one of the most prolific undeveloped resources in the basin. We've identified a project to take it to 40,000 barrels a day, but on an accelerated time frame. And what excites us about that, again, is it's going to have a low SOR and lots of room for us to optimize as we go forward. So really, in our minds, this is about taking a piece of real estate that is strategic. It is of the highest quality, and it gives us the ability to accelerate future growth as well as apply sort of optimization based on our operating model.

We've already kind of defined about 80 redevelopment opportunities, both at Hangingstone and at Leismer. So we're very confident that in the short term, you're going to see a production bump. And then over the next 5 years or so, you're going to see a realization to the numbers that I talked about.

Yes. And then just a follow-up. This might be for Kam, but you guys have this tiered percentage of your excess free funds flow to shareholder returns. And if I remember, between $4 billion and $6 billion, you're 75% back to shareholders and below $4 billion, you're 100%. So this will get you to around $5 billion, $5.5 billion by year-end. So is it fair to say through this process and into next -- early next year, we should be thinking 75% still to shareholders and the other 25% to debt reduction?

Yes. Good question, Neil. So I think first, what I'd start with is those -- that framework obviously has been in place for a number of years. And I think one of the things we've highlighted continuously is it is it's not formulaic, it's principal-based. So any decision we make around shareholder returns, investing in the assets and buying back our stock as an example, it's going to be a value-based decision. I would say we continue to see value in buying our shares. So we'll -- as I mentioned, we've paid back about $1.9 billion through the third quarter. I think that's the highest it's been through this year.

So we'll continue to look at that as an opportunity. What you should expect from us is a balanced approach. We're going to continue to invest in our assets along with these -- the growth options that we were adding into the portfolio, but we'll continue to be balanced around returning cash. So use that 75% as a guideline. We will adjust accordingly where we see value opportunities.

Our next question comes from Travis Wood with NBC.

Question would be kind of a bit of a follow-on to Neil's there, but what would be the governors around the pace of growth? Like obviously, you're sitting with some pretty epic resource ahead of you. So what -- why is it 115 by 2032? And is this kind of building into your egress outlook as we look at egress options kind of west and south?

Yes. We have -- one of the things that this does for us as well, Travis, is it just increases our ability to be opportunistic. So we have a number of avenues with which we can add value for shareholders on a per share basis, whether that is deleveraging, whether that is buying back our stock, dividends or future resource growth. So this just increases that sense of balance that exists across our portfolio, and we're excited about the opportunity to take advantage of that.

Another piece in here that is important, that is the fiscal framework with which we exist within. And I mentioned in this that having the federal government come forward with accelerated capital cost allowance is not immaterial to this. And we also expect to see growth incentives for -- on the royalty side with the province of Alberta. So all of that kind of fits together to kind of draw capital back into the resource in the Athabasca Basin and probably accelerate growth as well.

So we're looking at a number of different things, but what we really like about what we continue to do is we just create this balanced portfolio where we have a really healthy company in terms of the resource availability in front of us. We have a bulletproof balance sheet, and we have the ability to get value back to shareholders through multiple channels as we become more and more opportunistic.

Okay. And the follow-up, kind of a follow-up but separate question, just around you've done now consolidated MEG. You have kind of best-in-class thermal assets across the basin now with this Athabasca purchase. How are you guys thinking about, especially with the Suncor news overnight? How are you guys thinking about those East Coast Canada assets fitting into the portfolio kind of over the next 5 years?

Yes. We really like West White Rose. We're invested in that and production there is imminent. So I'm sure Suncor had their own reasons for doing what they did, and we continue to see that as a profitable area of the world in which we exist. And we understand what our footprint is there. We understand what our competitive advantage is within that footprint. So I don't think it's ever going to be something that is materially bigger than what we've got today, but we are excited about bringing on West White Rose and look forward to first production there.

Thank you. At this time, we have no questions in the queue. So we will wait a minute to give you the chance to connect with us. [Operator Instructions] Thank you. There are no further questions registered at this time. I would now like to turn the meeting over to Mr. Jon McKenzie.

Great. And thank you, operator. So this concludes our conference call. I'd like to thank everybody for participating and wish everybody a great day. Thank you.

Thank you. This does conclude the program. You may now disconnect.

Hello, and welcome to the Annual General Meeting of Shareholders of Athabasca Oil Corporation. Please note that today's meeting is being recorded. It is now my pleasure to turn today's meeting over to the Chairman of the Board, Ron Eckhardt.

