OPTI Canada Announces Year End 2007 Results



    TSX: OPC

    CALGARY, Jan. 23 /CNW/ - OPTI Canada Inc. (OPTI) announced today the
Company's financial and operating results for the year ended December 31,
2007.
    First production of premium synthetic crude from OPTI's Long Lake Project
(the Project) is anticipated in mid-2008. The Project will be the first to use
OPTI's integrated OrCrude(TM) process. This proprietary process is designed to
substantially reduce operating costs compared to other oil sands projects
while producing a high quality, sweet synthetic crude. The Company is also
advancing its future phases of growth via a multi-stage expansion strategy to
reach 180,000 barrels per day (bbl/d) of Premium Sweet Crude (PSC(TM))
production capacity net to OPTI.

    
    Key developments in 2007 include:

    -   Completion and start-up of the SAGD facilities, as well as
        commencement of steam injection into all steam assisted gravity
        drainage (SAGD) well pads;

    -   Continued progress of Upgrader construction with an ongoing strong
        safety record. The Upgrader construction is expected to be completed
        in the first quarter of 2008;

    -   Upgrader commissioning and start-up activities are underway with all
        units on-track for production in mid-2008;

    -   Continued progress of Long Lake Phase 2 engineering and planning
        activities with the goal to be in a position to sanction the project
        in late 2008;

    -   Booking of significant reserves for Phase 2 with a total resource
        base of over three billion barrels; and

    -   Successful closing of a $412 million equity financing as well as a
        US$750 million senior secured note offering to fund Phase 1 to
        completion as well as to support our future phase planning activities
        in 2008.
    

    "2007 was a challenging year as we worked through cost increases and
delays primarily related to the heated construction market. We are pleased to
now have most of Phase 1 construction behind us with start-up and
commissioning activities well underway," said Sid Dykstra, President and Chief
Executive Officer of OPTI. "In 2008 we anticipate first production of our
light sweet synthetic crude, a significant milestone in our Company's history
and a culmination of the hard work of our employees and contractors over the
past several years. We have a terrific team in place prepared for the safe
operation of the Long Lake Phase 1 Upgrader, a long-life asset anticipated to
produce about 60,000 bbl/d (30,000 bbl/d net to OPTI) for 40 years. Looking
forward, we are well positioned to execute our multi-phase development
strategy."

    
    FINANCIAL SUMMARY

    -------------------------------------------------------------------------
    $million                                         Years ended December 31
    -------------------------------------------------------------------------
                                                    2007      2006      2005
    -------------------------------------------------------------------------
    Net loss                                     $    (9)  $   (10)  $    (2)
    -------------------------------------------------------------------------
    Capital expenditures incurred(1)               1,108     1,109       754
    -------------------------------------------------------------------------
    Working capital                                  271       554       134
    -------------------------------------------------------------------------
    Shareholders' equity                         $ 1,816   $ 1,444   $ 1,382
    -------------------------------------------------------------------------
    Common shares outstanding(2)                 195.4(3)    172.7     156.8
    -------------------------------------------------------------------------

    Notes:
        (1) Non-cash additions are excluded.
        (2) After giving effect to the 2:1 share split to shareholders of
            record on June 1, 2006.
        (3) Common shares outstanding at the end of 2007 after giving effect
            to common share options and common share warrants would be
            approximately 208.8 million common shares.
    

