Hello, welcome to the annual 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. Sir, the floor is yours.
Good morning. Welcome to Athabasca's annual shareholders meeting. I'm Ron Eckhardt, chair of the company's board of directors. Pursuant to the company's bylaws, I will be chair of this meeting. This year again, the meeting will be held in a virtual-only format, conducted via live webcast. The virtual-only format provides all shareholders and duly appointed proxy holders with an equal opportunity to participate, submit questions, and vote in the meeting regardless of their geographic location. 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 formal business, I will ask Rob Broen, Athabasca's CEO, to give an update of 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 meeting. No questions submitted by guests will be read or answered during the 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, please 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, and Marnie Smith. 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 in the form of proxy, were mailed on April 11, 2023 to the registered shareholders of record as of the close of business on March 30, 2023. Our circular and other meeting materials were made available to beneficial shareholders through the notice and access system. With the consent of the meeting, I will dispense with reading the notice calling this meeting.
I've been provided the scrutineer's report. At this meeting, there are 60 persons holding or representing by proxy 225 million shares, or 38.4% 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 today, Matthew Taylor will propose and Karla Ingoldsby will second the formal motions. At this meeting, each share held as of record is entitled to 1 vote. 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 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 procedure, we will now open the polls. At any time during the meeting, registered shareholders and duly appointed proxy holders that are logged on and wish to vote their shares may do so by clicking on the Vote tab on your screen. The polls will remain open until just before conclusion of the formal business of the meeting. If you are attending this meeting as a guest, you will not be able to vote or ask questions 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, 2022, and the related auditor's report. Copies are available online 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 7. Mr. Taylor, may I have a motion for this?
Thanks, Ron. I move that the number of directors of the company to be elected at the meeting be fixed at 7.
I second the motion.
A motion has been made and seconded to fix the number of directors of the company at seven. Mr. Danyluk, have we received any questions relating to the item of business?
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 other items of business after the polls are closed. The next item of business is the election of the company's directors. I would like to take a moment to recognize Thomas Ebbern, who will be retiring from the board and will not be standing for re-election this year. We want to thank him for his years of service on the board, the audit committee, and the Compensation and Governance Committee , and his ongoing business expertise and wisdom. 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 be duly elected or appointed, unless his or her office is earlier vacated. Angela Avery, Bryan Begley, Rob Broen, Ronald Eckhardt, John Festival, Marty Proctor, and Marnie Smith.
I second the motion.
Thank you. No other nominations have been made in this timeframe 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?
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 the remuneration as such be fixed by the board of directors.
I second the motion.
A motion has been made and seconded to appoint Ernst & Young LLP as Athabasca's auditor and to authorize the board of directors to fix its remuneration. Mr. Danyluk, have we received any questions relating to this item of business?
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. You may not vote for any accounting firm other than Ernst & Young LLP. We will now wait about one minute to allow registered shareholders and duly appointed proxy holders to submit their votes, and we will then close the polls. The polls are now closed with respect to voting on all of the motions. Mr. Danyluk, could you 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, therefore, all items are passed. The final voting results will be posted online on SEDAR under Athabasca's profile.
Thank you, Mr. Danyluk. In light of the results of the voting, I now declare the number of directors of Athabasca is fixed at seven. The seven 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 her office is earlier vacated. Ernst & Young LLP is appointed as the auditor of Athabasca until the next annual meeting, and the board of directors is authorized to fix its remuneration. A final report to be furnished by the scrutineers 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 the meeting. I will now give our registered shareholders and duly appointed proxy holders the opportunity to ask their questions.
Mr. Danyluk, have we received any other questions?
Mr. Chairman, there are no questions.
Thank you. 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'd like Rob Broen to provide an update on the business. Rob?
Well, thank you, Ron. Good morning, everyone. I want to thank you for dialing in to our virtual AGM this morning. My name is Rob Broen, and I'm the CEO of Athabasca Oil. It's a very exciting time to be a shareholder of Athabasca. Our company has undergone a remarkable transformation over the last few years. We've established a track record of strong operational performance and are now in the strongest financial position in our corporate history. The market has recognized our performance over the last 2 years. We were added to the TSX Composite Index in 2022, and we're recognized for being in the TSX30, one of the top performing companies on the TSX in the last 3 years. This year, we're continuing that momentum, focusing on providing outsized performance for our shareholders. As our investors on this call know, Athabasca has a diverse asset base.
