The TSX30 is an annual ranking of the 30 top-performing Canadian stocks based on dividend-adjusted share price performance over a three-year period. Energy companies accounted for nearly 50% of the winners in the sixth edition in 2024. Athabasca Oil (TSX: ATH) ranked sixth with a massive plus-429% return over three years.
The $4 billion, liquids-weighted intermediate producer missed the list last year, dominated by metals and mining stocks. However, this top Canadian energy stock is set for major gains and could return to the spotlight in 2026. Several positive factors have yet to reflect in the current share price. At $8.36 per share, you’d be investing in a potential growth and buyback king.
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Well-rounded portfolio
Athabasca invests in high-margin projects to maximize cash flow per share growth. The company operates in the Western Canadian Sedimentary Basin, focusing on thermal and light oil resources. Liquids-weighted means more oil and higher margins.
The Thermal division, the growth engine, uses Steam Assisted Gravity Drainage (SAGD) technology to extract bitumen from oil sands. Leismer and Hangingstone, the lead projects, boast a low-decline production base and generate significant free cash flow (FCF).
Duvernay Energy is a self-funded, pure play company. Athabasca has a 70% majority stake, while Cenovus Energy owns 30%. This second business segment produces light oil and liquids-rich natural gas from unconventional reservoirs. It owns and operates strategic regional infrastructure in the Duvernay at Greater Kaybob.
Athabasca intends to capitalize on the long-term growth optionality in high-quality Thermal Oil projects. Duvernay offers flexible development opportunities. This portfolio is well-rounded, with a unique exposure to liquids-rich production and a deep inventory of long-life reserves.
Profitable growth
Athabasca Oil is managing the business for strong free cash flow (FCF). Thus, the 2026 budget will focus on capital projects within its core assets that would drive profitable growth. The mid-cap stock is a non-dividend payer but commits to returning 100% of FCF to shareholders through buybacks.
Since 2021, the company has returned $1.1 billion to shareholders, $695 million for share buybacks and $386 million for debt reduction. The maturity of its term debt is 2029. Athabasca forecasts $1.1 billion in additional FCF over the next five years while funding its growth initiatives.
Progressive expansion is underway in in the thermal oil division. It will result in an exit rate of 43,000 barrels of oil equivalent per day (boe/d) on year-end 2026, from 28,000 boe/d in 2024. Notably, in 2025, Athabasca generates FCF at US$60 per barrel, while the operating break-even is US$40 per barrel WTI.
If oil prices settle between US$60 and US$62 this year, Athabasca will generate “excess” cash. Last, the large resource base, long-life, low decline assets and low sustaining capital requirements are Athabasca’s competitive advantages.
Long-term bet
Athabasca Oil is absurdly cheap vis-à-vis its visible growth potential. Given the significant multi-year FCF, clean balance sheet, low corporate break even, and limitless inventory, ATH is a good long-term bet. The return to the TSX30 List in a year or two is likely. Buy now before the price soars.
