Alberta Oilsands Inc. announces second quarter 2009 results


    CALGARY, Aug. 25 /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  ("MD&A") for
the three and six months ended June 30, 2009.  Copies of the filed documents
may be obtained through

    Second Quarter 2009 Highlights

    -   Placed one (0.5 net) Slave Point discovery well in the Ladyfern area
        on production on April 1, 2009 which produced a daily average of
        1.4 million cubic feet and 37 barrels of natural gas liquids net to
        the Company for the second quarter. The well is eligible for
        Alberta's new well royalty incentive program, which provides for a 5%
        royalty rate for gas production volume of up to 500 million cubic
        feet (mmcf).

    -   Produced an average of 325 barrels of oil equivalent per day (boepd)
        from conventional assets during the second quarter of 2009, a 433%
        increase from the 61 boepd produced in the first quarter of 2009.
        This average production rate includes a 13-day period during which
        the Slave Point discovery well was shut in for a pressure build-up

    -   Established an economic relationship with the Ft. McMurray Regional
        Airport Commission ("FMAC") by entering into a definitive agreement.
        The Fort McMurray Regional Airport is located northwest of the
        Clearwater project area. The agreement was announced by the Company
        by news release on July 9, 2009.

    -   Entered into a farm-in agreement on conventional oil and natural gas
        assets in the Hines Creek area in northwest Alberta which is a multi-
        zone hydrocarbon prone area with primarily all-season access.

    -   Maintained a strong balance sheet with working capital of
        $5.4 million as at June 30, 2009.

    -   Achieved gross revenue of $998,000 in the second quarter compared
        with $262,000 in the first quarter, and net operating income of
        $501,000 (after royalties and direct operating expenses) compared
        with a net operating loss of $235,000 in the first quarter of 2009.

    -   Incurred capital expenditures of $0.6 million in the second quarter
        of 2009, compared with capital expenditures of $7.3 million in the
        first quarter of 2009.

    -   Subsequent to the end of the second quarter, announced an increase in
        the assigned contingent resources at its Clearwater West project. The
        Ryder Scott Company of Canada resource report, effective June 1,
        2009, estimated that Alberta Oilsands' Clearwater West property
        contains 182.5 million barrels of contingent bitumen resources in a
        mid or "best estimate" scenario in a National Instrument 51-101
        compliant evaluation. This represents an increase of 20.4% over Ryder
        Scott's previous assessment. See "Disclosure of Resources" below.

    Review of Oil Sands Operations

    Our Clearwater West project has now been fully delineated with an average
density of 10 core holes per section. The Company expects that one of the main
steps remaining prior to commencing work on our first pilot project is the
application to Alberta's Energy Resources Conservation Board. We expect to
submit our application before the end of 2009 for a first phase 2,000 barrel
per day pilot project. Pending successful results from the pilot, AOS expects
to submit an expansion application for a 10,000 barrels per day full
commercial project.
    Two seasons of coring, 3D reservoir modeling, extensive cap rock studies
and an updated independent resource assessment suggest Clearwater West will
meet the Company's high expectations. All indications confirm a high quality
reservoir and a large quantity of bitumen. The Ryder Scott Company of Canada
resource report, effective June 1, 2009, estimated that Alberta Oilsands'
Clearwater West property contains 182.5 million barrels of contingent bitumen
resources in a mid or "best estimate" scenario in a National Instrument 51-101
compliant evaluation. This represents an increase of 30.9 million barrels or
20.4% over the previous assessment dated June 1, 2008. This brings the total
best estimate of contingent resources at Clearwater West, East and North to
350.9 million barrels of contingent resources. The resource numbers for
Clearwater East and North have not changed year over year because no
additional delineation drilling has been conducted in these areas since the
2008 report. It should be noted that there is no certainty that it will be
commercially viable to produce any portion of these contingent resources. See
"Oilsands Development Risks" in the MD&A.
    Clearwater West offers proximity to pipelines, electricity, natural gas
infrastructure and roads. In the second quarter the Company signed a
memorandum of understanding with the FMAC to help ensure access to three
sections of land adjacent to the airport. A definitive agreement was executed
subsequent to the end of the quarter on July 8, 2009. Alberta Oilsands
believes that the agreement creates a strategic economic relationship of
mutual benefit for both the Company and the Fort McMurray Airport Commission. 
The agreement provides for a 2% gross overriding royalty to the Fort McMurray
Airport Commission on the oil sands rights held by Alberta Oilsands in
Sections 21 and 22 of Twp 88-8-W4M. In addition, we have agreed to grant the
Fort McMurray Airport Commission 4 million common share purchase warrants to
purchase 4 million common shares of Alberta Oilsands at a weighted average
price of $0.75/share. In exchange, the airport authority agreed to grant
access to certain airport lands, provided that the Company's operations do not
interfere with the safety or proper operation of the airport, and to work with
Alberta Oilsands on planning and logistics of any operation on airport lands. 
Although we have always had a positive relationship with the Fort McMurray
Airport Commission, this agreement entrenches the relationship, allows us to
expedite the development of our Clearwater West project and has the potential
to provide considerable economic benefits to both parties for years to come.

