/NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR DISSEMINATION IN THE
TSX Trading Symbol: UTS
CALGARY, April 19 /CNW/ - UTS Energy Corporation ("UTS") today announced
that it has entered into a letter of intent with Teck Cominco Limited ("Teck
Cominco") under which Teck Cominco will acquire a 50 percent interest in Lease
14 for $200 million. Teck Cominco has had an option to acquire 50 percent of
Lease 14 since 2005. The price is based on a value of $1.00 per barrel and an
assumed bitumen resource for 100 percent of Lease 14 of approximately
400 million barrels. Closing of the transaction is conditional on customary
conditions, including settlement of definitive documentation.
"We are very pleased to partner once again with Teck Cominco. This
investment aligns UTS' and Teck Cominco's holdings into a 50:50 venture on the
west side of the Athabasca River, and, we firmly believe, provides tangible
benefits to both companies," said William Roach, President and Chief Executive
Officer. "This transaction has a profound impact on UTS in three fundamental
ways. Firstly, it fully repays UTS' $80 million obligation to Teck Cominco for
our share of the 50:50 land acquisition programs. Secondly, it effectively
funds UTS' share of the joint exploration and delineation program for the next
two to three years. Thirdly, and perhaps most importantly, this transaction
provides a new benchmark for the value of bitumen barrels in the ground on the
west side of the Athabasca River, where UTS and Teck Cominco have found
substantial oil sands some six miles north of Lease 14 in the Lease 311 area."
The transaction is expected to close in the third quarter of 2007 with
the final adjustment to take place once the full analysis of the Lease 14
drilling results is complete. The purchase price may be adjusted based on the
resource estimate to reflect a maximum of 500 million barrels or a minimum of
300 million barrels at $1.00 per barrel. This is consistent with our
previously disclosed estimate contained in our Annual Information Form.
Results of the detailed core analyses and the independent engineering estimate
of bitumen resources are expected by the fourth quarter of 2007.
"We believe that Lease 14 contains sufficient exploitable crude bitumen
resource to support a stand-alone or a satellite mining project of 50,000
barrels per day of bitumen," Dr. Roach continued, "Further, based on initial
review of well logs from Lease 311 and the surrounding area, we believe that
we now have a significant resource base outside of the Fort Hills Project."
Lease 14 is located in the Athabasca Oil Sands Area and comprises
approximately 7,147 acres (2,858 hectares) in Township 98, Ranges 10 and 11
W4, on the west side of the Athabasca River, and across from the northern
boundary of the Fort Hills Oil Sands Project. It is approximately
20 kilometres north of Syncrude's Aurora North operations, and a similar
distance north of CNRL's Horizon Project. Lease 14 is situated between Shell
Canada Limited's Oil Sands Leases 9 and 17, which are at the southern end of
the proposed Pierre River Mine.
Lease 311 comprises approximately 11,520 acres (4,608 hectares) and is
located 10 kilometres north of Lease 14 in Township 100, Range 11 W4 in the
Athabasca Oil Sands Area. Lease 311 is owned jointly with Teck Cominco on a
50:50 basis. UTS and Teck Cominco also jointly own Leases 477, 610 and 840,
contiguous and directly to the north of Lease 311 (comprising about
43,520 acres, or 17,408 hectares) and Leases 468 and 470 contiguous and
directly west of Lease 311 (comprising about 10,240 acres, or 4,096 hectares).
As a result of the successes from this winter's exploration program, UTS
and Teck Cominco have commenced developing preliminary plans for a program of
up to 400 core holes next winter. The focus of next year's program will be to
delineate Lease 311 and the surrounding area comprising of Leases 468, 470 and
477 extensively with approximately 300 additional core holes. A further 70 to
100 core holes will target continued evaluation of the other exploration
leases which may include some drilling on jointly held insitu leases.
For additional information on Leases 14 and 311, please refer to our
Annual Information Form filed on SEDAR at www.sedar.com or at www.uts.ca.
UTS Energy Corporation is based in Calgary, Alberta. The Company's common
shares (UTS) are traded on the Toronto Stock Exchange. The Company has two
strategic areas of focus. Firstly, the development and execution of the Fort
Hills Project, a mining project with a 4.7 billion barrels contingent
resource. UTS owns a 30 percent working interest with partners, Petro-Canada
with a 55 percent working interest and Operator, and Teck Cominco with a
15 percent working interest. Secondly, the Company is focused on the
exploration and development of oil sands leases held jointly by UTS and Teck
Cominco. These lands, totaling 257,920 acres and consisting of potentially
mineable and insitu resources, if prospective, provide organic growth
opportunities and potentially future funding flexibility for UTS.
FORWARD-LOOKING STATEMENTS: Except for statements of historical fact
relating to the Company, this news release contains certain "forward-looking
statements" within the meaning of applicable securities law. Forward-looking
statements are frequently characterized by words such as "plan", "expect",
"project", "intend", "believe", "anticipate", "estimate" and other similar
words, or statements that certain events or conditions "may" or "will" occur.
Forward-looking statements such as the references to resource estimates
referenced in this news release are based on the opinions 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 anticipated in the forward-looking
statements. The Company undertakes no obligation to update forward-looking
statements if circumstances or management's estimates or opinions should
change except as required by law. The reader is cautioned not to place undue
reliance on forward looking statements.
For further information:
For further information: Dr. William J. F. Roach, President and Chief
Executive Officer, or Wayne I. Bobye, Vice President and Chief Financial
Officer, at (403) 538-7030