    Project Status
    --------------
    Significant progress continues to be made on the Project as we prepare
for first bitumen sales in the first quarter with first production of PSC(TM)
mid-year. The SAGD plant is operational with all 10 well pads steaming into
both injector and producer wells to efficiently heat the reservoir. We expect
that we will begin to turn over the producer wells into operations mode within
the next several weeks. SAGD production is anticipated to reach 50 percent
capacity in mid-year with SAGD volumes expected to ramp-up through 2008 and
reach full design rate of 72,000 bbl/d in 2009.
    Construction, start-up and commissioning activities on the Upgrader
continued in the fourth quarter. The OrCrude(TM), hydrocracker and utilities
plants have been turned over to operations. The front end of the OrCrude(TM)
unit has been filled with lube oil to allow the start-up of pumps and heaters
and the utility boilers are in operation providing heat and steam.
    The gasifier and air separation units were essentially mechanically
complete at year end 2007, with current activities focused on final electrical
work and insulation. A substantial amount of progress was made on the sulphur
recovery unit in the fourth quarter of 2007 and the unit remains scheduled for
mechanical completion in the first quarter of 2008.
    Once operational, we expect that the capacity of the Long Lake Upgrader
during ramp-up will enable us to process all the forecasted SAGD volumes. We
expect the Project to reach full capacity of 58,500 bbl/d of PSC(TM) and other
products in 2009.
    Our current total cost estimate of the Project is between $5.8 billion
and $6.1 billion or between $2.90 billion and $3.05 billion net to us. As of
December 31, 2007, $5.4 billion or $2.7 billion net to us had been incurred on
the Project. The risk of changes to our forecast cost to complete and schedule
are now primarily related to the typical commissioning and start-up risks
associated with any major hydrocarbon processing complex.

    Development of Future Phases
    ----------------------------
    We continue to advance up-front engineering and planning for Phase 2 with
the intention to be in a position to sanction the project in late 2008.
Regulatory approval has been obtained for the Phase 2 Upgrader, which we
expect to construct adjacent to the Phase 1 plant. The SAGD portion of Phase 2
is planned to be located in the southern portion of the Long Lake lease (Long
Lake South). Planning and delineation for the Phase 2 SAGD project is ongoing.
In late 2006, a regulatory application for the Long Lake South project was
filed, comprising two SAGD phases totalling 140,000 bbl/d of SAGD production
in addition to Phase 1.
    Phase 2 sanctioning will be dependent on multiple factors including
Phase 1 ramp-up performance, regulatory approval for the SAGD portion of the
project, the capital cost estimate and regulations pertaining to CO(2). In
addition, the Alberta government announced significant changes to the oil
sands royalty regime in late 2007. Increases in royalties will impact the
economics of our business and may impact the timing of future investment
decisions.
    We currently anticipate that subsequent phases would be sanctioned every
24 months after the approval of previous phases. To support this timeline,
lease delineation and preliminary environmental evaluations are underway. Each
future phase is planned to be of a similar size and design to the Project and
anticipated to consist of integrated SAGD and integrated OrCrude(TM) Upgrader
projects. The specific design of these phases will be dependent upon a number
of factors including key learnings from Phase 1 and our strategy to address
CO(2) and other greenhouse gas (GHG) emissions. We are currently evaluating
alternatives to facilitate CO(2) capture.

