UTS Energy Corporation announces a plan of arrangement with Total E&P Canada
Ltd. and the creation of a new exploration and development company


TSX Trading Symbol: UTS

CALGARY, July 7 /CNW/ - UTS Energy Corporation ("UTS" or the "Company") is pleased to announce that its Board of Directors has unanimously approved a Plan of Arrangement (the "Plan") whereby Total E&P Canada Ltd. ("Total") will acquire all of the issued and outstanding common shares of UTS and, pursuant to the Plan, shareholders of UTS will receive cash consideration of $1.5 billion or $3.08 per UTS share (the "Cash Consideration") and shares in a new, publicly-traded exploration and development company, SilverBirch Energy Corporation ("SilverBirch").

The Cash Consideration to be received by UTS shareholders represents a 46% premium to UTS' closing price on July 6, 2010 of $2.11 per UTS share and a 36% premium to UTS' 30-day volume weighted-average trading price of $2.26 per UTS share.

UTS shareholders will also receive shares in SilverBirch whose assets will include a 50% interest in both the Frontier and Equinox Projects, interests in exploration oil sands leases and undeveloped lands as well as approximately $50 million in working capital (subject to adjustment). Upon completion of the transaction (which includes a planned 10:1 consolidation of SilverBirch shares), UTS' existing shareholders will own 100% of the SilverBirch shares outstanding.

As a result, the full proceeds that UTS shareholders will receive under the Plan include:

    -  Cash Consideration of $3.08 per UTS share
    -  Proportionate ownership in SilverBirch representing approximately
       $0.10 of working capital and 1.8 bbls of Contingent Resources (Best
       Estimate) per UTS share

"This transaction allows UTS shareholders to realize an immediate cash premium to UTS' current share price while also participating in the significant growth potential of SilverBirch", said John Watson, Chair of the UTS Board of Directors.

The Board of Directors of UTS, after receiving the recommendation of the Special Committee and fairness opinions from its financial advisors, has unanimously approved the Plan and recommends that UTS shareholders vote in favour of it. In addition, UTS' major shareholder (West Face Capital), management and directors, who collectively own approximately 15% of UTS' diluted shares outstanding, have signed agreements in support of the transaction.

SilverBirch Offers High Growth Opportunity

SilverBirch provides UTS shareholders with the opportunity to participate directly in a high growth exploration and development company to be led by Dr. William J. F. Roach and members of the UTS management team.

The primary assets of SilverBirch will initially be as follows:

    -  50% working interest in each of the Frontier and Equinox Projects
    -  50% working interest in an additional 83,712 hectares (209,280 acres)
       of exploration oil sands leases
    -  100% working interest in 23,040 acres of undeveloped lands also in
       the Athabasca Oil sands region with in-situ oil sands potential
    -  Approximately $50 million in working capital to provide forward
       funding of all planned activities for the next 18 months

                              Contingent Bitumen Resources(1)(2)
                                     (millions of bbls)
    Project   ---------------------------------------------------------------
                            Gross                    Net to SilverBirch
                 Low(3)      Best     High(3)     Low(3)     Best     High(3)
    Frontier       930      1,450      2,550        465       725      1,275
    Equinox        230        330        380        114       166        189
                            1,780                             891
    (1) Contingent bitumen resources signifies that these are recoverable
        resources and that have been independently evaluated by Sproule
        Unconventional Limited. Best Estimate assumes a 12:1 TV:BIP cut-off
        and High Estimate assumes a 16:1 TV:BIP cut-off.
    (2) Resources as at December 31, 2009.
    (3) Low and High estimates are not additive.

The Frontier and Equinox Projects, with a combined 891 million barrels of mineable Contingent Resources (Best Estimate) net to SilverBirch, collectively provide a solid foundation for SilverBirch. UTS currently expects regulatory applications to be filed for both of these Projects in 2011, and that the mine plans included in those applications will be at a 16:1 TV:BIP cut off (representing an additional 573 million barrels of resources net to SilverBirch). The value associated with both of these Projects is expected to increase as they are progressed towards regulatory approvals, expected in the 2013/2014 timeframe.

SilverBirch's 50% owned exploration portfolio of 209,280 acres of land provides further upside for future drilling programs. In addition SilverBirch will also have 100% ownership in 23,040 acres of recently acquired land with in-situ oil sands potential.

"The creation of SilverBirch provides a platform to unlock the intrinsic value of its existing assets and undeveloped lands through organic growth. SilverBirch also offers significant leverage to a proven management team with a demonstrated track record of making large resource discoveries, raising equity and creating shareholder value", said SilverBirch CEO, Dr. Roach.

Other Transaction Terms

The transaction will be completed by way of statutory Plan of Arrangement under the Canada Business Corporations Act. The Plan is subject to court approval and must be approved by two-thirds of the votes cast by UTS shareholders at a special meeting expected to be held in September 2010.

