CALGARY, March 15, 2012 /CNW/ - Athabasca Oil Sands Corp. (TSX: ATH) today reported 2011 year-end operational results.
- Athabasca remains well funded with working capital of $1.4 billion at December 31, 2011, sufficient to fund its 2012 capital budget of $819 million for 100% owned assets including $403 million for the Oil Sands division and $403 million for the Light Oil division. Net income for 2011 was $147 million.
- Athabasca progressed its oil sands development program with the filing of two applications for 12,000 barrel per day (bbl/d) steam assisted gravity drainage (SAGD) projects on each of the Hangingstone and Dover West sands assets. Application approval, project planning and engineering are on-schedule.
- The MacKay River 35,000 bbl/d SAGD project regulatory approval was received 24 months after submission. Athabasca exercised its put option yielding gross proceeds of $680 million. Closing expected in Q1 2012.
- Year-end independent reserves and resource evaluation reporting an 11% year-over-year increase in contingent resource (best estimate) to 9.8 billion barrels of oil equivalent (boe)1. Proved plus probable reserves on Athabasca's wholly owned properties are estimated at 212 million boe as of December 31, 2011.
- Successfully completed and started-up thermal test facilities in the Dover West Leduc carbonates. Application was filed for a 6,000 bbl/d thermal pilot/demonstration project. The reef complex holds over 17 billion barrels of bitumen-in-place (best estimate).
- Launched an extensive five rig drilling program targeting the liquids-rich Montney, Nordegg and Duvernay formations in northwestern Alberta. Athabasca holds more than 1.9 million acres of petroleum and natural gas rights. Infrastructure construction is underway.
"In 2011, Athabasca achieved the ambitious development and exploration milestones that we set for ourselves," says Sveinung Svarte, president and CEO. "As we look forward, 2012 is a pivotal year for the company as Athabasca moves into the development phase of its assets. The company's goal is to grow its production to 220,000 barrels per day by 2020, half extra heavy oil and half light oil. To accomplish this Athabasca has assembled a highly competent team of professionals, 206 strong at year's end, which is expected to grow to more than 1,000 by 2020."
|(1)||Includes Grosmont contingent resources which are uneconomic using a 10% discount factor based on the January 1, 2012 pricing models of GLJ Petroleum Consultants Ltd.|
|Oil Sands||Light Oil||Total|
|100% Owned||Joint Venture3|
|Capital Expenditures ($ millions)1||227.4||98.8||36.8||31.4||351.6||84.8||621.9||215.9|
|Net Acreage (acres thousands)||1,080||1,070||524||524||1,967||922||3,571||2,523|
|Proved Plus Probable Reserves (MMBOE)2||202||-||251||251||9||-||462||251|
|Contingent Resource (best est.) (MMBOE)2||7,568||6,643||2,212||2,163||N/A||N/A||9,780||8,806|
|(1)||Total includes expenditures for corporate assets.|
|(2)||Reserves and resources are presented on a gross basis, net to Athabasca.|
|(3)||Includes MacKay, Dover and Grosmont. Grosmont contingent resources are uneconomic using a 10% discount factor based on the January 1, 2012 pricing models of GLJ Petroleum Consultants Ltd.|
The company has filed its financial statements for the 12 month period and management's discussion and analysis (MD&A) for the three and 12 month periods ended December 31, 2011. These documents can be retrieved electronically from Athabasca's website (www.aosc.com and later this morning from SEDAR www.sedar.com).
Athabasca is focused on the development of oil resource plays in Alberta, Canada. It is a development stage company where the first significant revenues are planned in late 2012. The company is organized into two divisions Oil Sands and Light Oil.
Oil Sands Division
All of Athabasca's wholly-owned oil sands projects have progressed on schedule in 2011.
In Hangingstone, the company drilled 26 delineation wells and seven water wells during the 2010/2011 winter drilling program. The company also acquired 316 kilometres of 2D seismic and 46 square kilometres of 3D seismic. Athabasca paid $53.6 million for a 100% interest in 24,640 acres at Halfway Creek that consolidated its position in the Hangingstone area allowing for optimized development and project scale. On March 31, 2011 the company filed a regulatory application for its first 12,000 bbl/d in situ oil sands project at Hangingstone. Regulatory approval, internal sanction and the commencement of construction are anticipated in 2012. First production is targeted for 2014.
During the winter of 2010/2011 the company drilled 21 delineation wells, three water wells and acquired 13 square kilometres of 3D seismic to support a regulatory application for a 12,000 bbl/d SAGD project within the sandstones of the McMurray and Wabiskaw formations on its Dover West leases. The application was filed in December 2011 with first oil targeted for 2015. Work has been initiated on a 65 kilometre permanent access road to the Dover West area.
Athabasca successfully constructed a thermal assisted gravity drainage (TAGD) field test facility in the Dover West Leduc carbonates, in the first quarter of 2011, including drilling two horizontal wells and four vertical observation wells. Electric heaters were installed in the horizontal wells and the vertical wells were equipped with instrumentation. Heater performance has exceeded expectations and production commenced in late October ahead of schedule. Athabasca filed a regulatory application for a 6,000 bbl/d TAGD demonstration project in October. The company drilled 11 delineation and six water wells into the Leduc carbonates in 2010/2011.