    RESERVES AND RE

SOURCES ---------------------- OPTI has a significant presence in the Athabasca oil sands, with a 50 percent interest in over 385 sections of land on three leases: Long Lake, Leismer and Cottonwood. We believe our existing lands will support approximately 360,000 bbl/day of PSC(TM) production (180,000 bbl/d net to OPTI) from six phases including Long Lake Phase 1. Based on reserve and resource estimates, we believe there is potential for three phases at Long Lake, two phases at Leismer and one at Cottonwood. Reserves -------- McDaniel & Associates (or McDaniel), our resource evaluator, has prepared a report evaluating the bitumen reserves and synthetic oil reserves of the Long Lake leases effective December 31, 2007. Due to the advanced nature of Long Lake Phase 2, previously recognized Contingent Resources are now booked as probable and possible reserves. The McDaniel evaluation of our Long Lake Phase 1 and 2 lands recognizes the impact of upgrading on the resources. Most of the raw bitumen will be upgraded and sold as PSC(TM) and butane, and is shown as synthetic crude oil or butane reserves. Bitumen will be sold upon start-up of the SAGD operations, prior to Upgrader start-up, and thereafter during periods of Upgrader downtime, and is shown as bitumen reserves. The following table shows OPTI's working interest in the raw bitumen reserves and the corresponding sales volumes at December 31, 2007. 2007 ------------------------------------------------------------------------- Raw Gross Sales Volumes Bitumen ------------------- ------------------------------------------------------------------------- All volumes are millions of barrels PSC(TM) Butane Bitumen ------------------------------------------------------------------------- Proven 268 202 16 3 ------------------------------------------------------------------------- Proven plus Probable 803 620 29 9 ------------------------------------------------------------------------- Proven plus Probable plus Possible(1) 941 731 29 10 ------------------------------------------------------------------------- Note: (1) Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10 percent probability that the remaining quantities actually recovered will be greater than the sum of proved plus probable plus possible reserves. Resources --------- In addition to estimating our reserves, McDaniel has estimated bitumen resources on all of OPTI's lands including the Long Lake, the Leismer and the Cottonwood Leases. A summary of the additional resource estimates on a net basis to us is shown below: 2007 ------------------------------------------------------------------------- All volumes are millions of barrels Raw Bitumen(1) ------------------------------------------------------------------------- Remainder of Long Lake leases(2) 704 ------------------------------------------------------------------------- Leismer(2) 960 ------------------------------------------------------------------------- Cottonwood(3) 542 ------------------------------------------------------------------------- Total 2,206 ------------------------------------------------------------------------- Notes: (1) These estimates represent the "best estimate" of our resources, are not classified or recognized as reserves, and are in addition to our disclosed reserve volumes. These resource estimates are categorized primarily as Contingent Resources, with some categorized as Prospective Resources. See Notes 2 and 3 below. Contingent Resources are 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. There is no certainty that it will be commercially viable to produce any portion of the Contingent Resources. Prospective Resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective resources have both an associated chance of discovery and a chance of development. There is no certainty that any portion of the Prospective Resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources. (2) The resource estimates for Leismer and Long Lake are categorized as Contingent Resources. These volumes are classified as resources rather than reserves primarily due to less delineation and the absence of regulatory approvals, detailed design estimates and near-term development plans. (3) The estimate for Cottonwood is categorized as both Contingent and Prospective Resources. The estimate of 542 million barrels is comprised of 247 MMbbl of Contingent Resources and 295 MMbbl of Prospective Resources. These Contingent Resource volumes are classified as resources rather than reserves primarily due to less delineation; the absence of regulatory approvals, detailed design estimates and near-term development plans; and less certainty of the economic viability of their recovery. In addition to those factors that result in Contingent Resources being classified as such, Prospective Resources are classified