Alberta Oilsands Inc. Announces Second Quarter Results



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

    CALGARY, Aug. 29 /CNW/ - Alberta Oilsands Inc. (the "Company" or "AOS")
(TSXV: AOS) is pleased to announce the financial highlights of the three and
six month periods ended June 30, 2007.
    During the second quarter of 2007 the Company continued its previously
announced change in focus from a conventional oil and gas company to a company
involved in pursuing the exploitation and production of bitumen reserves in
the Athabasca oil sands area of Alberta.

    Highlights of the three month period ended June 30, 2007 for AOS were:

    Oil Sands Operations:

    -   The Company added 100% working interests in a total of 47 sections
    (27,394 acres) during the second quarter, thereby increasing the
    Company's aggregate oil sands lease holdings at the end of the second
    quarter to 70 sections (40,800 acres). The Company also commenced
    planning the seismic and delineation programs on the initial 23 acres
    of oil sands leases acquired during the first quarter of 2007.

    Conventional Operations:

    -   During the second quarter of 2007, the Company's production decreased
    to 80 boe per day (see "BOE Presentation" below) as compared to 267
    boe per day in the first quarter of 2007 and 270 boe per day in the
    second quarter of 2006. Second quarter 2007 production reflects the
    Company's change in focus and the related sale of the Crystal Hills,
    Macoun and Hume properties in Saskatchewan during the first quarter
    of 2007.

    -   Royalties for the second quarter of 2007 were 15% of revenues as
    compared to 11% in the second quarter of 2006. Although total royalty
    expenses decreased, royalties increased on both a percentage and a
    boe basis in the second quarter ended June 30, 2007 as compared to
    the same quarter in 2006 due primarily to the higher royalty rates
    applicable to the current production profile of the Company.

    -   Operating costs for the second quarter of 2007 were $241,921 or
    $33.09 per boe as compared to $346,838 or $14.12 per boe for the same
    period in 2006. The increase on a boe basis for the quarter was due
    primarily to the increased rate of operating costs applicable to the
    current production profile of the Company.

    Financing Activities:

    -   The Company raised an aggregate of $25 million during the second
    quarter of 2007. Specifically, the Company closed an over subscribed
    "non-brokered" private placement issuing 10 million flow-through
    shares for gross proceeds of $5.0 million and a "bought deal" private
    placement financing issuing 8,888,900 common shares and 4,848,500
    flow-through common shares for gross proceeds of $20 million.

    Highlights of the prior three month period ended March 31, 2007 for AOS
were:

    -   In March 2007, the Company announced a change in focus from being a
    conventional oil and gas company to one that would pursue the
    exploitation and production of the bitumen reserves in the Athabasca
    oil sands area of Alberta. The Company also received shareholder
    approval for a name change to Alberta Oilsands Inc. at its Annual
    General Meeting in May 2007.

    -   In connection with the change in focus, the Company acquired a 100%
    working interest in 23 sections (14,720 acres) of contiguous oil
    sands rights and the Company received an independent resource
    assessment report from Ryder Scott Company, Petroleum Consultants on
    the 23 section parcel estimating an undiscovered resource of
    1.15 billion barrels of initial bitumen in place (see "Undiscovered
    Resources" below).

    
    Second Quarter Operating Highlights

    The following table outlines certain highlights of our financial and
operating results for the three months and six months ended June 30, 2007:


                                  Three months ended        Six months ended
                                             June 30                 June 30
                             ------------------------------------------------
                                    2007        2006        2007        2006
    -------------------------------------------------------------------------
    Petroleum and
     natural gas sales           487,642   1,637,241   2,006,998   2,613,164
    Funds from (used in)
     operations                 (703,819)    758,549     (98,487)    947,978
    (Loss) income
     for the period           (1,378,661)     94,319     (63,121)   (193,123)
    Total assets              34,002,115  12,849,088  34,002,115  12,849,088
    Capital expenditures       4,112,925     977,665   7,882,007   2,762,877



                                  Three months ended        Six months ended
                                             June 30                 June 30
                             ------------------------------------------------
                                    2007        2006        2007        2006
                             ------------------------------------------------
    Oil and NGL (bbls/day)            75         248         166         208

    Natural gas (mcf/day)             34         129          43         104

    boe(1)/day                        80         270         173         225



                                  Three months ended        Six months ended
                                             June 30                 June 30
                             ------------------------------------------------
                                    2007        2006        2007        2006
                             ------------------------------------------------
    Commodity Prices

    Oil and NGL ($/bbl)            68.16       70.41       65.00       66.22

    Natural gas ($/mcf)             7.92        3.86        7.20        6.53

    $/boe(1)                       66.69       66.64       64.09       64.14

    (1) See "BOE Presentation" below.
    

