Alberta Oilsands Inc. announces 2008 year end results and files annual disclosure documents



    
    /NOT FOR DISTRIBUTION TO THE U.S.A. NEWS WIRE SERVICES OR FOR
    DISSEMINATION TO THE U.S.A./
    

    CALGARY, April 30 /CNW/ - Alberta Oilsands Inc. ("Alberta Oilsands" or
the "Company") (TSXV: AOS) is pleased to announce that it has filed its
financial statements and management's discussion and analysis for the year
ended December 31, 2008. The Company has also filed its reports regarding its
reserve data and other oil and natural gas information as mandated by National
Instrument 51-101. The above referenced documents, together with the letter to
shareholders are available for viewing on SEDAR at www.sedar.com.
    Alberta Oilsands continued to make strides in 2008 towards submitting an
application in 2009 for its first oil sands pilot project on Alberta's
Athabasca fairway. Alberta Oilsands' strategy is to delineate and prove up
bitumen reserves sufficient to support a minimum potential 10,000 barrel per
day in-situ project within five years.
    Although Alberta Oilsands remains firmly focused on extracting bitumen
from the province's rich oil sands deposits, the Company took advantage of its
strong cash position, its corporate agility and the overall market downturn in
early 2009 to acquire some promising conventional assets to supplement its oil
sands assets. Alberta Oilsands entered into a conventional farm-in agreement
in north-western and central Alberta in January 2009. The objective is to
benefit from the team's conventional experience to seize attractive
opportunities during the global financial crisis that would not normally be
available. The benefits of taking steps at this time to gain access to quality
conventional assets are becoming clear with the recent release of encouraging
test results. Alberta Oilsands is positioning itself not only to survive the
downturn, but to thrive after markets return to normal.
    Alberta Oilsands is committed to being prudent in managing its funds
until financial markets show signs of sustained recovery.

    
    2008 highlights include the following:

    -   Raised $23.6 million, including $8.1 million in a non-brokered
        private placement financing and $15.5 million through a bought-deal
        equity financing.
    -   Received approval for the Fort McMurray Clearwater Oil Sand
        Exploration Program application from Alberta Sustainable Resources
        Development.
    -   Completed a strategic pooling of contiguous oil sands acreage with an
        oil sands producer in the Hangingstone East/Halfway Creek area of
        Alberta.
    -   Commenced and completed a drilling program at Clearwater West
        property. The drilling results confirm high quality bitumen and cap
        rock integrity testing results are positive, providing the results
        the Company needs to proceed with its Steam-Assisted Gravity Drainage
        (SAGD) pilot project submission.
    -   Selected to the "TSX Venture 50," a ranking of Canada's top emerging
        public companies. Alberta Oilsands was ranked fourth in the oil and
        gas sector.
    -   Completed facilities upgrades at central Alberta property resulting
        in reduced operating costs.
    -   Identified six conventional, light oil focused development drilling
        locations on the Company's Nisku property.
    -   Obtained a net present value report by Ryder Scott Company that
        estimates the unrisked total value of Alberta Oilsands' Clearwater
        project areas at $464 million based on a price of US$55 West Texas
        Intermediate (WTI) (see "Review of Oilsands Operations - Resource
        assessment" below in this news release).
    -   Received an increase to contingent resources at its Fort McMurray
        property resulting in an assignment of 320 million barrels of bitumen
        - a 59% increase since the October 2007 Ryder Scott report (see
        "Review of Oilsands Operations - Net present value cash flow
        evaluation" below in this news release).
    -   Sought strategic partners to accelerate the Company's growth plan.
    -   Entered into two production sharing contracts in Kenya, through its
        wholly owned subsidiary Platform Resources, to allow it to evaluate
        two exploration blocks.

    Subsequent events:

    -   Entered into a significant farm-in agreement on conventional oil and
        natural gas assets in the McLeod area of Central Alberta and the
        Hamburg area of northwest Alberta.
    -   Successfully drilled one (0.5 net) Slave Point discovery well in the
        Hamburg area and placed on production on April 1, 2009 at an average
        gross rate of 5 million cubic feet per day.
    

