ALBERTA OILSANDS INC. ANNOUNCES SECOND QUARTER RESULTS

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

CALGARY, Aug. 30 /CNW/ - Alberta Oilsands Inc. ("Alberta Oilsands", "the "Company", "we", "us", or "our") (TSXV: AOS) is pleased to announce that it has filed with Canadian securities authorities its interim unaudited consolidated financial statements and management's discussion and analysis for the interim period ended June 30, 2010. Copies of the filed documents may be obtained through www.sedar.com.

Q2 2010 highlights:

    
    -   Continued discussions with potential joint-venture partners and
        provided detailed information about Alberta Oilsands to these groups.

    -   Achieved a milestone when Ryder Scott Company - Canada, Petroleum
        Consultants (Ryder Scott) assigned the Company with its first
        probable and possible oil sands reserves. Such third party evaluation
        with an effective date of March 31, 2010, assigned 67.6 million
        barrels of probable and possible (3P) bitumen gross lease reserves on
        approximately one section of the Company's 28 sections of 100%
        working interest lands at Clearwater West. 16.3 million barrels have
        been classified as probable bitumen reserves and 51.3 million barrels
        have been classified as possible bitumen reserves. Probable reserves
        are those additional gross reserves that are less certain to be
        recovered than proved reserves. It is equally likely that the actual
        remaining quantities recovered will be greater or less than the sum
        of proved plus probable reserves. Possible reserves are those
        additional gross reserves that are less certain to be recovered than
        probable reserves. There is a 10% probability that the quantities
        actually recovered will equal or exceed the sum of proved plus
        probable plus possible reserves. Lease reserves are volumes before
        deductions for capital costs, operating costs, royalties, and
        encumbrances. For more information on the Ryder Scott report, please
        refer to the Company's news release dated May 20, 2010 on Alberta
        Oilsands' website at www.aboilsands.ca and through SEDAR at
        www.sedar.com". Please also refer to "Disclosure of Reserves and
        Resources" below in this news release.

    -   Increased net capital expenditures to $913,715 in the second quarter
        of 2010 compared with $587,301 in the second quarter of 2009.

    -   Completed mini-fracture testing and analysis on the 5-22-88-08W4M
        observation well in the McMurray bitumen and the Clearwater cap rock
        at Clearwater West.

    -   Completed drilling, data gathering and analysis of the AB/1-21-88-
        08W4M observation well at Clearwater West.

    -   Open house held on June 9, 2010 in Fort McMurray as part of Alberta
        Oilsands' commitment to communicate with communities near the
        proposed Clearwater West project.

    -   Enhanced the Company's Board of Directors by the appointment of Mr.
        John (Jack) R. Crawford, Mr. Bill Matheson and Mr. Leonard Sokolow.

    -   Produced an average of 161 barrels of oil equivalent per day (boe/d)
        of conventional production during the three-month period ended June
        30, 2010, resulting in oil and gas revenue of $622,100. The Company
        used $750,452 of cash flow in operations in the second quarter,
        resulting in net working capital of $2.95 million on June 30, 2010.
    

Review of Oilsands Operations

Fort McMurray Clearwater West

Alberta Oilsands continues to take steps on the path to production at its first oil sands project at Clearwater West.

On January 15, 2010, Alberta Oilsands filed the project application with the Energy Resources Conservation Board (ERCB) and Alberta Environment. The project at Clearwater West has a design production capacity of up to 4,500 bpd of bitumen in Phase 1 through six horizontal SAGD well pairs. Subject to regulatory approval, Alberta Oilsands expects to begin construction of the well pad and pairs in 2011. Production capacity is expected to increase to 15,000 bpd of bitumen in the next phase.

The Clearwater West project is located one mile southeast of the Fort McMurray Regional Airport and is accessible via Highway 69. Alberta Oilsands has a 100% working interest in 28 contiguous sections of oil sands rights in the area which are subject to a 2% gross overriding royalty to the Fort McMurray Airport Authority on two of the sections 21 and 22 where the Phase 1 project is located.

