Athabasca Oil Corp. continues to suffer from selling pressure

Mar 15th, 2013 – Comment

Make note of the MACD and RSI which will have to do some work to give us a better indication that the sellers have been washed out and that buyers are taking control of the market.


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Hi Lou,

Been watching ATH for a while now for an entry point, and was wondering what your take on it is at this time?

Thanks,

Matt

 

 

Hey Matt,

Thanks for the assignment. Athabasca Oil Corp. (ATH TSX) has taken a balanced approach to developing its assets with a light oil division and a thermal oil division. I love the thermal oil framing for what at one time was called steam assisted gravity drainage. The company also changed its name from Athabasca Oil Sands in an effort to take the focus off the side of their business that is under pressure. Funny in my day tar sands pretty much nailed the venue but in the current environment I suppose you have to make it purdy!

ATH released its 2013 capital expenditures budget on December 17, 2012 when it announced $789 million would be applied to their efforts. The light oil side of the business would receive $236 million of the allocation and the thermal oil side $533 million. The company expects to exit the first half of 2013 with production of between 11,000 – 13,000 barrels of oil equivalent per day. Management strategic vision to to drive production to 220,000 boed by 2020.

A review of the information present in the charts will help determine if there is a good entry point at these levels.

 

The three- year chart indicates that things haven’t been rosy since 2011 with a short but profitable pop in 2012. What should be of concern is the failure to hold support at $10.00. We are now in the process of trying to find support where it has never existed before. The message here is be cautious! In addition the MACD and RSI are not indicating a trend reversal at this time.

 

 

 

 

 

The six- month chart provides a close up of the selling pressure that has plagued ATH since October. Make note of the MACD and RSI which will have to do some work to give us a better indication that the sellers have been washed out and that buyers are taking control of the market.

The best path at this point is be patient and see if this downtrend is coming to an end. It is always better to confirm the bottom than to anticipate it.

 

Make it a profitable day and happy capitalism!

 

 

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