as such due to the absence of proximate delineation drilling. PRINCIPAL FACTORS AFFECTING OUR FINANCIAL CONDITION AND RESULTS OF OPERATIONS Project and Future Phase Development and Construction ----------------------------------------------------- Our financial condition to date has been affected primarily by financing activities, and capital expenditures in connection with the development and construction of the Project and the development of future phases. Investments to Date ------------------- Our current total cost estimate of the Project is between $5.8 billion and $6.1 billion, or between $2.9 billion and $3.05 billion net to us. We have incurred $2.7 billion (net to OPTI) in cumulative expenditures to December 31, 2007, in relation to this estimate. The table below identifies expenditures incurred by us in the referenced periods for the Project, other oil sands activities and other capital expenditures. ------------------------------------------------------------------------- $million Year Year Year ended ended ended 2007 2006 2005 ------------------------------------------------------------------------- Long Lake Project Phase 1 SAGD $ 282 $ 440 $ 310 Upgrader 529 $ 476 $ 386 Sustaining capital and capitalized operations 54 - - ------------------------------------------------------------------------- Total Long Lake Project Phase 1 865 916 678 Other oil sands activities 96 140 56 Other capital expenditures 147 53 20 ------------------------------------------------------------------------- Total cash expenditures 1,108 1,109 754 Non-cash additions (212) 66 11 ------------------------------------------------------------------------- Total capital expenditures $ 896 $ 1,175 $ 765 ------------------------------------------------------------------------- Capital Expenditures -------------------- During the year ended December 31, 2007, we had capital expenditures of $896 million. Project expenditures of $865 million primarily related to on-site construction. SAGD construction costs in 2007 were primarily incurred in the central plant and cogeneration facilities, site-wide services and in start-up and commissioning costs. Upgrader construction costs in 2007 were primarily incurred in the OrCrude(TM), air separation, gasification, utilities and sulphur facilities and in start-up and commissioning costs. We also invested $96 million in other oil sands activities, $147 million in other capital expenditures and had a recovery of $212 million related to non-cash items. The expenditures of $96 million for other oil sands activities during the period related to engineering costs and resource delineation for future phases. The other capital expenditures of $147 million related to $130 million of capitalized interest and standby charges in connection with our long-term debt and $17 million of corporate capital costs. The $212 million recovery of non-cash capital charges related primarily to a $235-million capitalized foreign exchange gain with respect to the remeasurement of our U.S. dollar denominated long-term debt and cash. In addition, we had capital lease additions of $4 million, a capitalized future tax recovery of $36 million and an unrealized hedging loss of $57 million related to the interest rate swap. Operation of the Project ------------------------ Once we complete the construction of the Project and commence commercial operations, we expect that our revenues from the Project will primarily consist of PSC(TM) revenue and our operating costs relating to the Project will primarily consist of labour, maintenance and the purchase of natural gas. Our results of operations will principally be driven by production rates, plant capacity and reliability, natural gas costs and oil prices. Our results of operations will also be affected by production factors, such as our success in recovering bitumen using the SAGD process, including the Project's steam oil ratio (SOR). For more information, see "Risk Factors - Risks relating to the Project." Our results of operations will also depend on the successful operation of the Long Lake Upgrader and prior to the planned start-up of the Long Lake Upgrader, we intend to blend bitumen produced by the SAGD operation with diluent such as synthetic crude oil and sell it as a bitumen blend. In addition, during periods when the Upgrader is not operating, such as for planned and unplanned maintenance and repair, we may not be able to upgrade the bitumen produced by the SAGD operation. During these periods, bitumen would be mixed with a purchased diluent and sold as a bitumen blend, which would be sold at a price significantly less than conventional light oil. Financial Summary ----------------- ------------------------------------------------------------------------- $million 2007 2006 2005 ------------------------------------------------------------------------- Interest