TSX Trading Symbol: UTS
/NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR DISSEMINATION IN THE
CALGARY, Oct. 23 /CNW/ - UTS Energy Corporation ("UTS") today advises of
an update to the Fort Hills oil sands Project (the "Project"). The Project as
currently conceived, consists of an integrated oil sands mine and bitumen
extraction plant north of Fort McMurray and an upgrader northeast of Edmonton.
On September 17, 2008, together with our Fort Hills partners Petro-Canada
and Teck, we announced that the preliminary results from the Front End
Engineering and Design ("FEED") process indicated significant capital cost
inflation for a fully integrated Project. The Fort Hills partners continue to
review the preliminary cost estimates and assess options for development of
the Project, including the phasing of various aspects of the Project. The
selected development option will be reflected in the final FEED report at
which time Fort Hills will develop a definitive cost estimate, which will be
the basis for the final investment decision by the Fort Hills Partnership.
This decision is expected in the fourth quarter of 2008.
While no final decision has been taken by the Fort Hills Partnership, the
partners contemplate making the initial investment decision with respect to
only the mining and extraction portion of the Project. Due to several factors
including costs, current commodity, equity and credit market conditions, the
partners are considering deferral of any decision to construct the upgrader.
This would substantially reduce Project costs prior to first bitumen
production. The Fort Hills Partnership does not yet have a definitive cost
estimate for a stand-alone mine, extraction plant and infrastructure. However,
it is UTS' view that the costs associated with the mining and extraction
project would be in the range of $13 - $15 billion (including pre-FEED, FEED
costs of $1.5 billion, contingency and escalation). UTS' corresponding funding
requirements, after the current earn-in and cash on hand have been spent,
based on this preliminary estimate would be between $1.1 and $1.5 billion
(excluding fees and capitalized interest).
"This is a significant step forward in today's business environment. We
anticipate making the final investment decision on a mining and extraction
project before year end. We believe that proceeding prudently with a bitumen
project would decrease our overall funding requirements, and thereby extend
the duration of UTS' current funding into the first quarter of 2010," said
William Roach, President & Chief Executive Officer. "Moreover, this will allow
more time for the equity and debt markets to recover, at a time when we are
placing the additional funding required for the Project".
Proceeding with the Project is subject to certain regulatory approvals
being received. Fort Hills is working with the regulators and various
stakeholders to obtain the necessary approvals, which are expected in the
fourth quarter of 2008.
The Fort Hills Project, located 90 kilometres north of Fort McMurray, is
held by UTS with a 20% working interest, Teck with a 20% working interest and
Petro-Canada with a 60% working interest and operatorship.
UTS will be hosting a conference call upon release of its third quarter
report. The call will take place on Thursday, November 6, 2008 at 9:00 am
EDT/7:00 am MDT, and will include a discussion of the above information.
Details of the conference call will follow closer to the date.
FORWARD-LOOKING INFORMATION: Except for statements of historical fact
relating to the Company, this news release contains "forward-looking
information" within the meaning of applicable securities law. The
forward-looking statements in this press release include, but are not limited
to, statements with respect to the costs associated with the mining and
extraction portion of the Project and the timeline for a final investment
decision and obtaining regulatory approvals. With respect to the
forward-looking statements contained herein, the Company has made assumptions
regarding, among other things, the direct and indirect costs of goods,
services and labour, project management, exchange rates and other variables
affecting the costs of the mining and extraction Project and has based
estimated timelines on past experience and current expectations.
Forward-looking information is 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 information such as the references to the
Company's anticipated mine plan, drilling results, capital expenditures,
drilling plans, estimated resources and production estimates of bitumen
resources 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.
There are numerous uncertainties inherent in estimating bitumen, including
many factors beyond the Company's control, and no assurance can be given that
the indicated level of bitumen or the recovery thereof will be realized. In
general, estimates of bitumen are based upon a number of factors and
assumptions made as of the date on which the resource estimates were
determined, such as geological and engineering estimates, certain TV:BIP
ratios and pit boundaries, which have inherent uncertainties. The Company
undertakes no obligation to update forward-looking information 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 information.
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, Tel: (403) 538-7030