    Review of Conventional operations

    Although we remain focused on developing our oil sands prospects and
projects, we have been taking advantage of the current economic downturn to
invest in conventional exploration opportunities. The Company's decision to
acquire conventional assets at attractive prices paid dividends in the second
quarter of 2009 after our recent Ladyfern Slave Point discovery well (Hamburg
13-29-095-12W6M) in Alberta came on stream on April 1, 2009. As a result, we
experienced significant increases in revenue and cash flow compared with the
first quarter. This well produced an average of 1.4 million cubic feet per day
net to the Company during the second quarter of 2009. We are enthusiastic
about our discovery at Ladyfern, however readers should be cautioned that
initial production from one well is not necessarily indicative of future
production from that well or any other well in the area. We are optimistic
that we will be able to repeat our success in the Ladyfern South prospect this
winter if sufficient working capital is available. Alberta Oilsands has 11
sections (5.5 net) of land in the area.
    In addition to Ladyfern, we have a depth of conventional prospects at
Mahaska and Bronson in Alberta and Wildmint in British Columbia. The Mahaska
prospect consists of 18 sections (9 net upon earning) targeting the Blueridge
(Nisku) formation. The Mahaska 16-29-57-12W5M well was drilled subsequent to
June 30, 2009. This test well was abandoned and the land earned upon the
drilling of the well. The Bronson prospect has two sections consisting of rich
gas potential in the Basal Cretaceous and Jurassic formations. In British
Columbia, the Wildmint prospect consists of 4 sections of land overlying a
large seismically defined structure.
    On June 4, 2009, we announced a conventional farm-in agreement with a
private company in the Hines Creek area of the Peace River Arch region of
northwest Alberta. This area is known as a multi-zone, gas prone area. The
agreement provides the right to earn a minimum 50% working interest in more
than 17 sections of conventional oil and gas rights. We are pleased to be able
to partner with the technical team of an experienced operator in what we
believe to be a high-quality, hydrocarbon prone region. We believe that the
area features low finding costs, robust economics, a short time to cash flow
and upside from multiple targets on each location.
    The Leduc property continues to produce and averaged 47 barrels per day
of light oil for the first half of 2009. Together with other legacy
conventional properties, they produced about 60 boe/d for the first half of
2009. Production in the third quarter to date is averaging over 70 barrels per
day for Leduc and the other legacy conventional properties.
    While our conventional production is expected to be overshadowed by our
oil sands assets, the decision to take advantage of our flow-through funds at
this time to pursue conventional exploration is generating cash flow intended
to facilitate the pursuit of our Clearwater West oil sands pilot project.

    Financial and Operating Summary


                                                Three months ended June 30
                                              2009         2008         2007
    Statement of Operations and Deficit
      Petroleum and natural gas
       sales ($)                           997,514      555,333      487,642
      Petroleum & natural gas sales
       per boe ($)                           33.76       112.62        66.69
      Daily sales volumes (boe 6:1)            325           54           80
      Net loss for the period ($)         (921,812)  (1,169,247)  (1,378,661)
      Net loss per share - basic and
       diluted ($)                           (0.01)       (0.02)       (0.02)
    Statement of Cash Flows
      Funds (used in) from
       operations ($)(1)                   (34,242)    (631,341)    (703,819)
      Cash flow (used in) from
       operations ($)                     (811,087)  (1,043,057)    (384,910)
      Capital expenditures ($)             607,301    1,805,135    4,112,925

    Weighted average number of shares
     - basic and diluted                79,651,375   62,777,154   56,451,094

                                                 Six months ended June 30
                                              2009         2008         2007
    Statement of Operations and Deficit
      Petroleum and natural gas
       sales ($)                         1,259,541      999,669    2,006,998
      Petroleum & natural gas sales
       per boe ($)                           35.97        98.84        64.09
      Daily sales volumes (boe 6:1)            193           56          173
      Net loss for the period ($)       (2,138,382)  (1,949,681)     (63,121)
      Net loss per share - basic and
       diluted ($)                           (0.03)       (0.03)        0.00
    Statement of Cash Flows
      Funds (used in) from
       operations ($)(1)                (1,144,558)    (898,589)     (98,487)
      Cash flow (used in) from
       operations ($)                   (1,447,915)    (589,908)     389,025
      Capital expenditures ($)           7,871,089    7,698,146    7,882,007

    Total assets ($)                    51,100,787   45,524,918   34,002,115
    Total liabilities ($)                7,577,791   10,454,492    2,689,058
    Shareholders' equity ($)            43,522,996   35,070,426   31,313,057

    Weighted average number of shares
     - basic and diluted                79,651,375   61,128,625   32,137,594

    (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 noncash
        working capital related to operating activities and abandonment
        expenditures incurred.