income $ 13 $ 10 $ 14 ------------------------------------------------------------------------- Expenses General and administrative expenses 14 10 7 Unrealized loss on commodity contracts 4 - - Financing charges 12 - - Amortization and accretion expenses 2 22 5 Tax expense (recovery) $ (9) $ (12) $ 5 ------------------------------------------------------------------------- (*) Revenues Because we have not yet completed the Project, our historical revenues have consisted entirely of interest income. Interest income consists of interest on cash, cash equivalents and short-term investments and is affected by average balances of interest-bearing instruments and associated interest rates. (*) Expenses Our expenses have historically consisted of general and administrative expenses, amortization and accretion expenses and income taxes. General and administrative expenses, or G&A expenses, primarily consist of salaries and information technology costs. Amortization and accretion expenses primarily relate to amortization of corporate assets. Income taxes consist of future tax expense or recovery. We do not currently pay income taxes. The timing of the payment of income taxes in the future will be primarily influenced by the construction cost of the Project, commodity prices, SAGD production and Upgrader operations, foreign exchange rates, operating costs, interest rates and future phase activities. RESULTS OF OPERATIONS Year Ended December 31, 2007 Compared With Year Ended December 31, 2006 ----------------------------------------------------------------------- (*) Interest Income For the year ended December 31, 2007, interest income increased to $13 million from $10 million in the corresponding period in 2006. The increase was due to an increase in average cash and cash equivalent balances as a result of the proceeds from debt issuances in December 2006 and July 2007 and equity issuances in late 2007. (*) General and Administrative (G&A) Expenses For the year ended December 31, 2007, G&A expenses increased to $14 million from $10 million in the corresponding period in 2006. The increase was due to increased levels of corporate staff and information technology expenditures. (*) Unrealized Loss on Commodity Contracts For the year ended December 31, 2007, we had a loss of $4 million compared to $nil in the corresponding period in 2006. During 2007, we entered into a put option with respect to 5,500 bbl/d of production for 2008 with an exercise price of US$50 per barrel. The loss was due to the fair value measurement of our commodity contract as a result of an increase in the forward price of WTI during 2008. (*) Financing Charges For the year ended December 31, 2007, financing charges are $12 million compared to $nil in the same period in 2006. The expense was primarily in relation to issuance costs of our US$750-million senior secured notes. Financing charges in 2007 are expensed in accordance with the adoption of the new Canadian accounting policy for Financial Instruments. (*) Amortization and Accretion Expenses For the year ended December 31, 2007, amortization and accretion expenses are $2 million compared with $22 million in the same period in 2006. The expense in 2007 was primarily related to the amortization of corporate assets. The expense in 2006 was due primarily to the cancellation of two credit facilities: our subordinated debt facility, which resulted in $3 million in amortization expense; and our LP Project Facility, which resulted in a further $15-million in amortization expense. (*) Taxes Future tax expense for the year ended December 31, 2007, is a recovery of $9 million compared with a recovery of $12 million in the corresponding period in 2006. The recovery of taxes in 2007 were primarily due to a reduction in the federal tax rate expected in future periods which reduced the applicable combined Federal and Provincial corporate tax rate from 29 percent to 25 percent. The recovery in future tax expense in 2006 was primarily due to a reduction in the applicable tax rate from 33.6 percent to 29.0 percent and an increase in amortization of deferred financing charges. (*) Cross Currency Swap OPTI is exposed to foreign exchange rate risk on our U.S. dollar denominated debt. To partially mitigate this exposure, we have entered into US$875 million of cross currency interest rate swaps to manage our exposure to repayment and interest payments risk on our U.S. dollar denominated long-term debt. In line with the maturity date of the Notes, the swaps provide for a fixed Canadian dollar (CDN) payment of CDN$928 million in exchange for receipt of US$875 million in December 2014. The swaps also provide for semi-annual Canadian dollar interest payments until December 2014 at a fixed rate of 8.15 percent based on notional Canadian dollar $928 million of debt. The interest portion