HONG KONG, Nov. 12, 2013 /CNW/ - (HKEX: 2012;TSX: SUO) Sunshine Oilsands Ltd. ("Sunshine" or the "Company") today announced its financial results for the third quarter of 2013. The Company's condensed interim consolidated financial statements, notes to the condensed interim consolidated financial statements and Management's Discussion and Analysis have been filed on SEDAR (http://www.sedar.com) and with the SEHK at (http://www.hkexnews.hk) and are available on the Company's website (http://www.sunshineoilsands.com). All figures are in Canadian dollars unless otherwise stated.
- A strategic review process was initiated on August 6, 2013 to look at opportunities for additional funding in the form of debt, equity, JV arrangements or other structures to fund the development of our substantial asset base.
- With only about three months remaining to first steam, Sunshine suspended construction of the West Ells project pending the infusion of additional capital. With the construction suspension in effect, the date for Phase 1 first steam will depend on when sufficient funding is obtained and construction restarted.
- Our Thickwood 10,000 barrels per day SAGD project received Order in Council approval, a critical step in beginning to realize the potential of the Thickwood area.
- Following the end of the quarter, we announced the formation of a joint venture in our Muskwa and Godin areas, with 100% of the initial development funding to be provided by our JV partner, demonstrating the quality of our development potential.
Message to Shareholders
The third quarter of 2013 resulted in substantial changes and fresh challenges for Sunshine, along with new accomplishments and opportunities in some of our asset areas.
The Company had expected to be able to do a term debt financing to advance its initial projects but with market conditions for Canadian oilsands being poor, in August we announced the formation of a special committee of our Board to examine strategic alternatives available to the Company. The special committee has engaged financial advisors who are working with us to determine and progress our best opportunities to fund and develop West Ells and our other extensive opportunities.
Significant progress at West Ells and the expectation of first steam within a few months were unfortunately cut short by the difficult but necessary decision to suspend construction August 18 due to insufficient funding. With the first 5000 bpd pad of 8 well pairs already drilled and completed, drilling was completed on the second 5,000 bpd pad and the wells suspended to await completion activities. The central processing facility and the site generally have been winterized to protect the assets pending funding. With funding in place, a revised Project construction schedule and cost estimate will be executed as quickly as possible to enable commissioning and begin operations, likely within a few months of moving back on site with full construction staff.
Beyond West Ells, we have been pleased with the progress on certain of our other projects. Our second planned project at Thickwood has been approved by the Alberta government through its Order-in-Council issued in September. The Thickwood Project also has the benefit of being approved and supported by the Ft. McKay First Nation up to its maximum expected capacity of 70,000 barrels per day.
During the quarter we negotiated, and following the quarter closed and announced, a Joint Venture arrangement at our Muskwa and Godin properties. Under the terms of the JV, our new partner earns up to a 50% working interest in the properties by spending up to $250 million, or achieving production of 5,000 barrels per day, whichever comes first. The deal excludes the carbonate Oilsands rights, which remain 100% owned by Sunshine, and provides a solid indication of the potential value of our extensive properties.
We appreciate the patience and support of all of our stakeholders, particularly our vendors and suppliers, as we work through these challenging times to begin realizing the value of our large and attractive asset base, starting with our very near term operation at West Ells. We expect the enormous embedded value in our assets will galvanize potential investors and partners into participating with us as we develop that value.
We also want to thank our staff for their dedication and efforts towards the success of the Company at a difficult time. Regretfully we accepted the resignation of our Senior Vice President of Engineering and Geosciences, Mark Montemurro, and wish him the best of luck; we are searching for a replacement and in the meantime are relying on our depth of professional technical staff to carry on. We thank you for your support and believe we will secure funding to enable the completion of West Ells and then move to develop our other extensive potential.
FORWARD-LOOKING INFORMATION AND DISCLAIMER
This document contains forward-looking information relating to, among other things: (a) the future financial performance and objectives of Sunshine Oilsands Ltd. ("Sunshine" or the "Company"); and (b) the plans and expectations of the Company. Such forward-looking information is subject to various risks, uncertainties and other factors. All statements other than statements and information of historical fact are forward-looking statements. The use of words such as "estimate", "forecast", "expect", "project", "plan", "target", "vision", "goal", "outlook", "may", "will", "should", "believe", "intend", "anticipate", "potential", and similar expressions are intended to identify forward-looking statements. Forward-looking statements are based on Sunshine's experience, current beliefs, assumptions, information and perception of historical trends available to Sunshine, and are subject to a variety of risks and uncertainties including, but not limited to those associated with resource definition and expected reserves and contingent and prospective resources estimates, unanticipated costs and expenses, regulatory approval, fluctuating oil and gas prices, expected future production, the ability to access sufficient capital to finance future development and credit risks, changes in Alberta's regulatory framework, including changes to regulatory approval process and land-use designations, royalty, tax, environmental, greenhouse gas, carbon and other laws or regulations and the impact thereof and the costs associated with compliance. Although Sunshine believes that the expectations represented by such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. Readers are cautioned that the assumptions and factors discussed in this document are not exhaustive and readers are not to place undue reliance on forward-looking statements as our actual results may differ materially from those expressed or implied. Sunshine disclaims any intention or obligation to update or revise any forward-looking statements as a result of new information, future events or otherwise, subsequent to the date of this document, except as required under applicable securities legislation. The forward-looking statements speak only as of the date of this document and are expressly qualified by these cautionary statements.
Readers are cautioned that the foregoing lists are not exhaustive and are made as at the date hereof. For a full discussion of our material risk factors, see "Risk Factors" in our most recent Annual Information Form, "Risk Management" in our current MD&A for the three and nine months ended September 30, 2013 and risk factors described in other documents we file from time to time with securities regulatory authorities, all of which are available on the Hong Kong Stock Exchange at http://www.hkexnews.hk, on the SEDAR website at http://www.sedar.com or our website at http://www.sunshineoilsands.com.
About Sunshine Oilsands Ltd.
The Company is engaged in the evaluation and the development of oil properties for the future production of bitumen in the Athabasca oil sands region in Alberta, Canada. Sunshine trades on the HKEX under the symbol "2012" and on the TSX under the symbol "SUO".
SOURCE: Sunshine Oilsands Ltd.
For further information:
Mr. John Zahary, President and CEO / Mr. David Sealock, Executive VP, Corporate Operations, +403-984-1446, [email protected], www.sunshineoilsands.com