                        Three months ended June 30  Six months ended June 30
                                 2009         2008         2009         2008

      Oil and NGL (bbls/day)       87           47           71           48
      Natural gas (mcf/day)     1,429           41          737           44
      boe/day (6:1)               325           54          193           56

    Commodity Prices
      Oil and NGL ($/bbl)       63.22       120.12        57.91       105.71
      Natural gas ($/mcf)        3.84        10.17         3.89         8.91
      boe ($/boe)               33.76       112.62        35.97        98.84

      Oil and NGL ($)         497,774      517,120      740,436      928,577
      Natural gas ($)         499,740       38,213      519,105       71,092
      Total ($)               997,514      555,333    1,259,541      999,669

    Royalties and Operating
      Royalties ($)            71,057       87,041      108,547      132,048
      % of revenues                 8           16            9           13
      Operating and
       expenses ($)           425,318      240,529      884,597      457,140

      Revenue ($/boe)           33.76       112.62        35.97        98.84
      Royalties ($/boe)          2.40        17.65         3.10        13.06
      Operating expenses
       ($/boe)                  14.39        48.78        25.26        45.20
      Field netbacks ($/boe)    16.97        46.19         7.61        40.58


    We expect to spend approximately $4.5 million over the second half of
2009 to complete the final steps for our Clearwater West pilot project
application and to drill exploratory wells into our inventory of what we
believe will be high-impact conventional prospects. Our conventional
activities are expected to fulfill our flow-through share obligations for the
    Despite achieving success in conventional oil and gas prospects, our
primary focus is to incubate and pilot our oil sands assets at Clearwater
West. We will take the steps to convert our discovered resources into proved
producing reserves. We plan to accomplish this through commercial
partnerships, hedging our input fuel requirements and growing our cash flow
through the exploration and development of conventional oil and gas prospects.
    As Alberta Oilsands enters a critical phase, we are in the process of
sourcing industry and financial partners to share in our success as we develop
our resources and realize our vast potential.
    Alberta Oilsands expects its initial Clearwater pilot project to be
capable of producing 2,000 barrels per day of pilot production and 10,000
barrels per day once the project is fully operational. See "Oilsands
Development Risks" in the MD&A.
    The Company will continue to be prudent in the use of its cash resources
and the sourcing of the same while it explores opportunities to develop its
oil sands assets.
    Over the last few weeks we have seen Investor interest returning to the
oil sands. With six potential oil sands projects identified on our lands, we
believe we are well positioned to profit from the renewed interest in the
sector thanks to our bitumen assets on Alberta's Athabasca oil sands fairway.

    Interim Filings

    The Company will file its MD&A and interim consolidated financial
statements and notes thereto as at and for the three and six months ended June
30, 2009 in accordance with National Instrument 51-102 - Continuous Disclosure
Obligations adopted by the Canadian securities regulatory authorities.
Additional information about the Company, including the interim consolidated
financial statements and notes thereto and MD&A as at and for the three and
six months ended June 30, 2009, are available on the Company's SEDAR profile

    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 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.

    There is no certainty that it will be commercially viable for the Company
to produce any portion of the bitumen resources 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 resources. The high level
of uncertainty associated with the Company's possible recovery of any of these
resources 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 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; (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 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. 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 oilsands
properties, the uncertainties involved in interpreting drilling results and
other geological data, fluctuating oil prices, the possibility of project cost
overruns or unanticipated costs and expenses, uncertainties relating to the
availability and costs of financing needed in the future and other factors
including unforeseen delays. As an oilsands-focused enterprise, the Company
faces risks, including those associated with exploration, development,
approvals and the ability to access sufficient capital from external sources.
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 interim financial statements and management discussion
and analysis for the three and six months June 30, 2009, all of which are
available at 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
"Disclosure of Resources" in this news release.

    The TSX Venture Exchange has not reviewed and does not accept
    responsibility for the adequacy and 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.

    %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,; or Chad Dust,
Executive Vice-President, T: (403) 538-3191,; Company

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