of the swaps essentially replaces our semi-annual interest payments at a fixed rate of 8.25 percent based on notional US$875 million. This contract has not been designated as a hedge for accounting purposes. The fair value adjustment has been capitalized as the underlying debt instrument is used to fund development of our major projects. The value of the swaps was unfavourable to OPTI due to an increase in the value of the Canadian dollar during the period. As a result, OPTI has capitalized an unrealized loss in relation to the swaps of $60 million during the period. This unrealized loss is more than offset by translation gains on our long-term debt during the period the swaps have been outstanding. SELECTED ANNUAL INFORMATION ------------------------------------------------------------------------- $ million, except per share amounts 2007 2006 2005 ------------------------------------------------------------------------- Interest income $ 13 $ 10 $ 14 Net loss (9) (10) (2) Net loss per share, basic and diluted(1) (0.05) (0.06) (0.01) Total assets 3,837 3,374 1,585 Total long term financial liabilities $1,735 $1,690 $ Nil ------------------------------------------------------------------------- Notes: (1) After giving effect to the 2:1 share split to shareholders of record on June 1, 2006. The amount of interest income in each year is primarily the result of cash and cash equivalents available for investments. The amount of cash in each year is influenced by the size and timing of financing activities, as well as capital expenditures related to project development. Net loss has been influenced by increasing general and administrative expenses as well as fluctuations in tax expense. Amortization expense increased significantly in 2006 thereby increasing the net loss as a result of the write off of financing costs associated with the cancellation of various credit facilities. SUMMARY FINANCIAL INFORMATION ------------------------------------------------------------------------- $ million, except per share amounts 2007 ------------------------------------------------------------------------- Q4 Q3 Q2 Q1 ------------------------------------------------------------------------- Interest income $ 3 $ 3 $ 2 $ 5 Net earnings (loss) 6 (13) (2) - Earnings (loss) per share, basic and diluted(1) $ 0.03 $ (0.07) $ (0.01) $ - ------------------------------------------------------------------------- ------------------------------------------------------------------------- $ million, except per share amounts 2006 ------------------------------------------------------------------------- Q4 Q3 Q2 Q1 ------------------------------------------------------------------------- Interest income $ 4 $ 3 $ 2 $ 1 Net earnings (loss) (11) (1) 4 (2) Earnings (loss) per share, basic and diluted(1) $ (0.06) $ (-) $ 0.02 $ (0.01) ------------------------------------------------------------------------- Notes: (1) After giving effect to the 2:1 share split to shareholders of record on June 1, 2006. Quarterly variations in interest income are primarily the result of the amount of cash and cash equivalents available for investments during the applicable period. The amount of cash and cash equivalents is influenced by the size and nature of financing activities and level of investing activities during the period. Earnings have also been influenced by fluctuating interest income, generally increasing levels of G&A and fluctuating tax expenses. During the fourth quarter of 2006, we recorded a $15-million increase in the amortization expense related to deferred financing charges, which increased our loss during the period. In the third quarter of 2007, we expensed financing charges of $11-million, which increased our loss during the period. During the fourth quarter of 2007, we had a $9 million recovery of future taxes, primarily as a result of a reduction in the applicable federal tax rate. SHARE CAPITAL On November 21, 2007, OPTI issued 18,534,500 common shares at a price of $19.00 per common share and 2,430,000 flow-through common shares at a price of $24.70 per common share for aggregate gross proceeds of $412 million. At January 15, 2008, OPTI had 195,355,526 common shares, 7,211,116 common share options, and 3,104,000 common share warrants outstanding. The common share options have a weighted average exercise price of $13.03 per share and each common share warrant entitles the holder to purchase two common shares at a price of $14.75 each. At January 15, 2008, including instruments where the option to exercise resides with the holder, OPTI's fully diluted shares outstanding was 208,774,642. This fully diluted number includes common shares outstanding and shares issuable pursuant to common share options and common share warrants but does not include shares issuable pursuant to call obligations. LIQUIDITY AND CAPITAL RE

