CALGARY, Jan. 3, 2012 /CNW/ - Athabasca Oil Sands Corp. (TSX: ATH)
announces that it has exercised its option to divest its 40% interest
in the MacKay River oil sands project to Cretaceous Oilsands Holdings
Limited, a wholly owned subsidiary of PetroChina International
Investment Limited, for cash consideration of $680 million (Cdn.),
subject to closing adjustments including Athabasca's repayment of two
loans provided by Cretaceous.
The February 10, 2010 Put/Call Option Agreement between Cretaceous and
Athabasca granted this option to trigger the sale of Athabasca's 40%
interest in the MacKay River project. As a result of the sale of its
MacKay River interest, Athabasca's 2012 capital budget will be reduced
by approximately $190 million.
The Board of Directors of Athabasca decided to proceed with this
divestiture because it believes the long-term prospects of the company
are enhanced by deploying its capital and resources into its other
development projects.
Sveinung Svarte, president and CEO says, "Since creating the joint
venture with Cretaceous in February, 2010 and until our exercise of the
put option, Athabasca has grown and diversified. We added approximately
three billion barrels of contingent resource (best estimate) through
successful drilling and acquisitions, reaching approximately 10 billion
barrels of contingent resources (best estimate)."
Svarte adds, "We grew the resource base of the Hangingstone asset area,
which the company estimates now has the potential to produce more than
80,000 barrels of bitumen per day. As a result, we accelerated the
timing of development for this project and first production is expected
in 2014.
"We have also acquired more than 1.7 million acres of promising light
oil and liquids-rich natural gas properties. The company is very
pleased with the results of our 2011 light oil drilling and completions
program and we are targeting a production rate of 8,000 - 10,000
barrels of oil equivalent per day by the end of 2012," Svarte states.
Bill Gallacher, chair of the Board says, "Our strategy is to ultimately
achieve approximately 50% of our production from the company's oil
sands division and the balance from the light oil division. We will use
the proceeds from the option exercise to implement this strategy."
Athabasca is a dynamic, Canadian company focused on development of oil
resource plays in Alberta, Canada. It has accumulated a large, high
quality resource base suitable for extraction of extra heavy crude oil
(bitumen) and light oil. The company is well financed and with its
excellent assets and talented people, Athabasca is poised to become a
major Canadian oil producer. It is traded on the TSX under the symbol
ATH.
Reader Advisory
This news release contains certain forward-looking information and
statements within the meaning of applicable securities laws. The use of
any of the words "expect", "anticipate", "continue", "estimate", "may",
"will", "project", "should", "believe", "plans", "intends" and similar
expressions are intended to identify forward-looking information or
statements. In particular, but without limiting the forgoing, this
news release contains statements concerning the closing of the
divestiture, the potential use of the net proceeds from the divestiture
to other development projects, the company's anticipated capital budget
for 2012, the potential production capabilities of the company's
Hangingstone properties, anticipated timelines for production from the
company's Hangingstone properties, anticipated exit fiscal 2012
production rates and the company's estimations with regards to its
future production profile between conventional oil and gas and oil
sands production. The forward-looking information is based on certain
key expectations and assumptions made by the company's management,
including expectations and assumptions concerning the current terms of
prevailing commodity prices, exchange rates, interest rates, applicable
royalty rates and tax laws; future production rates and estimates of
operating costs; performance of existing and future wells; reserve and
resource volumes; anticipated timing and results of capital
expenditures; the success obtained in drilling new wells; the
sufficiency of budgeted capital expenditures in carrying out planned
activities; the timing, location and extent of future drilling
operations; the state of the economy and the exploration and production
business; results of operations; performance; business prospects and
opportunities; the availability and cost of financing, labor and
services; the impact of increasing competition; ability to market oil
and natural gas successfully, the company's ability to access capital,
obtaining the necessary regulatory approval and satisfaction of the
other conditions to closing the put transaction. In addition,
information and statements relating to "reserves" and "resources" are
deemed to be forward-looking information and statements, as they
involve the implied assessment, based on certain estimates and
assumptions, that the reserves and resources described exist in the
quantities predicted or estimated, and that the reserves and resources
described can be profitably produced in the future.
Although the company believes that the expectations and assumptions on
which such forward-looking information is based are reasonable, undue
reliance should not be placed on the forward-looking information
because the company can give no assurance that they will prove to be
correct. Since forward-looking information addresses future events and
conditions, by its very nature they involve inherent risks and
uncertainties. The put transaction may not be completed on the
anticipated time frames or at all or may be renegotiated and the
company's actual results, including production results, performance or
achievement could differ materially from those expressed in, or implied
by, the forward-looking information and, accordingly, no assurance can
be given that any of the events anticipated by the forward-looking
information will transpire or occur, or if any of them do so, what
benefits that the company will derive there from. Management has
included the above summary of assumptions and risks related to
forward-looking information provided in this news release in order to
provide readers with a more complete perspective on the company's
future operations and such information may not be appropriate for other
purposes.
Readers are cautioned that the foregoing lists of factors are not
exhaustive. The assumptions relating to AOSC's reserves and resources
are contained in the reports of GLJ Petroleum Consultants Ltd. dated
effective April 30, 2011 and DeGolyer and MacNaughton Canada Limited
dated effective April 30, 2011. The risks and uncertainties referred to
above are described in more detail in AOSC's Annual Information Form
dated March 28, 2011, which is available on the SEDAR website at www.sedar.com. See also AOSC's financial statements and Management's Discussion and
Analysis for the year ended December 31, 2010 and for the current
interim financial period, which are also available on SEDAR. These
forward-looking statements are made as of the date of this press
release and AOSC disclaims any intent or obligation to update publicly
any forward-looking information, whether as a result of new
information, future events or results or otherwise, other than as
required by applicable securities laws.
Oil and Gas Disclosure
"Contingent Resources" are defined in the Canadian Oil and Gas
Evaluation Handbook (the "COGE Handbook") as those quantities of
petroleum estimated, as of a given date, to be potentially recoverable
from known accumulations using established technology or technology
under development, but which are not currently considered to be
commercially recoverable due to one or more contingencies.
Contingencies may include factors such as economic, legal,
environmental, political and regulatory matters or a lack of markets.
It is also appropriate to classify as "Contingent Resources" the
estimated discovered recoverable quantities associated with a project
in the early evaluation stage. Contingent Resources are further
classified in accordance with the level of certainty associated with
the estimates and may be sub classified based on project maturity
and/or characterized by their economic status. The volumes of
contingent bitumen resources in the above table were calculated at the
outlet of the proposed extraction plant and are the Company's working
interest (operating or non-operating) share before deduction of royalty
obligations. There is no certainty that it will be commercially viable
to produce any portion of the resources.
Barrel of oil equivalents or 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.