Good morning. Welcome to Athabasca's Annual General Meeting of Shareholders. I'm Ron Eckhardt, Chair of the company's Board of Directors. Pursuant to the company's bylaws, I will be the Chair of this meeting. This year, again, the meeting will be held in a virtual-only format conducted via live website (sic) [ webcast ].

On the agenda today is the formal business described in the notice of meeting and the notice and access notification. After we take care of the formal business, I will ask Rob Broen, Athabasca's CEO, to give an update on the company's recent activities and strategic objectives.

During the meeting, registered shareholders and duly-appointed proxy holders may at any time submit questions or communicate with the Chair and the Secretary by clicking on the Q&A tab, typing in and submitting their question or comment. If you are attending as a guest, you may submit questions to be addressed by Mr. Broen following the formal meeting. No questions submitted by guests will be read or answered during the formal meeting.

Given the virtual format of the meeting and in order for us to expediently address as many questions as we can, we would encourage shareholders who have a specific question on an item of business to submit their question now. If you have further questions not specifically relating to the items of business, feel free to submit those questions at any time, and they will be addressed at the conclusion of the meeting.

I will now call the meeting to order. In addition to myself, the other Board nominees attending virtually are Angela Avery, Bryan Begley, Rob Broen, John Festival, Marty Proctor, Marnie Smith and Theresa Roessel.

So let's get started with the formal part of the meeting. Cam Danyluk will act as Secretary of the meeting; and Marina St. Denis from Computershare will act as scrutineer. I've been advised that the notice calling this meeting, along with the management information circular and the form of proxy were mailed on March 31, 2026, to registered shareholders of record as of the close of business on March 9, 2026.

Our circular and other meeting materials were made available to beneficial shareholders through the notice and access system. And so with the consent of the meeting, I will dispense with reading the notice calling this meeting. I've been provided the scrutineers' report.

At this meeting there are 69 persons holding or representing by proxy circa 247 million shares or 50% -- 57% of the common shares entitled to vote at this meeting. This represents a quorum of shareholders. Therefore, I declare this meeting regularly called and properly constituted for the transaction of business.

To facilitate the formal business of the meeting, Matthew Taylor will propose and Karla Ingoldsby will second the formal motions. If you have voted your shares prior to the start of the meeting, your vote has been received by the scrutineer, and there is no need for you to vote those shares during the meeting, unless you wish to revoke or change your vote. As such, if you have already voted and do not wish to revoke or change your vote, please do not vote during this meeting.

In order to streamline the voting process, we will now open the polls. And at any time during the meeting, registered shareholders and duly-appointed proxy holders that they are logged on and wish to vote the shares may do so by clicking on the vote tab on your screen. The polls will remain open until just before conclusion of formal business of the meeting. If you are attending this meeting as a guest, you will not be able to vote during the meeting. We have been advised by Computershare that based on proxies already deposited with them, enough votes have been cast to carry each of the motions.

The first item of business is the presentation of the company's financial statements for the period ended December 31, 2025, and the related auditor's report. Copies are available online and on the company's website. Extra copies are also available to shareholders upon request. The next item of business is fixing the number of directors to be elected at the meeting at 8. Mr. Taylor, may I have a motion?

Thanks, Ron. I move that the number of directors of the company be elected at the meeting be fixed at 8.

I second the motion.

Mr. Danyluk, have we received any questions relating to this item of business?

No, Mr. Chairman, there are no questions relating to this item of business.

Thank you. You can cast your vote on this item of business until I announce that the polls are closed. I will announce the voting results of this item of business and all items of business after the polls are closed. The next item of business is the election of the company's directors. Mr. Taylor, may I have a motion for the election of the company's directors.

I nominate each of the following individuals as directors of the company to hold office until the next annual meeting or until his or her successor is duly elected or appointed unless his or her office is earlier vacated: Angela Avery, Bryan Begley, Rob Broen, Ron Eckhardt, John Festival, Marty Proctor, Marnie Smith, Theresa Roessel.

I second the motion.

Thank you. No other nominations have been made in the time frame specified in the company's advance notice bylaw. Accordingly, I declare that the nominations are now closed. Mr. Danyluk, have we received any questions relating to this item of business?

No, Mr. Chairman, there are no questions relating to this item of business.

Thank you. You can cast your vote on this item of business until I announce the polls are closed. The next item of business is to appoint Athabasca's auditors. Mr. Taylor, may I have a motion for this?