The Company continues to move forward while awaiting approval of the Clearwater West project, including gathering technical data through observation wells and consulting with the local community and planning for delineation wells in the Company's other Clearwater lands.

Alberta Oilsands completed work on two observations wells at Clearwater West during the quarter, including mini-fracture testing and analysis on the 5-22-88-08W4M observation well in the McMurray bitumen and the Clearwater cap rock and the drilling, completion, data gathering and analysis of the AB/1-21-88-08W4M observation well. Preliminary results are encouraging.

The Company is committed to providing people who live or work in the area with the opportunity to learn about the Clearwater West project. As part of Alberta Oilsands' community engagement activities, the Company held an open house in Fort McMurray on June 9, 2010. The event provided the Alberta Oilsands' team with an opportunity to introduce the Clearwater West project to area residents and to answer questions related to air quality, sound, traffic, construction and community investment. The Company is committed to forging business and community relationships built on trust and to conduct business in a safe, healthy and environmentally responsible manner.

Those in attendance at the open house were advised that emissions from the project are anticipated to be well below Alberta's strict regulatory guidelines. Water required for the project is expected to be purchased from the Regional Municipality of Wood Buffalo, providing a source of revenue for the local community. The water would eventually be injected into approved disposal wells. The footprint of the Clearwater West project is expected to be limited to 10.2 hectares thanks to existing infrastructure in the area. The average sound level for project operations is expected to be five decibels (dBA) below the ERCB's night-time permissible sound level of 40 dBA. Finally, the total number of truck shipments is expected to be less than 22 loads per day with less than 150 metres of travel on gravel roads before reaching the paved Highway 69. A second open house is set for late October 2010.

Hangingstone East

Alberta Oilsands' joint-venture partner at Hangingstone East in Alberta's Athabasca oil sands engaged GLJ Petroleum Consultants Ltd. to conduct a third-party resource analysis on the property in the second quarter of 2010. Results were released in August 2010. Alberta Oilsands has a 50% interest in 38.5 contiguous sections (9.856 hectares or 24,640 acres of oilsands rights) at Hangingstone. Contingent resources of 79.9 million (net) barrels of bitumen were assigned to the property. An additional 13 core holes were drilled in the first quarter of 2010 for a total of 32 core holes since inception.

In an independent report dated June 30, 2010, GLJ Petroleum Consultants Ltd. (GLJ) assigned contingent resources of 79.9 million (net) barrels of bitumen to the Company's Hangingstone East property. See "Disclosure of Reserves and Resources" below in this news release.

Review of Conventional Operations

Alberta Oilsands produced an average of 161 boe/d in the second quarter of 2010, including 607 thousand cubic feet per day (mcf/d) of natural gas from northeastern British Columbia's Ladyfern field and 41 boe/d from Leduc, Alberta. This compares to 196 boe/d in the first quarter of 2010 and 325 boe/d in the second quarter of 2009 as the Company experienced natural declines. The Company has not added any additional conventional production since the Ladyfern well in April 2009. Alberta Oilsands has rights to 97,283 acres of undeveloped land in Alberta, Saskatchewan and Manitoba to pursue conventional exploration.

Alberta Oilsands' natural gas discovery at Ladyfern North (Hamburg) has now been producing since April 1, 2009. Gross revenue, before royalties and operating expenses generated for this property was $813,564 in the six months ended June 30, 2010, including $312,287 in the second quarter of 2010.

Given the success at Ladyfern North, Alberta Oilsands plans to drill a follow-up well at Ladyfern South during the 2010/2011 winter drilling season.