SOURCES ------------------------------- Liquidity --------- We have not had any revenue from the commercial development of bitumen or PSC(TM) as the commercial operations of the Project are not planned to commence until mid-2008. Project expenditures, future phase expenditures and corporate costs during the year ended December 31, 2007, were funded from the issuance of debt and equity. During the first half of 2008, we expect to fund our capital expenditures from existing working capital and borrowings under our Revolving Credit Facility. In the second half of 2008, we expect that operating cash flow will fund a portion of our capital expenditures. For the year ended December 31, 2007, cash provided by operating activities was $5 million, cash provided by financing activities was $713 million and cash used in investing activities was $940 million. Including the foreign exchange loss on US$4 million, this resulted in a reduction in cash and cash equivalents during the year of $226 million compared with an increase of $331 million in 2006. Our long-term debt consists of US$1,750 million of senior secured notes and an undrawn $500-million Revolving Credit Facility. OPTI intends to register its senior secured notes with the United States Securities and Exchange Commission on or about January 31, 2008, in order to comply with its covenants to holders of the notes to exchange the outstanding notes for senior secured notes registered with the SEC. Capital Resources ----------------- At December 31, 2007, our capital resources included total working capital of $271 million and an undrawn $500-million Revolving Credit Facility. Working capital is comprised of cash and short-term investments of $311 million, the interest reserve account of $137 million and a non-cash working capital deficiency of $177 million. We expect the total amount of the interest reserve account, which can only be used to pay interest on the notes, to cover all interest payments in respect of the Notes until December 15, 2008. Our current financial resources include our available working capital, the Revolving Credit Facility and the interest reserve account. We expect that these resources will be sufficient to complete construction and start-up of the Project and our budgeted 2008 expenditures related to future phases. Our current total cost estimate to complete the Project is between $5.8 billion and $6.1 billion, or between $2.9 billion and $3.05 billion net to us. At December 31, 2007, $5.4 billion had been incurred on the Project ($2.7 billion net to us) and our share of the remaining costs is between $0.2 and 0.35 billion. We expect the majority of these expenditures to be incurred in the first half of 2008. Upon the commencement of commercial operations of the Upgrader we expect to generate positive operating cash flows. Operating cash flows will play an integral part in the financing of the expenditures associated with our multi-stage expansion plans. Total cash flow from the Project in the latter part of 2008 will be impacted by many factors including, but not limited to, the final cost of the Project, timing of commencement of operations, the speed of ramp-up during the start-up phase, as well as oil and natural gas prices. We are planning to be in a position to sanction Phase 2 of the project in late 2008. The amount of total funding required for Phase 2 will not be known until a cost estimate is prepared in late 2008. Operating cash flows from the Project are not expected to be sufficient to fund our Phase 2 construction program so we expect to need additional debt and/or equity. The amount of new debt and equity required in future periods will primarily be impacted by factors noted above affecting total cash flow from Phase 1 over the Phase 2 construction period, the total cost of Phase 2, and the timing of Phase 2 construction expenditures. Additional financing is not expected to be needed until after Phase 2 sanctioning. In relation to a flow-through share issuance, we have a commitment to incur approximately $60 million in qualifying resource expenditures in 2008. A portion of these expenditures were incurred in 2007. We have 3,104,000 common share warrants outstanding. Each warrant entitles the holder to purchase two common shares at a price of $14.75 each and the warrants expire in November 2008. Should all holders of these warrants choose to exercise their option, it would result in gross proceeds to us of $92 million. We have $202 million of call obligations. The option for exercise belongs to us, and we do not expect to exercise our right to issue shares in relation to the call obligations. The call obligations consist of unconditional and irrevocable call options whereby we, at our option, can require a subscription for either a convertible preferred share or a common share for the face amount of the call obligation. We can exercise the call obligations at any time until the earlier of completion of the Project on June 30, 2008. The exercise price of the call obligations is $2.20 per share and should we exercise our option, it would result in the issuance of 91.8 million additional common shares and gross proceeds of $202 million. CONTRACTUAL OBLIGATIONS AND COMMITMENTS The following table shows our contractual obligations and commitments due during the next five years and thereafter as at December 31, 2007. ------------------------------------------------------------------------- $ million less More than than Total 1 year 2-3 years 4-5 years 5 years ------------------------------------------------------------------------- Contracts and purchase orders(1) $ 132 $ 132 $ - $ - $ - ------------------------------------------------------------------------- Long-term debt(2) 1,735 - - - 1,735 ------------------------------------------------------------------------- Capital leases(3) 99 2 9 8 80 ------------------------------------------------------------------------- Operating leases and other commitments(4) 96 9 27 