Our assets are characterized as low decline and large resource underpinned by our thermal oil assets, and they're complemented by high return, short cycle time assets in light oil, Montney, and Duvernay. We are intentionally oil-weighted, resulting in exceptional cash flow in today's environment. Our assets have performed remarkably well, maintaining a very strong and stable production base, and these assets also provide a deep inventory of opportunities and are the basis for a long period of significant cash flow generation. Our financial position is strong and resilient. In late 2021, we refinanced our debt position, specifically designed to allow us to redeem debt using free cash flow. We set a target of paying down 50% of our debt position, and we have now paid down 54% of the original principal, years ahead of expectations. We now have the lowest absolute debt in our corporate history.
Our net debt position is only CAD 57 million, and that includes a CAD 260 million liquidity position with almost CAD 175 million of cash. We also have approximately CAD 3 billion of valuable tax pools, allowing for no tax payable for many years into the future. This capital structure provides resilience to macro volatility and sets the stage for a robust return of capital program, which I will describe shortly. Yesterday, after market close, we released our Q1 results. Some highlights included. Our production was approximately 34,700 BOE per day with 93% liquids. We have started this year strong, and we expect that we'll be well within our annual corporate guidance of 34,500-36,000 BOE per day as we execute our exciting capital programs, particularly at Leismer.
Our annual operating income was CAD 57 million in the quarter. The quarter was impacted by one-time hedging and financial adjustments that do not change or impact our future outlook. As you will see in a few slides, we expect cash flow to grow significantly through the balance of 2023 and in 2024, even with conservative oil price assumptions. Net backs have improved significantly since the volatility that we saw in Q1. This momentum will be reflected in future quarters. I also want to provide a short update on the recent wildfire situation in Alberta as it pertains to our company. Our greater Kaybob operations were temporarily affected by the Alberta wildfires. As a precautionary measure, we temporarily shut in 2 facilities last weekend. We resumed operations earlier this week.
At this time, we are not aware of any damage to our well sites or infrastructure. Our Placid and Saxon production was not affected, and there has been no impact to our Thermal Oil operations. Although certainly a significant issue in our operating area, it has not had a material impact on our operations. I want to thank our staff and those from the province who are protecting our people, our assets in this province of Alberta. I would like to say a few words on the company's views on commodity prices and specifically heavy oil. Global oil benchmarks have been supported by improving demand and structural supply deficits. Athabasca maintains a constructive outlook on oil prices, supported by years of industry under-investment and demand trends moving higher. Canadian WCS heavy differentials have historically been volatile due to a lack of egress.
This is no longer the case and should continue to improve with the start-up of the 590,000 barrel a day Trans Mountain pipeline expansion that happens in early 2024. The differential temporarily widened through the latter half of 2022 and early 2023 as a result of unprecedented U.S. Strategic Petroleum Reserve heavy barrel releases, TC Energy's Keystone Pipeline leak in December 2022, and some other factors. Pricing has significantly improved as these transitionary headwinds have eased. Differentials are currently trading at approximately $14-$15, compared with an average of $25, almost $25 U.S. in the first quarter of 2023. The supply-demand outlook for heavy barrels is expected to strengthen WCS prices into the back half of this year and in 2024. Athabasca is a go-to name for exposure to heavy oil production.
With every CAD 5 move in WCS impacting our annual cash flow by CAD 80 million. Our differentiated long life reserves has unparalleled exposure to this improving commodity price environment. Our near-term strategic priority is to manage for strong cash flow. You can see in the graph on this slide in the top right-hand side that we do expect to grow our production by 5%-7% each year through 2025. This growth is from expansion plans at Leismer and a modest capital spend in light oil. Activity is within our capital guidance and enhances our ability to generate free cash in the near term. The bottom graph shows how our cash flow grows at various oil prices. We expect to generate almost CAD 1 billion of free cash flow over the 3-year period from 2023-2025.
That assumes a CAD 85 oil price, and a CAD 5 WTI move is approximately CAD 50 million in free cash flow, and as already mentioned, a CAD 5 move in WCS is approximately CAD 80 million. As I will describe in a moment, in 2023, we are implementing a share buyback program. On these graphs, you can see the compound effect on production and cash flow per share when we are growing cash flow and also reducing our share count. It is our belief that this will continue to generate superior returns for our shareholders. Athabasca's capital allocation framework balances material near term return of capital initiatives for shareholders with a strong multi-year growth trajectory of cash flow per share. The company sees tremendous intrinsic value not reflected in the current share price.
In 2023, we are allocating a minimum of 75% of excess cash flow, defined as adjusted funds flow less sustaining capital to our shareholders. Athabasca has in place a Normal Course Issuer Bid program that provides the ability to purchase up to 10% of the company's float per annum. This program started in April, I'm pleased to report that we've already completed CAD 20 million in repurchases and canceled 6.2 million common shares as of May 10th. Additional excess cash flow allocation in 2023 and 2024 will be commodity price dependent with the flexibility to do additional buybacks, opportunistic debt reduction or high return growth projects. The company retains excellent exposure to commodity price upside. Our risk management program provides for 25% of corporate price hedges targeting wide collars.