    
    Financial and Operating Summary

    Financial

    -------------------------------------------------------------------------
                                            Three months ended June 30, 2010
                                              2010         2009         2008
    -------------------------------------------------------------------------
    Statement of Operations and
     Deficit
      Petroleum and natural gas
       sales ($)                           622,100      997,514      555,333
      Petroleum & natural gas sales
       per boe ($)                           42.93        33.76       112.62
      Daily sales volumes (boe 6:1)            161          325           54
      Net loss for the period ($)         (939,128)    (921,812)  (1,169,247)
      Net loss per share - basic and
       diluted ($)                           (0.01)       (0.01)       (0.02)
    Statement of Cash Flows
      Funds used in operations ($)(1)     (750,452)     (34,242)    (631,341)
      Cash flow used in operations ($)    (700,101)    (811,087)  (1,043,057)
      Capital expenditures ($)             913,715      607,301    1,805,135

    Weighted average number of
     shares - basic and diluted        105,296,330   79,651,375   62,777,154



    -------------------------------------------------------------------------
                                                 Six months ended June 30
                                              2010         2009         2008
    -------------------------------------------------------------------------
    Statement of Operations and
     Deficit
      Petroleum and natural gas
       sales ($)                         1,437,643    1,259,541      999,669
      Petroleum & natural gas sales
       per boe ($)                           45.05        35.97        98.84
      Daily sales volumes (boe 6:1)            179          193           56
      Net loss ($)                      (2,125,668)  (2,138,382)  (1,949,681)
      Net loss per share - basic and
       diluted ($)                           (0.02)       (0.03)       (0.03)
    Statement of Cash Flows
      Funds used in operations ($)(1)   (1,127,572)  (1,144,558)    (898,589)
      Cash flow used in operations ($)  (1,244,152)  (1,447,915)    (589,908)
      Capital expenditures ($)           5,331,685    7,871,089    7,698,146

    Total assets ($)                    57,611,323   51,100,787   45,524,918
    Total liabilities ($)                8,336,025    7,577,791   10,454,492
    Shareholders' equity ($)            49,275,298   43,522,996   35,070,426

    Weighted average number of
     shares - basic and diluted        105,277,780   79,651,375   61,128,625


    (1) Alberta Oilsands' method of calculating funds from operations may
        differ from that of other corporations and, accordingly, may not be
        comparable to measures used by other corporations. Alberta Oilsands
        calculates funds from operations by taking cash flow from operating
        activities as determined under GAAP before the change in non-cash
        working capital related to operating activities and abandonment
        expenditures incurred.



    -------------------------------------------------------------------------
                                      Three months ended    Six months ended
                                              June 30             June 30
    Production                            2010      2009      2010      2009
    -------------------------------------------------------------------------
    Oil and NGL (bbls/day)                  55        87        55        71
    Natural gas (mcf/day)                  638     1,429       743       737
    boe/day (6:1)                          161       325       179       193



                                      Three months ended    Six months ended
                                              June 30             June 30
                                          2010      2009      2010      2009
    -------------------------------------------------------------------------
    Commodity Prices
      Oil and NGL ($/bbl)                74.72     63.22     76.22     57.91
      Natural gas ($/mcf)                 4.42      3.84      5.20      3.89
      boe ($/boe)                        42.93     33.76     45.05     35.97
    Revenues ($)
      Oil and NGL                      384,964   497,774   738,181   740,436
      Natural gas                      237,136   499,740   699,462   519,105
                                   ------------------------------------------
      Total                            622,100   997,514 1,437,643 1,259,541
                                   ------------------------------------------
                                   ------------------------------------------



                                      Three months ended    Six months ended
                                              June 30             June 30
    Royalties and Operating Expenses      2010      2009      2010      2009
    -------------------------------------------------------------------------
    Royalties ($)                       88,662    71,057   283,799   108,547
    % of revenues                           14         8        20         9
    $/boe                                 6.04      2.40      8.78      3.10
    Operating and transportation
     expenses ($)                      369,240   425,318   860,205   884,597
    $/boe                                25.15     14.39     26.60     25.26



                                      Three months ended    Six months ended
                                              June 30             June 30
    Netbacks ($/boe)                      2010      2009      2010      2009
    -------------------------------------------------------------------------
    Revenue                              42.37     33.76     44.46     35.97
    Royalties                             6.04      2.40      8.78      3.10
    Operating expenses                   25.15     14.39     26.60     25.26
                                   ------------------------------------------
    Field netbacks                       11.18     16.97      9.08      7.61
    General and administrative           54.46     16.78     39.75     34.82
                                   ------------------------------------------
    Netbacks                            (43.28)     0.19    (30.67)   (27.21)
                                   ------------------------------------------
                                   ------------------------------------------
    

Outlook

Alberta Oilsands' growth strategy is to develop large-scale oil sands assets supported by conventional oil and gas asset development, joint-venture opportunities and financial partners. This will allow the Company to move quickly to convert contingent resources to proved reserves resulting in the generation of material production and cash flow.