18 42 ------------------------------------------------------------------------- Total commitments $ 2,062 $ 143 $ 36 $ 26 $ 1,857 ------------------------------------------------------------------------- Notes: (1) Consists of our share of commitments associated with contracts and purchase orders in connection with the Project and our other oil sands activities. Our share of remaining expenditures relating to the Project are between $0.2 billion and $0.35 billion. (2) Consists of US$1,000 million and US$750 million under our Notes. The amounts represent only scheduled principal repayments. In addition, we are contractually obligated for interest payments on borrowings and standby charges in respect of undrawn amounts under the Revolving Credit Facility, which are not reflected in the above table. In respect of our Notes, annual interest of US$142 million is due until 2014. (3) Consists of our share of payments under our product transportation agreements with respect to future tolls during the initial contract term. (4) Consists of our share of payments under our product transportation agreements with respect to future tolls during the initial contract term. This amount also includes our share of future commitments with respect to rail traffic transportation CONFERENCE CALL We will hold a conference call at 7:00 a.m. MDT (9:00 a.m. EDT) on Wednesday, January 23, 2008 to review our fourth quarter results and progress on the Long Lake Project. Sid Dykstra, President and Chief Executive Officer and David Halford, Chief Financial Officer, will host the call. To listen to the conference call, please dial: (800) 733-7571 (North American Toll-Free) (416) 644-3414 (Toronto or International) Please reference the OPTI Canada conference call with Sid Dykstra when speaking with the Operator. A replay of the call will be available until February 6, 2008, inclusive. To access the replay, call (416) 640-1917 or (877) 289-8525 and enter passcode 21255878 followed by the pound sign. The webcast archive will be available for 30 days on OPTI's website under "Webcasts and Presentations" in the For Investors section. ABOUT OPTI OPTI Canada Inc. is a Calgary, Alberta-based company focused on developing the fourth and next major integrated oil sands project in Canada, the Long Lake Project, in a 50/50 joint venture with Nexen Inc. The first phase of the Project consists of 72,000 barrels per day of SAGD (steam assisted gravity drainage) oil production integrated with an OPTI-operated upgrading facility, using OPTI's proprietary OrCrude(TM) process and commercially available hydrocracking and gasification. Through gasification, this configuration substantially reduces the exposure to and the need to purchase natural gas. The Project is expected to produce 58,500 bbl/d of products, primarily 39 degree API Premium Sweet Crude with low sulphur content, making it a highly desirable refinery feedstock. OPTI's common shares trade on the Toronto Stock Exchange under the symbol OPC. FORWARD LOOKING STATEMENTS Certain statements contained herein are forward-looking statements, including statements relating to: OPTI's operations; anticipated financial performance; business prospects, expansion plans and strategies; OPTI's plans and expectations concerning the use and performance of the OrCrude(TM) process and other related technologies; the cost, development and operation of the Long Lake Project and OPTI's relationship with Nexen Inc. Forward-looking information typically contains statements with words such as "anticipate," "estimate," "expect," "potential," "could" or similar words suggesting future outcomes. Readers are cautioned not to place undue reliance on forward-looking information because it is possible that expectations, predictions, forecasts, projections and other forms of forward-looking information will not be achieved by OPTI. By its nature, forward-looking information involves numerous assumptions, inherent risks and uncertainties. A change in any one of these factors could cause actual events or results to differ materially from those projected in the forward-looking information. Although OPTI believes that the expectations reflected in such forward-looking statements are reasonable, OPTI can give no assurance that such expectations will prove to be correct. Forward-looking statements are based on current expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by OPTI and described in the forward-looking statements or information. The forward-looking statements are based on a number of assumptions which may prove to be incorrect. In addition to other assumptions identified herein, we have made assumptions regarding, among other things: market costs and other variables affecting operating costs of the Project; the ability of the Long Lake joint venture partners to obtain equipment, services and supplies, including labour, in a timely and cost-effective manner; the availability and costs of financing; oil prices and market price for the PSC(TM) output of the OrCrude(TM) Upgrader; foreign currency exchange rates and hedging risks; government regulations and royalty regimes; the degree of risk that governmental approvals may be delayed or withheld; other risks and uncertainties described elsewhere in this document or in OPTI's other filings with Canadian securities authorities. Readers should be aware that the list of factors, risks and uncertainties set forth above are not exhaustive. Readers should refer to OPTI's current Annual Information Form, which is available at www.sedar.com, for a detailed discussion of these factors, risks and uncertainties. The forward-looking statements or information contained in this news release are made as of the date hereof and OPTI undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable laws or regulatory policies.

For further information:

For further information: Alison Trollope, Investor Relations Manager,
(403) 218-4705

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