    Review of Oil Sands Operations

    Due to market and economic conditions, Alberta Oilsands is currently
focusing all of its oil sands development efforts on its Clearwater West
project, which is at the most advanced stage of development. All other oil
sands activities have been deferred until the economic environment improves.
When conditions warrant additional exploration and development, Alberta
Oilsands will be able to take advantage of its depth of opportunities on 140.5
sections (121.5 net) of Alberta's Athabasca oil sands fairway. These
opportunities include three potential project areas at Clearwater, one joint
project at Hangingstone, one prospect at Algar Lake and one prospect at Grand
Rapids.

    Fort McMurray Clearwater West, East and North Projects:

    By focusing its attention on Clearwater West at the end of 2008, Alberta
Oilsands has been able to make significant progress on its path to production
in the oil sands. By the end of January 2009, the Company had commenced its
arrangements for water sourcing and water disposal. By the end of February
2009, the Company had received the initial results of its cap rock study.
Additional results are expected in May 2009. The initial cap rock results were
encouraging.
    As a result of coring activity in the 2007/2008 winter coring program,
Ryder Scott Company of Canada, an independent petroleum consulting firm, has
assigned 320 million barrels of contingent resources to a portion of Alberta
Oilsands' Clearwater parcel in a resource report dated June 1, 2008. With an
additional 16 core holes drilled during the fall of 2008 and the winter of
2009, the Clearwater West project area was adequately delineated by the end of
the first quarter of 2009 to provide the necessary data for the pilot project
application, which is expected to be submitted in 2009.
    The Company undertook a cap rock study during the fall/winter coring
season. The study included ERT, in-situ mini FRAC and elevated temperature
intrusion permeability testing. The results exceeded all cap rock regulatory
integrity requirements. The ERT (Electro Resistivity Tomography) confirmed the
lateral continuity of the cap rock validating the applicability of the use of
SAGD recovery methodology for the Clearwater West project. In addition, two
water source and disposal zones respectively were identified.

    Resource assessment and net present value cash flow evaluation

    Alberta Oilsands has commissioned a resource report from Ryder Scott
Company to reflect the Company's delineation drilling activities in the fall
of 2008 and 2009. The results of this report are expected to be available by
May 2009.
    Alberta Oilsands commissioned two reports from Ryder Scott at the
completion of the Company's March 2008 drilling program and core analysis at
Clearwater; a resource assessment update and a net present value (NPV) cash
flow evaluation of the potential conventional SAGD projects for these
resources. These reports were completed in July 2008, prior to the Company's
delineation drilling in the fall of 2008 and into 2009. An excerpt of these
reports follows.

    Resource assessment:

    Ryder Scott presented Alberta Oilsands with a National Instrument 51-101
compliant independent resource report in July 2008 dated June 1, 2008. The
report attributed an estimated contingent (recoverable) resource of 320
million barrels over five sections. This represents a 59% increase from the
2007 report. The following table summarizes the contingent (recoverable)
resources assignment history at the Fort McMurray Clearwater properties.

    
    -------------------------------------------------------------------------
                                                                   Estimated
                                                                  Contingent
                                                                   Resources
    Independent Contingent Resource Assignments                     Volume
                                                                    million
                                                                    barrels
    -------------------------------------------------------------------------
    Total Contingent Resources October 2007 (pre drill results)        201.0
    -------------------------------------------------------------------------
    Additional Assignment March 2008 (pre drill results)                15.0
    -------------------------------------------------------------------------
    Total Contingent Resources March 2008 (pre drill results)          216.0
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Additional Assignment June 2008 (post drill results)               104.0
    -------------------------------------------------------------------------
    Total Contingent Resources, June 2008                              320.0
    -------------------------------------------------------------------------
    

    Net present value cash flow evaluation report:

    On July 10, 2008, the Company released the Ryder Scott net present value
(NPV) cash flow evaluation report and memorandum for two separate potential
10,000 barrels per day SAGD projects in Alberta Oilsands' Fort McMurray
Clearwater West and Clearwater East project areas. The report, with an
effective date of July 1, 2008, was prepared in accordance with the Canadian
Oil and Gas Evaluation Handbook (the COGE Handbook) and estimates the unrisked
total before income tax net present value discounted at 10% (BFIT NPV10) at
approximately $635 million: NPV10 at approximately $328 million for Clearwater
West and NPV10 at approximately $308 million for Clearwater East. This scoping
valuation is based on preliminary cost and timing estimates, provided by a
third party engineering firm, along with the contingent resources assigned to
the Clearwater West and East areas as announced in the Company's news release
on July 2, 2008 and an assumed WTI oil price of US$80 per barrel.
    The Company has obtained a net present value update with a US$55 WTI
price which estimates the unrisked total, before tax, at NPV10 of Alberta
Oilsands' Clearwater East and West projects at $464 million, therefore the
Company believes that, based on certain assumptions and conditions, its
projects continue to be economically viable. See "Oilsands Development Risks"
in the MD&A.
    Excerpts of the valuation results for Alberta Oilsands' Clearwater West
and Clearwater East potential 10,000 bpd SAGD Projects over three constant
price scenarios are shown below with the respective bitumen volumes:

    
    Fort McMurray Clearwater West Project Scoping Economics

                                                      Net Present Value of
                                                       Future Net Revenue
                                                      (Before Income Tax)
    Gross                                              at Constant Price
    Bitumen    US/Cdn       WTI       Bitumen    ----------------------------
    Volume    Exchange     Price       Blend        8%        10%       12%
     (MMB)      Rate     (US$/Bbl)   (Cdn$/Bbl)  (Cdn$MM)  (Cdn$MM)  (Cdn$MM)
    -------------------------------------------------------------------------
     91.0       0.82       $55.00      $47.73      $347      $237      $157
     91.0       0.95       $80.00      $51.72      $464      $328      $230
     91.0       1.00      $100.00      $58.89      $536      $386      $276


    Fort McMurray Clearwater East Project Scoping Economics

                                                      Net Present Value of
                                                       Future Net Revenue
                                                      (Before Income Tax)
    Gross                                              at Constant Price
    Bitumen    US/Cdn       WTI       Bitumen    ----------------------------
    Volume    Exchange     Price       Blend        8%        10%       12%
     (MMB)      Rate     (US$/Bbl)   (Cdn$/Bbl)  (Cdn$MM)  (Cdn$MM)  (Cdn$MM)
    -------------------------------------------------------------------------
     78.2       0.82       $55.00      $47.73      $319      $227      $148
     78.2       0.95       $80.00      $51.72      $429      $308      $218
     78.2       1.00      $100.00      $58.89      $498      $364      $263

    Notes: Assumptions include: peak production rate at 10,000 bpd and end of
    life decline at 30% until economic limit is reached. Bitumen Blend refers
    to realized bitumen price of a marketable mixture of bitumen and diluents
    (condensate) that is roughly equivalent to a Lloydminster heavy oil
    blend. Sustaining and operating costs of $8.61/bbl of bitumen were used.
    The proposed new Alberta royalty regime and anticipated Federal green
    house gas levy were also used.
    

    Review of Conventional Operations

    Alberta Oilsands uses cash flow from its growing base of conventional
production to assist in funding general and administrative expenses. In
addition to producing an average of 61 boe per day ("boe" or barrels of oil
equivalent) of conventional production in Alberta during 2008, Alberta
Oilsands entered into a significant conventional farm-in agreement in the
first quarter of 2009 related to properties in northwest and central Alberta.
Pursuing conventional exploration plays allows Alberta Oilsands to prudently
invest capital raised through the sale of flow-through shares in 2008,
providing access to incremental production and consequently funding until
markets return to normal.
    As part of the farm-in agreement, AOS successfully completed a
significant Slave Point exploration discovery well at Hamburg in northwest
Alberta. The Company has a 50% working interest in the well, and testing in
the pipeline started on April 1, 2009 with the well tied into the local
gathering system. The well was placed on production at rates averaging 833
(416 net) boe per day. All produced gas and associated liquids are being
processed and sold. This well is expected to pay the reduced 5% royalty for
its first 500 mmcf of production.