I move that Ernst & Young LLP, chartered accountants, be appointed auditors of the company until the next annual meeting and that their remuneration as such be fixed by the Board of Directors.

I second the motion.

Mr. Danyluk, have we received any questions relating to this item of business?

No, Mr. Chairman, there are no questions relating to this item of business.

Thank you. You can cast your vote on this item of business until I announce that the polls are closed. You may not for any accounting -- you may not vote for any accounting firm other than Ernst & Young LLP. We will now wait a moment to allow registered shareholders and duly appointed proxy holders to submit their votes, and we will then close the polls.

[Voting]

The polls are now closed with respect to voting on all of the motions. Mr. Danyluk, could you provide -- please provide the preliminary voting results?

Mr. Chairman, based on the preliminary report of the scrutineer, all items voted upon at the meeting have received more than the number of votes required, and therefore, all items are passed. The final voting results will be posted online at SEDAR+ under Athabasca's profile.

Thank you, Mr. Danyluk. In light of the results of voting, I now declare the number of directors of Athabasca is fixed at 8. The 8 director nominees named in the management information circular have been duly elected as directors to hold office until the next annual meeting or until his or her successor is duly elected or appointed. unless his or her office is earlier vacated. And Ernst & Young LLP is appointed as auditor of Athabasca until the next annual meeting, and the Board of Directors is authorized to fix its remuneration.

The final report to be furnished by the scrutineer subsequent to the meeting will be incorporated into the minutes of the meeting. That concludes the formal business as set out in the notice of meeting. I will now give our registered shareholders and duly appointed proxy holders the opportunity to ask other questions. Mr. Danyluk, have we received any other questions?

No, Mr. Chairman, there are no questions.

Thank you. I will now call for a motion to terminate the meeting.

I move that the meeting be terminated.

I second the motion.

Thank you all for attending. I now declare this meeting closed. Now I would like to invite Rob Broen to provide an update on the business. Rob?

Thank you, Ron, and good morning, everyone. My name is Rob Broen, and I'm the CEO of Athabasca, and thank you for joining our virtual AGM. 2025 was another outstanding year for Athabasca. We continued strong operational execution, building a resilient business that is growing its production base and generating sustainable free cash flow. Over the past several years, we've remained disciplined and responsible -- responsive in how we allocate capital, always acting in the best interest of our shareholders. We started by paying down our debt, allowing us to have full control of our strategy. When it made sense to do so, we shifted our capital allocation strategy towards share buybacks based on the massive intrinsic value in our assets. We have now shifted towards growth, balancing that with thoughtful evaluation on the continued use of free cash flow for share buybacks. We are in a unique space where our vast asset base allows us to efficiently grow our business while reducing share count at the same time. That approach has proven to be an effective way to enhance per share value.

On this slide, you will see our 5-year total shareholder return. Over that period, Athabasca has outperformed all of our peers, delivering a total shareholder return of approximately 1,700%, including over 70% this year alone. That performance reflects the strength of our asset base, the discipline of our capital allocation framework and the commitment of our team to creating sustainable shareholder value. We will continue to apply that discipline going forward. And ultimately, our objective is simple: to create long-term value for our shareholders.

Our strategy is underpinned by three key pillars: first, low-decline, high-quality thermal assets that have an 85-year reserve life; second, self-funded growth through the high-returning Kaybob Duvernay oil play that has over 400 future locations and third, a pristine balance sheet with a net cash position supporting financial resilience and flexibility. You can see in this graph on the bottom left-hand side that we expect a compound annual growth on production of greater than 20% per share through 2030. The middle graph shows our expected cash flow growth. With consistent execution of share buybacks, we expect to also realize greater than 20% per share compound annual growth rate on funds flow through 2030. We've already returned approximately $1.1 billion to shareholders through first deleveraging and then share buybacks over the last 5 years. And now looking ahead, we expect to exceed that level of free cash flow between 2026 and 2030. The growth outlined assumes long-term commodity prices of $70 WTI and $12.50 heavy oil differential.

And I'm going to speak in a moment to the pricing sensitivities and our exceptional ability to withstand periods of volatility and continue to deliver strong returns. This slide is a corporate snapshot. Our thermal oil assets underpin our strategy and the heavy oil production also positions us very well for today's pricing environment. And on the Duvernay Energy side, our assets are positioned in the liquid-rich fairway of the prolific Kaybob Duvernay with over 400 future locations. I'm going to talk more about our assets in a moment. But you can see our financial position is clean and resilient. At the end of the quarter, our balance sheet was in a $60 million net cash position with over $400 million of liquidity, including almost $300 million of cash. We also have approximately $2.1 billion of valuable tax pools, allowing for a tax-free horizon for years into the future.

