Q3 Earnings Preview: Athabasca, Valaris & Alpha
What’s next for three unloved cyclicals
My investment theses are simple.
No civilization can grow without metallurgical coal — yet supply keeps shrinking. The largest oil reserves are likely under the sea, but rigs are disappearing and no new ones are being built. Everyone worries about uncertain oil demand, but in the long run, demand is far more predictable than supply — and that’s the essence of my oil investment thesis.
I’m always looking for excellent businesses in in lousy industries, because fast-growing sectors invite crowds, attracts too much attention and too many competitors. In business, competing keeps you alive—dominating makes you rich.
All three companies are unloved, highly cyclical, and largely avoided. However, each of them is almost debt-free, plans to return close to 100% of free cash flow to shareholders— primarily through buybacks — and there’s a strong chance we’ll see some good returns from them over time.
They are currently in some form of a downturn phase — which might not be the worst time to own them. As Peter Lynch once said:
“Buying a cyclical after several years of record earnings and when the P/E ratio has hit a low point is a proven method for losing half your money in a short period of time.”
Three of my core positions — Athabasca, Valaris, and Alpha Metallurgical — are reporting within just a few days of each other. It’s rare to see all three line up like this, and the setup couldn’t be more interesting.
All three are long-term bets, and to be clear — I expect plenty of volatility from each. But I don’t see volatility as risk. The ideal long-term scenario is actually one where prices stay pessimistic while these companies continue generating strong free cash flow and using it for buybacks. That would accelerate compounding and get us to the desired outcome even faster.
While I don’t place much weight on next quarter’s headline numbers, there are still a few key things worth paying attention to in each report.
Let’s see what to expect from each.
Athabasca Oil (ATH.TO)
Q3 2025 Earnings Preview — October 29
Athabasca is quietly executing one of the most aggressive buyback programs in Canada’s energy sector. Management targets ~10% share repurchases per year and they’re right on track.
So far in 2025, the company has bought back 28–32 million shares (~6% of the float) for roughly $160–175M CAD. If that pace continues, Athabasca will end the year near its 10% goal — an exceptional outcome for shareholders.
One detail worth pausing on: about 5 million shares were repurchased and permanently cancelled in September alone. That word cancelled is crucial — those shares are gone for good, not sitting in treasury or waiting to be reissued. Once cancelled, they simply cease to exist, meaning the total share count drops permanently. It’s quiet, simple, and directly in the best interest of every remaining shareholder — the purest form of value creation.
And I like it. I like it a lot. Do I need to say I got a little excited again? 😄