    
    Annual Operating Highlights

                                                   --------------------------
                                                          2008          2007
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Petroleum and natural gas sales ($)              2,032,513     2,980,974
    Petroleum & natural gas sales per boe ($)            91.39         67.08
    Daily sales volumes (boe 6:1)                           61           122
    Net loss for the period ($)                     (4,734,313)   (2,754,755)
    Net loss per share - basic and diluted ($)           (0.07)        (0.06)
    Cash flow used in operations ($)                (1,257,504)     (581,763)
    Capital expenditures ($)                        15,623,603    20,221,545

    Working capital as at December 31               14,560,866     7,664,662
    Common shares outstanding as at December 31     79,651,375    53,542,098
    


    Outlook:

    Alberta Oilsands continues to believe in the future viability of the oil
sands in Alberta. The Company believes the oil sands are viable in the medium
and long-term thanks to operating leverage and technological advances that
reduce environmental impact, the province's proximity to the United States and
the global supply-demand equation. Alberta Oilsands is well positioned to tap
into this future because of the characteristics of its proposed in-situ SAGD
method of bitumen extraction. Alberta Oilsands' SAGD operation at Clearwater
West would be close to infrastructure, allow for low injection pressure, have
no bottom water, would have a deep water source and a water disposal zone and
competent cap rock.
    Alberta Oilsands has a healthy balance sheet. The Company raised $23.5
million from January to August 2008, allowing the Company to end the year on
December 31, 2008 with $19.0 million in the bank and no debt.
    The Company's focus for 2009 is to submit a pilot project application for
its Clearwater West property. The Company believes it has sufficient working
capital and revenue from conventional production to complete the requirements
for the pilot project application. The construction of the pilot project will
be dependent on the availability of capital and commodity prices. The Company
expects the global downturn to be felt for some time; however, expects
healthier financial markets and commodity prices in 2010, allowing for
continued exploration and development of the oil sands.
    Alberta Oilsands continues to evaluate multiple approaches to finance its
capital expenditures. The preference is to proceed with projects on a 100%
working interest basis, provided the capital markets recognize the value of
the assets and facilities and are conducive to the raising of project capital
at non-dilutive levels. The Company is also seeking industry and financial
partners as additional sources of funding to mitigate this risk.
    Although the Company is confident in its financial strength, management
has also taken steps to lower its risk during the global financial downturn.
The Company has reduced its capital program to defer or reduce spending on
exploratory projects and to focus on the projects that will get the Company to
initial oil sands production as soon as possible. In January 2009, Alberta
Oilsands' 2009 capital budget has been reduced to $11.0 million, $6.0 million
of which is allocated towards the Company's oil sands assets, mostly in the
Clearwater area and $5.0 million is allocated to exploration and development
of conventional opportunities. This reduced capital budget will nevertheless
still enable the Company to incur the required qualifying expenditures from
the 2008 flow-through financings by December 31, 2009. The capital budget may
be adjusted as conventional opportunities arise and fiscal environment
changes.
    Management believes capital management, revenue from conventional
production and the depth of opportunity on its current assets all provide the
Company with a strong outlook for the future.
    The Company will file its annual management's discussion and analysis and
audited consolidated financial statements and notes thereto as at and for the
year ended December 31, 2008 in accordance with National Instrument 51-102 -
Continuous Disclosure Obligations adopted by the Canadian securities
regulatory authorities. Additional information about the Company, including
the audited consolidated financial statements and notes thereto and
management's discussion and analysis as at and for the year ended December 31,
2008, are available on the Company's SEDAR profile at www.sedar.com

    
    - The TSX Venture Exchange has not reviewed and does not accept
    responsibility for the adequacy and accuracy of this release. -
    

    Important Information Regarding the Disclosure of Resources

    There is no certainty that it will be commercially viable for the Company
to produce any portion of the resources detailed in this news release and the
estimated future net revenues and values contained in this news release do not
necessarily represent the market value of such resources. There are a number
of inherent risks and contingencies associated with oil sands development,
including commodity price fluctuations, project costs and those other risks
and contingencies discussed in more detail in the sections entitled "Oilsands
Developments Risks" and "Business Risks and Uncertainties" in the Company's
management discussion and analysis for the year ended December 31, 2008. See
also "Forward-Looking Statements and Information" below.
    "Contingent resources" are defined 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 commercial 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.
Certain of these contingencies, as they apply to the Company, are discussed in
more detail under the headings "Disclosure of Resources" in the Company's
management discussion and analysis for the year ended December 31, 2008.
    "Resources" are quantities of petroleum that are estimated to exist
originally in naturally occurring accumulations, including the quantity of
petroleum that is estimated, as of a given date, to be contained in known
accumulations, prior to production, plus those estimated quantities in
accumulations yet to be discovered.