Our 2026 guidance is summarized at the bottom of this page. Our production guidance includes the impact of turnarounds that are happening across our assets this year and then highlights the significant exit growth rate to approximately 45,000 boe per day later this year, and this growth will continue in 2027 and beyond.

Yesterday, after market close, we released our Q1 results. There are a number of significant highlights. Production of 40,242 boe per day with 98% liquids. We started the year strong and expect that we'll be at the upper end of our annual corporate production guidance, including turnarounds as we execute our exciting capital programs on both sides of our business. Our consolidated adjusted funds flow was $128 million in the quarter, which is a 14% growth on a per share basis year-over-year with free cash flow of $20 million from our thermal oil assets.

You can see that our asset netbacks are very strong, an indicator of the quality and the profitability of our assets. These assets or these netbacks rank very well compared to peers across North America. And in fact, in March of this year, we recorded netbacks of approximately $67 a barrel in our thermal assets and $66 a barrel in our Duvernay asset, demonstrating the fantastic upside to commodity prices. We continue to allocate 100% of thermal free cash flow to our shareholders, and we've repurchased approximately $40 million worth of shares year-to-date. Our balance sheet remains pristine, as I've already mentioned, with $60 million net cash position.

Our business strategy is to deliver capital allocation that maximizes shareholder returns. As I touched on earlier, you can see in the graph on the top right-hand side that we expect a compound annual growth rate on production of greater than 20% per share through 2030. We expect our thermal business to reach over 60,000 barrels a day by 2030. And including our Duvernay business, we will be almost 80,000 boe per day. Our breakevens are very competitive with our capital growth program fully funded over the next 5 years at about $55 WTI pricing. And we've now repurchased 149 million shares or about 24% of our fully diluted share count over the last 3 years, and that's at approximately a 60% discount to our current value. Athabasca continues to see intrinsic value in its shares. For 2026, we renewed our normal course issuer bid with the capacity to repurchase up to 47 million shares until mid-March 2027.

The bottom graph on this page shows our substantial cash flow growth. You can see the power of compounding through the growth in cash flow while reducing share count through a buyback program. As previously mentioned, we're forecasting greater than 20% cash flow per share growth through 2030 annually. We believe this is a winning formula enhancing per share value in a way that few companies can match.

Now the macro backdrop for Canadian heavy oil has rarely been more compelling. Global markets are pricing in a very real supply risk with the disruption in the Strait of Hormuz impacting a significant share of global oil flows at a time when inventory buffers remain limited worldwide. At the same time, the Canadian heavy oil outlook continues to strengthen. TMX and the Mainline optimizations are expected to unlock roughly 700,000 barrels per day of incremental egress with additional pipeline projects also being advanced. Athabasca is uniquely positioned to benefit from this environment. We have material liquids growth through 2030, and we are fully unhedged on commodity prices in 2027 and beyond. Approximately 65% of our volumes are committed long term to secure PADD II and PADD III markets in the U.S.

At $70 WTI, we expect to generate $1.5 billion of cumulative free cash flow over the next 5 years. And for every $1 move in WTI, that number increases by almost $20 million. So we have strong exposure to the macro backdrop, growing liquids volumes, direct access to premium markets and the balance sheet strength to execute our business strategy. I'd like to now switch to our assets and talk about our exciting development programs.

This slide shows Leismer, a top-quality oil sands project and our largest producing property that is currently producing around 27,000 barrels per day. We are focused on progressive growth to 40,000 barrels a day over the next 2 years at a total project cost of $300 million. We will implement this growth with a highly economic $25,000 per flowing barrel capital efficiency.

Central processing facility is being expanded. We're adding more steam, water treatment and oil processing capacity. We recently drilled 12 new well pairs that will begin steaming in a stage sequence in the second half of this year following our planned 3-week turnaround in May that's underway right now. We are anticipating an exit rate of approximately 31,000 barrels a day in 2026.

Additional drilling will continue next winter, and we expect to reach our planned capacity of 40,000 barrels a day by the end of 2027. The project remains on budget and on schedule with about 90% of the capital spending complete by the end of this year. Once full capacity is achieved, we estimate that our sustaining capital breakeven to hold production flat is at about $45 WTI, allowing us to generate substantial free cash flow from this asset. This growth will complement our long-term strategy with a 50-year 2P reserve life remaining at this asset.

