UPDATE 1-Canada's Athabasca Oil to spend 42 pct less in 2014
* Says will spend C$460 million in 2014
* Expects average output of 6,000-6,500 boe/d in first quarter
Dec 17 (Reuters) - Canadian oil producer Athabasca Oil Corp said it planned to spend 42 percent less in 2014 to develop its assets, as it awaits government approval for its Dover project.
The Dover project in Alberta was approved in April by the province's energy regulator, but the Alberta Court of Appeal in October allowed the Fort McKay First Nation, an aboriginal community, to challenge the approval.
Athabasca holds 40 percent stake in the project, which could eventually produce as much as 250,000 barrels per day of bitumen. PetroChina Co Ltd holds the rest.
The Calgary-based energy company has the right to exercise a C$1.32 billion ($1.25 billion) put option with PetroChina once the Dover project gets all approvals.
The two companies had a similar agreement for the smaller, nearby MacKay River project. Athabasca exercised its option to sell its 40 percent interest in the project to the Chinese state-owned company last year. ()
Athabasca had warned in October that it could cut its budget, sell light oil assets or incur more debt if approval on the Dover project was denied. ()
The company on Tuesday said it will spend C$460 million in 2014 - C$348 million for developing thermal oil assets and C$106 million for light oil assets. The remaining will be used for corporate expenses.
"We will only undertake new project commitments when we have the necessary funding to complete them," Chief Executive Sveinung Svarte said in a statement.
Athabasca had said last year it would spend C$798 million to develop its oil assets in Alberta in 2013, and finance capital costs through cash-on-hand, debt and cash flow from production.
The company expects average production in the range of 6,000 to 6,500 barrels of oil equivalent per day (boe/d) in the first quarter of 2014. Production in the first quarter of 2013 averaged 6,100 boe/d.
Athabasca shares closed at C$6.57 on the Toronto Stock Exchange on Monday. They have fallen about 37 percent this year.