Athabasca Oil Corporation Announces Proposed Private Offering of Senior Secured Notes

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CALGARY, Nov. 5, 2012 /CNW/ - Athabasca Oil Corporation (TSX: ATH) announces that it intends to issue, on a private placement basis, up to C$600 million in aggregate principal amount of senior secured second lien notes which will be due in 2017. Athabasca may issue the notes in connection with this private placement offering or in future offerings from time to time. In conjunction with the note offering, the Company is currently negotiating senior secured first lien revolving credit facilities with a syndicate of financial institutions. The revolving credit facilities are anticipated to be initially on the order of C$150 million. Timing, size, terms and completion of these transactions are subject to market conditions and other factors.

Athabasca intends to use the net proceeds from the private placement and the credit facilities for general corporate purposes, including the advancement of its thermal oil projects in Athabasca and the development of its light oil assets in Kaybob and Saxon/Placid. The proposed note offering and credit facilities are intended to provide Athabasca with additional liquidity and flexibility to fund and possibly expand its future capital expenditure programs.

As at September 30, 2012, Athabasca had a very strong balance sheet with cash, cash equivalents, short term investments and restricted cash of approximately C$626 million. The Company currently has no debt.

Athabasca's five year plan includes the developments of the Hangingstone and Dover West thermal oil (oil sands) projects, the pilot production test at the Dover West Leduc carbonate reservoir and the development of the light oil production areas in Kaybob and Saxon/Placid. To execute this plan the Company has assumed using cash on hand and a modest level of debt, in addition to using proceeds from future joint ventures and from the possible exercise of the Put/Call Option in respect of Athabasca's Dover Thermal Oil Asset.

The Company has been evaluating its capital structure during 2012 and believes the current market presents the Company with a favourable opportunity to seek debt financing and reduce the Company's overall cost of capital. It will also increase the Company's flexibility with respect to timing of third party transactions such as joint ventures. Athabasca still anticipates that the contemplated joint venture on Hangingstone and Birch announced in August 2012 will be concluded. Additionally, the exercise of the Put/Call Option in respect of Athabasca's Dover thermal oil asset would provide the Company with an additional C$1.32 billion (before expenses and taxes).

It is possible that the note offering, the contemplated Hangingstone/Birch joint venture and the exercise of the Put/Call Option will lead to excess liquidity for the Company. Such excess liquidity would most likely be utilized to accelerate the development of our Light Oil acreage in line with the Company's overall strategy.

Athabasca has so far invested approximately $900 million into its Light Oil division which has resulted in a land base of approximately 2.7 million acres, excellent drilling and test results and a 100% owned infrastructure system in the Kaybob - Saxon/Placid areas. This has enabled the Company to establish a 2012 exit production target in the range of 10,000 to 11,000 barrels of oil equivalent per day (boe/d), which should generate considerable cash flow from operations and allow for rapid growth.

This news release does not constitute an offer of any security for sale in the United States or in any jurisdiction in which such an offer, solicitation, or sale would be unlawful. The notes will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or the securities laws of any state, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. The notes will be offered and sold in Canada, on a private placement basis pursuant to available prospectus exemptions.  The notes may be offered in the United States only to "qualified institutional buyers" (as defined in Rule 144A ("Rule 144A") under the U.S. Securities Act) in reliance on Rule 144A under the U.S. Securities Act and outside the United States in reliance on Regulation S under the U.S. Securities Act.

Athabasca is a dynamic, Canadian company focused on the development of oil resource plays in Alberta, Canada. The Company has accumulated an extensive, high quality resource base suitable for the extraction of thermal crude oil (bitumen) and light oil. Well financed and well endowed with high quality assets and talented people, Athabasca is poised to become a major Canadian oil producer. It aspires to produce more than 200,000 boe/d by 2020, comprised of a 50/50 weighting of thermal and light oil. Athabasca is traded on the TSX under the symbol ATH.

Reader Advisory:

This News Release contains forward-looking information that involves various risks, uncertainties and other factors. All information other than statements of historical fact is forward-looking information. The use of any of the words "anticipate," "plan," "continue," "estimate," "expect," "may," "will," "project," "should," "believe," "predict," "pursue" and "potential" and similar expressions are intended to identify forward-looking information. The forward-looking information is not historical fact, but rather is based on the Company's current plans, objectives, goals, strategies, estimates, assumptions and projections about the Company's industry, business and future financial results. This information involves known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information. No assurance can be given that these expectations will prove to be correct and such forward-looking information included in this News Release should not be unduly relied upon. This information speaks only as of the date of this News Release. In particular, this News Release contains forward-looking information including but not limited to the potential for and terms of an offering and issuance of senior secured second lien notes by Athabasca and the establishment of senior secured first lien revolving credit facilities, and the use of proceeds therefrom, the potential exercise of the put/call option in respect of Athabasca's Dover thermal oil assets and completion of the previously announced potential joint venture involving Athabasca's Hangingstone and Birch assets and the benefits to Athabasca therefrom, the 2012 exit production target, future cash flow from operations and growth rates. Such forward-looking information is based on certain assumptions and analysis made by Athabasca in light of its experience and perception of current conditions and expected future developments as well as other factors it believes are appropriate in the circumstances. However, whether actual results, performance or achievements will conform to Athabasca's expectations and predictions is subject to market conditions and a number of known and unknown risks and uncertainties which could cause actual results to differ materially from Athabasca's expectations. Such factors may include the failure to successfully market the notes or negotiate the credit facilities, failure to satisfy certain conditions in connection with the issuance of the notes or the credit facilities, failure to satisfy conditions in connection with, or the determination not to exercise, the put/call option in respect of Athabasca's Dover thermal oil assets, failure to conclude definitive documentation or receive all necessary internal and regulatory approvals or to satisfy conditions in connection with the potential joint venture involving Athabasca's Hangingstone and Birch assets. Other factors which could materially affect such forward-looking information are described in the risk factors in the Company's most recent annual information form that is available on SEDAR at www.sedar.com. The forward-looking statements included in this News Release are expressly qualified by this cautionary statement. Athabasca does not undertake any obligation to publicly update or revise any forward-looking statements except as required by applicable securities laws.

BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf: 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. As the value ratio between natural gas and crude oil based on the current prices of natural gas and crude oil is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.

SOURCE: Athabasca Oil Corporation

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