At Clearwater, our improved understanding of the reservoir based on the technical work performed over the last few months will lead to an update to the current Clearwater West LP-SAGD Pilot Project application in the fourth quarter 2010. The Company expects to receive regulatory approval in 2011. Development efforts for Clearwater Phase 1 over the next few months are expected to progress to detailed engineering which will lead to procurement of some necessary long lead surface and subsurface facility items to ensure timely bitumen production in 2012. Construction of the project is expected to begin as soon as practical upon approval. To complete Clearwater Phase 1 construction and commissioning, the Company will have to raise an incremental $100 million capital. Alberta Oilsands anticipates financing the capital requirement through a combination of debt, equity and joint venture arrangements.

AOS expects to perform additional field measurements during the 2010-2011 winter season to confirm and define the safe maximum operating pressure of future bitumen production operations. The Clearwater West LP-SAGD Pilot Project constitutes Phase 1 in the development of the Clearwater area. Phase 2 will comprise Phase 1 operational learnings and form an optimized continued development for the Clearwater area with a possible plant size of 15,000 to 25,000 barrels of bitumen per day. The Phase 2 reservoir scoping stage is expected to conclude early 2011 and will include a significant delineation effort during the 2010-2011 drilling season, subject to an appropriate level of capital funding.

AOS expects to be in a position to add experienced personnel to its on-going oil sands exploration and development efforts, subject to an appropriate level of capital funding. Plans have been generated to explore AOS' Algar Lake and Grand Rapids oil sands leases. Algar Lake comprises 51 sections and the three vertical wells drilled in the late 1950's indicate significant in-situ bitumen volumes (potential for conventional heavy oil cold flow also exists). The objective of the Algar Lake exploration plan is to confirm available resource volumes and evaluate further AOS bitumen development potential. The current Algar Lake exploration plan calls for approximately 20 bitumen core holes and 30 contingent locations. Two historical core holes in the Grand Rapids area indicate significant potential for significant in-situ bitumen volumes. The Grand Rapids area has been more active and recent core holes on neighboring properties have been used to generate the Grand Rapids exploration plan. The 2010-2011 exploration season in Grand Rapids is intended to provide a first estimate of oil sands development potential on the 18 sections of oil sands properties and comprises approximately 10 core holes and 15 contingent locations. Execution of the Algar Lake and Grand Rapids are subject to obtaining appropriate levels of capital funding.

AOS expects to continue prudent management of funds and guide oil sands exploration and development subject to availability of capital. Current ranking of oil sands opportunities considers maintaining focus on bringing Clearwater Phase 1 to production, continued scoping and delineation for Clearwater Phase 2, confirm resource volumes and evaluate development potential at Algar Lake and provide a first estimate of resource volumes at Grand Rapids.

Interim Filings

The Company will file its MD&A and consolidated financial statements and notes thereto as at and for the three and six months ended June 30, 2010 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 MD&A as at and for the year ended December 31, 2009, are available on the Company's SEDAR profile at www.sedar.com

BOE Presentation - Production information is commonly reported in units of barrel of oil equivalent ("boe"). For purposes of computing such units, natural gas is converted to equivalent barrels of oil using a conversion factor of six thousand cubic feet to one barrel of oil. This conversion ratio of 6:1 is based on an energy equivalent wellhead value for the individual products. Such disclosure of boes may be misleading, particularly if used in isolation. Readers should be aware that historical results are not necessarily indicative of future performance.

Disclosure of Reserves and Resources - "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.

"Contingent resources" are defined as those quantities of petroleum estimated, on 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.

"Proved reserves" means those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated Proved reserves.

"Probable reserves" means those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated Proved plus Probable reserves.