Hangingstone is our original SAGD asset that was commissioned in 2015. It also has a 50-year reserve life index. This asset has seen tremendous improvement in cost structure. The implementation of co-gas injection for pressure maintenance has displaced steam, resulting in a reduced steam oil ratio currently around 3.4x. This reduced our operating costs, it lowered our emissions and created excess steam capacity.

In March of 2025, we brought on two new 1,400-meter well pairs. Current well performance remains very strong with average production of 800 to 1,100 barrels per day per well. These sustaining well pairs will support our base production in 2026 and beyond. The asset has generated about $300 million in operating income in the last 3 years with very minimal capital. It continues to deliver meaningful cash flow contributions with competitive netbacks. We have a planned 10-day turnaround that will be completed this year in June. The asset has been important to corporate cash flow, and we are now evaluating growth potential to take advantage of unused facility capacity starting in 2027.

Our next exciting growth project is called Corner, an asset just offsetting our Leismer project. This asset is completely derisked in the McMurray sand reservoir with over 300 vertical well penetrations. The asset has approximately 350 million barrels of 2P reserves and another 520 million barrels of contingent resource. We believe it is a very high-quality reservoir relative to most other industry projects. The asset also has a 40,000 barrels a day regulatory approval for development in place and its close proximity to Leismer will allow for the realization of many operational synergies.

Our plan is to develop this asset through modular design in 15,000 barrel a day phases. This type of development will also allow a progressive build at the asset while self-funding the project from existing cash flow. We have received Class 3 cost estimates on the first phase of the project, and we're now evaluating lump sum bid proposals to enhance certainty over both project schedule and cost.

We also have secured key critical path elements, including long-term gas supply and power contracts and are evaluating our options for diluent supply and build egress. In the first quarter of this year, we began preparing the site and access road during the winter construction season. And looking ahead, we expect we will sanction Phase 1 in the second half of this year. Once sanctioned, we expect first steam in about 30 months and first oil in 34 months, allowing the project to reach its 15,000 barrels a day by the end of 2029. The majority of capital will be deployed in 2027 and 2028, and that's following the completion of our current Leismer expansion.

Our current estimate for Phase 1 is approximately $35,000 a flowing barrel capital efficiency. Additional phases of this project would follow in subsequent years, resulting in Athabasca's thermal oil business growing to almost 100,000 barrels a day, completely self-funded while also returning free cash flow to shareholders. We are very excited about this project and look forward to fully sanctioning it later this year.

Now I'll switch to our Duvernay assets. Duvernay Energy Corporation, which created 2 years ago is a private subsidiary company operated by Athabasca. It has exposure to approximately 200,000 gross acres in the liquids-rich window in the prolific Kaybob Duvernay resource play. The company has an estimated 430 gross future locations with extensive operated infrastructure in the region. The area is very active with industry peers, allowing for a unique low-risk development outlook. Business plan is to allocate 100% of adjusted funds flow from this business to drive self-funded growth.

Our capital program for 2026 is estimated at $79 million. We recently brought on stream a 4-well 30% working-interest pad with average lateral lengths of 4,500 meters. These wells have an outstanding initial rate of approximately 1,635 boe per day, 91% liquids.

The performance of these wells, including the free condensate yields is contributing to outstanding netbacks and new wells in this area are consistently performing at or above our type curves. We announced yesterday that we're adding a new pad this year with three wells planned at 4,500 meters each, taking advantage of our increased cash flow due to strong commodity prices.

This pad will be on stream in Q4, contributing to an exit rate of about 6,000 boe per day this year. Land tenure is very good in this area, allowing for flexible development. Our objective with this asset is continue the growth to achieve a material scale in drilling inventory. Value crystallization for shareholders will be done once these goals are achieved.

So that, ladies and gentlemen, concludes my presentation this morning. I want to thank our shareholders for your continued support as we deliver on our strategy. And I want to say a special thank you to the staff at Athabasca for their dedication and very hard work. I'm very proud to work with such talented individuals. So at Athabasca, we believe that responsible energy we produce here in Alberta makes people's lives better. The world needs more Canadian energy. We'd be happy to take questions at this time.

Rob, there's no questions in the queue.

All right. We'll turn it over to you, operator.

This concludes the meeting. You may now disconnect.