The company drilled a 22 well winter delineation and a three water well program in addition to the acquisition of 100 kilometres of 2D seismic on its Birch holdings. The updated contingent resources were 1.9 billion barrels (best estimate). With additional drilling and a 3D seismic program Athabasca plans to submit a 12,000 bbl/d application in late 2012. A large part of the Birch lease remains unexplored and will require further evaluation to increase the resource.
Athabasca owns 50% and is operator of the Grosmont leases. Twelve delineation wells were drilled during the 2010/2011 winter program. The company continues to monitor the activities of other companies in the area and does not anticipate significant activity in the next year.
The development of the Dover and MacKay River oil sands projects is being carried out by Dover Operating Corp., a company jointly owned by Athabasca (40%) and Cretaceous Oil Sands Holdings Limited (Cretaceous) (60%), a wholly-owned subsidiary of PetroChina. In December 2011, Dover OPCO received full regulatory approval for the MacKay River commercial oil sands project. The application was submitted at the end of 2009 by Athabasca and achieved approval in 24 months. Athabasca exercised its MacKay River put option to sell its remaining 40% interest in MacKay River for gross proceeds of $680 million. The transaction is expected to close by the end of the first quarter of 2012. An application for a 50,000 bbl/d oil sands project on Dover was submitted in December, 2010 with regulatory approval expected in late 2012.
Light Oil Division
Athabasca now holds more than 1.9 million net acres of petroleum & natural gas (P&NG) rights in northwestern Alberta. This provides the company with significant exposure to prospective light oil and liquids-rich natural gas plays including the Montney, Nordegg, Duvernay and Charlie Lake formations.
In 2011, Athabasca spudded 19 horizontal wells and one vertical well. Six Montney and five Nordegg wells were completed by year-end. Initial results have been positive, particularly in the Montney formation where final test rates ranged from 300 to 2,250 boe/d with up to 80% liquids. See Athabasca's news release dated February 6, 2012 for additional information on these well-flow test results.
The company drilled and cored three vertical Duvernay wells in 2011 and continued one of them to a horizontal well, currently being tested. Approximately 640,000 acres of Athabasca's P&NG land holdings are prospective for the Duvernay and the company will continue to assess the formation on its holdings in 2012.
Athabasca acquired a total of 457 square kilometres of 3D seismic over its light oil acreage in 2011.
Given the early success of the program, in December 2011 the company approved development plans for Kaybob and Simonette which include constructing a 63 kilometre gas pipeline and two 10,000 bbl/d oil batteries. The company anticipates the facilities and pipeline will be fully operational during the third quarter of 2012. Athabasca continues its exploration efforts with 6 rigs active in the first quarter of 2012.
The board of directors approved a capital budget of $819 million for 2012 to invest in Athabasca's wholly-owned assets. Of that, approximately $403 million was for the Oil Sands division, $403 million for its Light Oil division and $13 million for corporate assets and other.
In 2012, the company expects to receive regulatory approval for the Dover commercial oil sands development (250,000 bbl/d at peak production) and the Hangingstone SAGD project. Athabasca also anticipates filing a regulatory application for a 12,000 bbl/d SAGD project at Birch. The Light Oil division expects to exit 2012 at 8,000 to 10.000 boe/d and currently has 1,200 to 1,300 boe/d on-stream on an interruptible basis and approximately 5,500 boe/d behind pipe awaiting completion of transportation and production infrastructure.
Athabasca is a dynamic, Canadian company focused on development of oil resource plays in Alberta, Canada. It has accumulated a large, high quality resource base suitable for extraction of extra heavy crude oil (bitumen) and light oil. The company is well financed and, with its excellent assets and talented people, Athabasca is poised to become a major Canadian oil producer. It aspires to produce 220,000 boe/d by 2020, half extra heavy oil and half light oil. Athabasca is traded on the TSX under the symbol ATH.
Conference Call Today March 15, 2012
7:30 am Mountain Time (9:30 am Eastern Time)
Athabasca Oil Sands Corp. will host a conference call today to discuss the 2011 year end results, March 15, 2012 at 7:30 a.m. MT (9:30 a.m. ET). To participate, please dial 888-231-8191 (toll-free in North America) or 647-427-7450 approximately 15 minutes prior to the conference call.
An archived recording of the call will be available from approximately 2:30 p.m. MT on March 15 until midnight on June 13, 2012 by dialing 855-859-2056 (toll-free in North America) or 416-849-0833 and entering conference password 56901822.