Our current callers provide protection to $50 WTI with upside to $106 WTI. I would like to highlight the value of the thermal oil assets in our portfolio. Our thermal oil assets provide unparalleled long life reserves with low decline rates. Our assets are all brownfield, meaning the large capital expenditures associated with infrastructure and delineation are behind us. In our company, we now have 1.2 billion barrels of 2P reserves with production that can be maintained with very low capital costs. It is also worth mentioning one significant financial advantage that Athabasca has on its thermal assets. In Alberta, royalties are paid to the Crown. The amount of royalties paid are much lower when the assets are still in pre-payout status to account for the cost of the initial investment.
Our assets are expected to maintain the status to 2028 and beyond, allowing for the company to continue to benefit from very low crown royalty rates of 5%-9% for the foreseeable future. This is a distinct advantage Athabasca assets have compared to most other thermal projects that are now in post-payout phase with royalties of 25%-40%. Leismer is a top quality oil sands project and this is our largest producing property. We have focused the majority of our capital spend on this property, which will be approximately CAD 105 million in 2023. Our most recent activity was drilling a 5-well pad in 2022 on the northern part of the field at Pad L8. This was our second set of wells off this pad site.
Steaming of these wells commenced in February this year. The wells are ramping up production with an expected plateau of 6,000 barrels a day by the end of 2023, similar to the first set of wells. Drilling in 2023 is expected to commence in June, with an expected 12 additional sustaining and infill wells. Additionally, we are expanding our oil treating capacity at the central processing facility. We expect to exit 2023 with a production rate of 24,000 barrels a day and achieve 28,000 barrels a day by mid-2024. This will provide the bulk of corporate growth at a very competitive capital efficiency of CAD 14,000 per flowing barrel per day and a CAD 5 per barrel margin enhancement due to the increased operating scale. We are continuing to progress with carbon capture and sequestration.
We have a letter of intent finalized with Entropy, who, Entropy Incorporated, who will fund modular carbon capture technology and then share in the carbon credits generated by our emissions reduction. Leismer also has the advantage of being in close proximity to the pipeline corridor of the Pathways project for sequestration. Our intent is to move this project to final investment decision once federal and provincial government regulatory and fiscal policies have been finalized for CCUS investments. Switching to light oil. Our light oil assets consist of both Montney and Duvernay development areas. Through several years of de-risking and development, we now have an inventory of approximately 850 future locations. These assets have very established and compelling economics, as can be seen by the single well economics on this page. It is also an area seeing significant competitor activity around our assets.
The Duvernay volatile oil window at Kaybob East and Two Creeks in particular, has demonstrated compelling extended rate production history. The company has many wells in the area that have consistently supported type curve expectations with IP365s averaging 550 BOE per day per well and 85% liquids on the most recent wells. The land in these areas have no near term expiries and it's ready for future development. We are really excited about the results in this area, its competitive economics and our operated infrastructure position across the region. Our light oil areas will be targeted for development in the near future. Yesterday, we were very pleased to publish our 2023 ESG report. The report is aligned to leading ESG standards and frameworks and can be found on our website.
At Athabasca, we believe that responsible energy we produce here in Alberta makes people's lives better. In this year's report, we outline the company's strong track record in all areas of ESG performance. We are utilizing technology to lower emissions intensity. We have achieved a 24% reduction in emissions intensity since 2015 and are targeting a 30% reduction by 2025. Our safety culture is deeply embedded and we continue to demonstrate industry-leading numbers with a 2022 Total Recordable Injury Frequency of 0.08 per 200,000 man-hours and no recordable injuries in 2023 to date. We also have not had a reportable hydrocarbons spill in the last four years. We're very proud of that. You can see and read about our plans for carbon capture and storage at Leismer that will take emissions even lower than our stated targets.
We have a robust corporate governance policy, many policies, and our ESG strategy and performance is fully integrated at the board level. The world needs more Canadian energy, not less. I hope this over-overview has helped you with why you should invest in Athabasca. I wanna thank our outgoing board member, Tom Ebbern, for his dedication, his support, and his guidance over the past five years. I would also like to welcome our newest board member, Marnie Smith. We are fortunate to have such qualified and engaged board members as we plan for our future. Finally, I wanna say a special thank you to the staff of Athabasca for their dedication and hard work. I'm very proud to work with such talented people. This concludes my presentation, and we would be happy to take any questions.
This concludes the meeting. You may now disconnect and have a pleasant day.
Thank you.