ALBERTA
09/08/2014 07:55 EDT | Updated 11/08/2014 05:59 EST

Athabasca Oil's CEO to retire on Sept. 30; company boosts capital budget

CALGARY - With uncertainty over a nearly $1.2-billion oilsands deal finally resolved, Athbasca Oil Corp. announced Monday that it's shuffling its executive ranks and bumping up capital spending for 2014.

CEO Sveinung Svarte, who has been at the helm of the company since 2006, is leaving his role to become vice-chairman on Athabasca's (TSX:ATH) board of directors, where he'll work on business development opportunities, such as joint-ventures.

Board chairman Tom Buchanan will assume Svarte's executive duties.

Late last month, Athabasca completed the sale of its 40 per cent stake in the Dover oilsands project to a Canadian unit of PetroChina for $1.184 billion, $600 million of which has already been paid in cash. The rest will be paid in instalments over the next two years.

Athabasca had been aiming to close the Dover deal by mid-year and the delays had been weighing on its stock price.

"Now that we have successfully completed the closing of the PetroChina deal, I feel that it's the ideal time for me to turn over the leadership to Tom," said Svarte on a conference call.

Buchanan said he's excited to lead Athabasca through its next stage of growth.

"We have best-in-class assets, a tremendously talented team of people and the financial capacity in place to execute on our strategic growth objectives and deliver strong shareholder value appreciation going forward," he told analysts on the call.

Also, the company's board of directors has approved an increase of $140 million to Athabasca's 2014 capital budget, bringing the total to $667 million. Athabasca says it's also maintaining its production guidance range of 6,000 to 6,500 barrels of oil equivalent per day for the second half of 2014.

Attention has now turned to whether Athabasca can find a joint-venture partner to help it develop its holdings in Alberta's promising Duvernay shale.

Desjardins analyst Justin Bouchard said he'd hoped to hear more details about Athabasca's plans for a Duvernay deal on Monday.

"The company has indicated that the Duvernay could be a self-funding asset—perhaps a precursor to going it alone?" Bouchard wrote in a note to clients.

"We view the company's direction regarding the Duvernay (joint-venture) process as a significant catalyst for the stock. A (joint-venture) could highlight the significant value per acre of the land, provide some cash or carried interest (and reduce risk); however, we are not fans of a 'go it alone' strategy."

A 2009 joint-venture deal between Athabasca and PetroChina covering the MacKay River and Dover projects included an exit strategy of sorts for the Canadian company.

In 2012, PetroChina took full control of the MacKay River project without any significant glitches, however the sale of Athabasca's 40 per cent stake in the Dover project, giving the Chinese company complete ownership, was more complicated.

Concerns over the sale had been mounting amid Chinese reports that a handful of PetroChina officials with Canadian ties were caught up in a corruption probe. The Financial Post also reported in July that PetroChina was trying to lower the amount owed to Athabasca because it is unhappy with the quality of the oilsands assets.

Months before that, regulatory approval for Dover — a prerequisite for the sale to PetroChina — had been held up by a legal challenge from a nearby First Nation.

The proposed five-phase Dover project aims to eventually produce 250,000 barrels of crude a day.

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