"Possible reserves" means those additional reserves that are less certain to be recovered than probable reserves. It is unlikely that the actual remaining quantities recovered will exceed the sum of the estimated Proved plus Probable plus Possible reserves.

There is no certainty that it will be commercially viable for the Company to produce any portion of the bitumen resources or reserves detailed in this news release. The estimated future net revenues and values contained in this news release do not necessarily represent the market value of such reserves or resources. The high level of uncertainty associated with the Company's possible recovery of any of these resources and reserves is the result of various risks and uncertainties including: current uncertainties around the specific scope and timing of the development of the Company's Fort-McMurray properties; the ability of the Company to finance any potential oil sands projects at its Fort-McMurray properties; proposed reliance on technologies that have not yet been demonstrated to be commercially applicable in oil sands applications; lack of regulatory approvals; the uncertainty regarding marketing plans for production from the subject areas; and improved estimation of project costs. There are a number of inherent risks and contingencies associated with such development, including commodity price fluctuations, project costs and those other risks and contingencies discussed in more detail in the sections entitled "Forward-looking Statements and Information" in this news release.

Resources, undiscovered resources and contingent resources do not constitute, and should not be confused with, reserves.

Forward-looking Statements and Information - Certain information regarding Alberta Oilsands set forth in this news release, including management's assessment of Alberta Oilsands' 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", "strives", "estimates", "continues", "designed", "objective", "maintain", "schedule" and similar expressions or statements that certain events or conditions "may" or "will" occur. In particular, this 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 oil sands 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; (iv) the ability of the Company and Platform Resources Inc. to complete the assignment of Platform Resources Inc.'s interests in Blocks 12A and 13T in Kenya to Africa Oil Corp.; (v) the ability of the current working capital levels of the Company to maintain future capital expenditures, including required flow-through expenditures; (vi) the Company's projected capital budget; (vii) successful results from the Company's core drilling programs; (viii) crude oil, natural gas and bitumen production levels; (ix) the continued economic viability of the Company's projects; * a regulatory regime that will be conducive to the Company completing its projects (including environmental regulation and royalty rates); (xi) the ability of the Company to meet its obligations (including future financial obligations) under the pooling agreement that it has entered into in respect of its Hangingstone East project area; (xii) projections of market prices and the demand for the commodities the Company produces or intends to produce; and (xiii) the exploration operations and commitment of Platform Resources Inc. in the Republic of Kenya. Such forward-looking statements and information 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 and information. These factors include the inherent risks involved in the exploration and development of oil sands properties, the uncertainties involved in interpreting drilling results and other geological data, uncertainties relating to the ability of the Company to receive the necessary regulatory approvals in respect of its oil sands projects, uncertainties relating to the availability and costs of financing needed to fund the Company's oil sands projects, uncertainties relating to the technologies associated with the Company's oil sands projects and whether the results of the Company's oil sands projects will meet designed capacities and simulated production numbers once operational, fluctuating oil and gas prices, the possibility of cost overruns or unanticipated costs and expenses, the possibility that royalties and other government levies could be increased, and other factors including unforeseen delays. No assurance can be given that any events anticipated by the forward looking statements or information will transpire or occur, or if any of them do, what benefits Alberta Oilsands may derive therefrom. Anticipated exploration and development plans relating to the Company's properties are subject to change. For a detailed description of the risks and uncertainties facing the Company and its business and affairs, readers should refer to the Company's annual financial statements and management discussion and analysis for the year ended December 31, 2009 and for the six months ended June 30, 2010, which are available at www.sedar.com.. 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 "reserves" and "resources" are deemed to be forward looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the described reserves and resources exist in the quantities predicted or estimated, and can be profitably produced in the future. See "Disclosure of Reserves and Resources" in this news release.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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.

Alberta Oilsands is a technically driven high growth energy company focused on the development and conversion of the Company's oilsands resources to reserves and the creation of long term sustainable value by increasing production and cash flow on relevant conventional oil and natural gas assets.

%SEDAR: 00020297E

SOURCE ALBERTA OILSANDS INC.

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; Company website: www.aboilsands.ca

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