    Resources and contingent resources do not constitute, and should not be
confused with, reserves. No bitumen reserves have been recovered within any of
the Company's project areas and there is no assurance that any commercial oil
sands projects will be developed.

    Forward-looking Statements and Information - Certain information
regarding the Company set forth in this news release, including management's
assessment of the Company's future plans, operations, properties, production
and prospects contains forward looking information and statements that involve
substantial known and unknown risks and uncertainties. In some cases, forward
looking information and statements can be identified by terminology such as
"may", "will", "should", "intends", "expects", "projects", "plans",
"anticipates", "targets", "believes", "potential", "estimates", "continues",
"designed", "objective", "maintain", "schedule" and similar expressions or
statements that certain events or conditions "may" or "will" occur. In
particular, this news release contains forward-looking statements and
information with respect to: (i) possible in-situ development (including the
timing of such development) on the Company's oilsands properties, including in
respect of pilot projects and further development in respect of its Clearwater
East and Clearwater West project areas located in its Fort-McMurray properties
and the joint development of its Hangingstone East project area with its
pooling partner in the area; (ii) expectations regarding future developments
costs and the ability to fund such costs; (iii) future values that may be
attributable to the Company's oil and gas properties, including in respect of
net present value calculations in respect of its Clearwater East and
Clearwater West project areas; (iv) the ability of the current working capital
levels of the Company to maintain future capital expenditures; (v) the
Company's projected capital budget; (vi) successful results from the Company's
2008/2009 winter core drilling program; (vii) crude oil, natural gas and
bitumen production levels; (viii) the continued economic viability of the
Company's projects; (ix) a regulatory regime that will be conducive to the
Company completing its projects (including in respect of environmental
regulation and royalty rates); and (*) projections of market prices and the
demand for the commodities the Company produces or intends to produce. These
statements are only predictions. Forward-looking statements are based on the
opinions, assumptions and estimates of management at the date the statements
are made, and are subject to a variety of risks and uncertainties and other
factors that could cause actual events or results to differ materially from
those projected in the forward-looking statements. These factors include the
risks and uncertainties discussed in the Company's annual financial statements
and management discussion and analysis for the year ended December 31, 2008,
both of which are available at www.sedar.com. Certain assumptions that
management has made in respect of certain of these forward-looking statements
are also contained in these documents. Readers are urged to review these
documents, including such risks, uncertainties and assumptions, in their
entirety. The Company undertakes no obligation to update such forward-looking
statements or information if circumstances or management's estimates or
opinions should change, unless required by law.
    Statements relating to "resources" are deemed to be forward-looking
statements, as they involve the implied assessment, based on certain estimates
and assumptions that the described resources exist in the quantities predicted
or estimated, and can be profitably produced in the future. See "Important
Information Regarding the Disclosure of Resources" above in this news release.
    Barrels of oil equivalent ("boe") 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.

    Not for dissemination in the United States of America. This news release
shall not constitute an offer to sell or the solicitation of any offer to buy
securities of the Company in any jurisdiction, including the United States.
The common shares of the Company have not been and will not be registered
under the United States Securities Act of 1933, as amended (the "U.S.
Securities Act") or any state securities laws and have not been and will not
be offered or sold in the United States or to any U.S. person except in
certain transactions exempt from the registration requirements of the U.S.
Securities Act and applicable state securities laws.

    %SEDAR: 00020297E




For further information:

For further information: Alberta Oilsands Inc., Suite 2800, 350 - 7th
Avenue S.W., Calgary, Alberta, T2P 3N9; Shabir Premji, Executive Chairman, T:
(403) 232-3341, F: (403) 263-6702, spremji@aboilsands.ca; or Chad Dust,
Executive Vice-President, T: (403) 538-3191, cdust@aboilsands.ca; Company
website: www.aboilsands.ca

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