The Plan provides that UTS will pay Total a non-completion fee of $40 million in certain circumstances if the transaction is not completed. The Plan also includes customary non-solicitation and right to match provisions. Full details of the Plan will be included in an information circular, which will be mailed to UTS shareholders.

The closing of the transaction is subject to the receipt by Total and UTS of all court, stock exchange and other regulatory approvals, receipt of the requisite shareholder approvals of UTS, no material adverse change having occurred in UTS and a number of other matters customary in transactions of this nature.

RBC Capital Markets and TD Securities Inc. are acting as financial advisors to UTS with respect to the transaction and have provided the Board of Directors of UTS with opinions indicating that the consideration to be received under the Plan is fair, from a financial point of view, to the holders of UTS shares. Blake, Cassels and Graydon LLP are acting as legal counsel to UTS. Macleod Dixon LLP are acting as tax counsel to UTS.

Conference Call and Webcast Notice:

UTS will host a conference call and webcast today, July 7, 2010, at 7:00 a.m. (Mountain)/9:00 a.m. (Eastern) to discuss this transaction.

         From North America, please call: (888) 231-8191
         International and Local Dial-in: (647) 427-7450

Please register at least 10 minutes before the start of the conference call.

A live audio webcast of the conference call will be available via http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=3134780 or by going to UTS' website at www.uts.ca.

Recorded call playback is available until August 6, 2010 at (800) 642-1687, (passcode: 86470724 followed by the number sign) and replay of the webcast is available for 90 days at http://www.uts.ca

Business of UTS

UTS is focused on the creation of shareholder value through exploration, development and production of hydrocarbon resources, mainly mineable oil sands deposits from the Athabasca Oil Sands Area in north-eastern Alberta.

UTS is committed to responsible resource development by conducting its business in a manner that reduces environmental effects, protects workers' and communities' health and safety and recognizes stakeholder interests.

UTS Energy Corporation is based in Calgary, Alberta. The Company's common shares (UTS) are traded on the Toronto Stock Exchange.


The preparation and disclosure of the reported resource estimates are the responsibility of UTS' management with approval by the Company's Audit and Reserves Committee and Board of Directors. Sproule Unconventional Limited ("Sproule") has prepared an independent opinion of the contingent bitumen resources of UTS effective as of December 31, 2009. Sproule's responsibility is to express an opinion on the bitumen-in-place and contingent bitumen resources data based on the evaluation, audit or review. Sproule carried out the evaluation, audit or review in accordance with standards established by the Canadian Securities Administrators within National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities. Those standards require that the bitumen-in-place and contingent resources data be prepared in accordance with the Canadian Oil and Gas Evaluation Handbook ("COGE Handbook") as published by the Society of Petroleum Evaluation Engineers (Calgary Chapter) and the Petroleum Society of Canada.

The term "contingent resources" is taken from the COGE Handbook. The volumes listed in the chart above entitled, "Contingent Bitumen Resources" refer to potentially recoverable volumes of asphaltene reduced bitumen resources. The volumes of contingent bitumen resources in the above chart were calculated at the outlet of the proposed extraction plant.

Contingent resources are defined in the COGE Handbook as those quantities of petroleum estimated, as of 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 associated with a project in the early evaluation stage.

There is no certainty that either of the Equinox Project or the Frontier Project will produce any portion of the volumes currently classified as "contingent resources". The primary contingencies which currently prevent the classification of the contingent resources disclosed in the table above as reserves consist of: current uncertainties around the specific scope and timing of the development of each of the Equinox Project and the Frontier Project; lack of regulatory approvals for certain aspects of such projects; the uncertainty regarding marketing plans for production from the subject areas; improved estimation of project costs; commodity price fluctuations; and those other risks and contingencies described below and under "Risk Factors" in UTS' annual information form for the year ended December 31, 2009 dated March 23, 2010 available under UTS' profile at www.sedar.com. Contingent resources do not constitute, and should not be confused with, reserves. There is no certainty that it will be commercially viable to produce any portion of the contingent resources on any of the above mentioned properties.

The Frontier Project is an oil sands mining project associated with the development of that portion of the Athabasca Oil Sands Area identified by Alberta Oil Sands Lease Nos. 311, 468, 470, 477, 610 and 840 and is located in northeastern Alberta approximately 100 kilometres north of Fort McMurray and 500 kilometres northeast of Edmonton. The Equinox Project is an oil sands project related to the development of Alberta Oil Sands Lease No. 14 located in northeastern Alberta. The Equinox Project bisects the Pierre River Project, approximately 90 kilometres north of Fort McMurray and 500 kilometres northeast of Edmonton.

FORWARD-LOOKING INFORMATION: Except for statements of historical fact relating to UTS, this news release contains "forwarding-looking information" within the meaning of applicable securities law. The forward-looking statements in this press release relate to, but are not limited to, statements with respect to the Company's anticipated mine plan, drilling results, capital expenditures, drilling plans, estimated resources, rate of recovery 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. 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 is 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. UTS 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 at 403-538-7030

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