    Outlook

    The Company continues to execute on its new focus of pursuing the
exploitation and production of bitumen reserves in the Athabasca oil sands
area of Alberta. During the six months ended June 30, 2007, as a result of
successful purchases by AOS at crown land sales, a 100% working interest in a
total of 70 sections (40,800 acres) was acquired.
    Subsequent to June 2007, the Company increased its aggregate oil sands
lease holdings to over 100 sections (58,286 acres) of 100% working interest
leases. The Company now has three separate and distinct prospective contiguous
land areas, each of which the Company expects may be capable of containing
sufficient reserves to support a SAGD project.
    The Company has purchased trade seismic data on the original 23 sections
of oil sands leases acquired in the first quarter of 2007. This seismic data
is expected to be utilized to select drilling locations in connection with the
upcoming winter drilling program. In addition, the Company is currently
planning a 2D seismic acquisition program for late fourth quarter 2007 which
would cover two main land blocks.
    The Company also currently expects to expand its first quarter 2008
coring program to include drilling in three of the Company's prospect areas. A
total of 30 to 50 core holes are anticipated to be drilled in the 2007/2008
drilling season.
    The Company has engaged Ryder Scott Company, Petroleum Consultants to
provide an updated resource assessment on the additional lands acquired by the
Company since the first quarter of 2007. The Company anticipates that such
reports will be completed by October 2007.
    As at June 30, 2007, the Company had working capital of approximately
$20.2 million, an increase from a working capital deficiency of $3.3 million
at December 31, 2006. Subsequent to June 2007, the Company has spent
approximately $5.7 million on additional land and seismic reducing the current
working capital to approximately $14.5 million.
    Pursuant to private placements, a total of $25 million equity was raised
in the first half of 2007. Of this amount $13 million was through the issuance
of flow-through shares for which the qualifying expenditures must be incurred
by December 31, 2008 and renounced on or prior to December 31, 2007.
    The Company will file its second quarter management's discussion and
analysis and interim unaudited consolidated financial statements and notes
thereto as at and for the three months ended June 30, 2007 in accordance with
National Instrument 51-102 - Continuous Disclosure Obligations adopted by the
Canadian securities regulatory authorities. Additional information about the
Company, including the audited consolidated financial statements and notes
thereto and management's discussion and analysis as at and for the year ended
December 31, 2006, 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.

    Undiscovered Resource - "Undiscovered Resources" are defined as those
quantities of oil and gas estimated on a given date to be contained in
accumulations yet to be discovered" (5.2.3. in Volume 1-Reserves Definitions
and Evaluation Practices and Procedures Volume 1, Canadian Oil and Gas
Evaluation handbook SPEE (Calgary Chapter)).

    Forward-Looking Statements: This press release contains certain
"forward-looking statements" within the meaning of such statements under
applicable securities law including management's assessment of the Company's
properties, production and prospects. Forward-looking statements are
frequently characterized by words such as "plan", "continue", "expect",
"project", "intend", "believe", "anticipate", "estimate", "may", "will",
"potential", "proposed" and other similar words, or statements that certain
events or conditions "may" or "will" occur. These statements are only
predictions. Forward-looking statements 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 projected in the
forward-looking statements. 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,
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 oil sands 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 annual financial statements and management discussion and analysis
for the year ended December 31, 2006, both of which are available at
www.sedar.com. The Company undertakes no obligation to update forward-looking
statements if circumstances or management's estimates or opinions should
change, unless required by law. The reader is cautioned not to place undue
reliance on forward-looking statements.

    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, spremji@aboilsands.ca; or Chad Dust,
Executive Vice-President, T: (403) 538-3191, cdust@aboilsands.ca; Company
website: www.aboilsands.ca

Organization Profile

ALBERTA OILSANDS INC.

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