This News Release contains forward-looking information that involves various risks, uncertainties and other factors. All statements other than statements of historical fact are forward-looking statements. The use of any of the words "anticipate," "plan," "continue," "estimate," "expect," "may," "will," "project," "should," "believe," "predict," "pursue" and "potential" and similar expressions are intended to identify forward-looking statements. The forward-looking information is not historical fact, but rather is based on Athabasca's current plans, objectives, goals, strategies, estimates, assumptions and projections about Athabasca's industry, business and future financial results. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. No assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this News Release should not be unduly relied upon. These statements speak only as of the date of this News Release. In particular, this News Release may contain forward-looking statements pertaining to the following: Athabasca's reserves and resources; 2012 production; future production objectives including production goals by 2020 and the composition thereof; Athabasca's capital expenditure programs; Athabasca's drilling plans; Athabasca's plans for, and results of, exploration and development activities; Athabasca's estimated future commitments and business plans; Athabasca's plans with respect to the company's light oil assets. With respect to forward-looking statements and forward-looking information contained in this News Release, assumptions have been made regarding, among other things: existing and future well production rates, well drainage areas, success rates of future well drilling, and production growth; the timing of completion of facilities, including pipelines, the number of drilling rigs to be operated, Athabasca's ability to obtain qualified staff and equipment in a timely and cost-efficient manner; the regulatory framework governing royalties, taxes and environmental matters; the applicability of technologies for the recovery and production of Athabasca's reserves and resources; the sufficiency of budgeted capital expenditures to carry out planned activities future capital expenditures to be made by Athabasca; future sources of funding for Athabasca's capital programs; geological and engineering estimates in respect of Athabasca's reserves and resources; the geography of the areas in which Athabasca is conducting exploration and development activities; and Athabasca's ability to obtain financing on acceptable terms. Statements in this News Release relating to reserves and resources are deemed to be forward-looking information, as they involve the implied assessment, based on certain estimates and assumptions, that the described reserves and resources, as the case may be, exist in the quantities predicted or estimated, and can be profitably produced in the future. This news release contains estimates of the Company's contingent resources. There is no certainty that it will be commercially viable to produce any portion of the Company's contingent resources. The assumptions relating to Athabasca's reserves and resources are contained in the reports of GLJ Petroleum Consultants Ltd. dated effective December 31, 2011 and DeGolyer and MacNaughton Canada Limited dated effective December, 2011. The contingencies which prevent the classification of the resources as reserves are set out in Athabasca's Annual Information Form ("AIF") dated March 28, 2011, which is available on the SEDAR website at www.sedar.com
Actual results could differ materially from those anticipated in these forward-looking statements as a result of the risk factors set forth above and in the company's most recently filed annual Information Form, which is available on SEDAR, including: fluctuations in market prices for crude oil and natural gas; general economic, market and business conditions; variations in foreign exchange and interest rates; factors affecting potential profitability; uncertainties inherent in estimating quantities of reserves and resources; Athabasca's status and stage of development; failure to meet development schedules and potential cost overruns; increases in operating costs can make projects uneconomic; environmental risks and hazards and the cost of compliance with environmental regulations, including greenhouse gas regulations and potential Canadian and U.S. climate change legislation; failure to obtain or retain key personnel; the substantial capital requirements of Athabasca's projects; the need to obtain regulatory approvals and maintain compliance with regulatory requirements; extent of, and cost of compliance with, government laws and regulations and the effect of changes in such laws and regulations from time to time; changes to royalty regimes; failure to accurately estimate abandonment and reclamation costs; risks inherent in Athabasca's operations, including those related to exploration, development and production of crude oil and natural gas reserves and resources, including the production of crude oil and natural gas using multistage fracture and other stimulation technologies; the potential for management estimates and assumptions to be inaccurate; incorrect assessments of the value of acquisitions; long term reliance on third parties; reliance on third party infrastructure for project facilities; failure by counterparties to make payments or perform their operational or other obligations to Athabasca in compliance with the terms of contractual arrangements between Athabasca and such counterparties and the possible consequences thereof; the potential lack of available drilling equipment and limitations on access to Athabasca's assets; aboriginal claims; seasonality; hedging risks; risks associated with establishing and maintaining systems of internal controls; insurance risks; claims made in respect of Athabasca's operations, properties or assets; competition for, among other things, capital, the acquisition of reserves and resources, export pipeline capacity and skilled personnel; the failure of AOSC or the holder of certain licenses or leases to meet specific requirements of such licenses or leases; risks arising from future acquisition activities; volatility in the market price of the common shares. See also Athabasca's financial statements and Management's Discussion and Analysis for the year ended December 31, 2011, which are also available on SEDAR. Readers are cautioned that the foregoing list of risk factors should not be construed as exhaustive. The forward-looking statements included in this News Release are expressly qualified by this cautionary statement. Athabasca does not undertake any obligation to publicly update or revise any forward-looking statements except as required by applicable securities laws.
Oil and Gas Information
"BOEs" may be misleading, particularly if used in isolation. A BOE conversion ratio of six thousand cubic feet of natural gas to one barrel of oil equivalent (6 Mcf: 1 bbl) is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. In addition, as the value ratio between natural gas and crude oil based on the current prices of natural gas and crude oil is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.
The estimates of reserves and resources for individual properties may not reflect the same confidence level as estimates of reserves and resources for all properties, due to the effects of aggregation.
The well-flow test results disclosed in this news release are not necessarily indicative of long-term performance of the well or of ultimate recovery from the well.
For further information:
Vice President, Communications & External Affairs
Andre De Leebeeck
Director, Partner & Investor Relations
Manager, Investor Relations