Alberta Oilsands Inc. announces 2009 yearend results
/NOT FOR DISTRIBUTION TO THE U.S.A. NEWS WIRE SERVICES OR FOR DISSEMINATION TO THE U.S.A./
CALGARY, April 26 /CNW/ - Alberta Oilsands Inc. ("Alberta Oilsands", "the "Company", "we", "us", or "our") (TSXV: AOS) is pleased to announce that it has filed with Canadian securities authorities its audited consolidated financial statements and management's discussion and analysis ("MD&A") for the year ended December 31, 2009. Copies of the filed documents may be obtained through www.sedar.com.
2009 Highlights
- Drilled eight core holes on its Fort McMurray Clearwater West
property as part of its winter 2009 capital program. The drilling
results continued to support the Company's assertion of the existence
of bitumen and provided additional reservoir technical information.
- These results allowed Alberta Oilsands to proceed with the
preparation of its pilot (Phase 1) project application which was
submitted in January 2010.
- Confirmed an economic relationship with the Fort McMurray Airport
Commission ("FMAC") by signing a memorandum of understanding in April
2009 and a subsequent definitive agreement in July 2009. The
strategic economic relationship provides Alberta Oilsands with access
to two and one-half sections of land at Clearwater West in exchange
for warrants and a gross overriding royalty on production from the
area.
- Drilled a successful conventional well at Ladyfern/Chinchaga in the
first quarter of 2009. Initial gross production from the well reached
5 million cubic feet per day (mmcf/d), with 3 mmcf/d in the third
quarter of 2009 and 2 mmcf/d in the fourth quarter of 2009. Alberta
Oilsands has a 50% interest in the well, resulting in an average of
167 boe/d net to the company in 2009. The Company's total production
in 2009 averaged 233 boe/d.
- Announced a 20% increase in the assigned contingent resources at
Clearwater West to 182.5 million barrels of contingent bitumen
resources. This amount is based on a mid case or "best estimate" by
the Ryder Scott Company of Canada, Petroleum Consultants, effective
June 1, 2009. The updated resource report was prepared in compliance
with National Instrument 51-101 (see "Review of Oilsands Operations"
and "Contingent Resource Estimate" in the MD&A).
- Increased the designed production capacity of its Clearwater West oil
sands project as it is expected to utilize six well pairs in a
stacked configuration instead of three well pairs.
- Increased our financial flexibility in October and November 2009 by
entering into a bought-deal financing agreement with a syndicate of
underwriters. The over-allotment option was exercised, increasing the
gross proceeds from the financing to $10.9 million.
Review of Oilsands Operations
Fort McMurray Clearwater West
With the submission of its Clearwater West oil sands project application in January 2010, Alberta Oilsands is moving closer to extracting bitumen through low-pressure steam assisted gravity drainage. Agreements have been entered into with commercial partners to assist in finding the resources to proceed with the project.
The Clearwater West pilot project lands are located just north of Highway 69, the east-west highway that connects to Highway 63 running from Edmonton to Fort McMurray. Alberta Oilsands has a 100% working interest in the area subject to the 2% GORR on 2 of the 28 sections pursuant to the FMAC agreement. This project has been fully delineated with an average density of 10 core holes per section.
The revised pilot project plan for Clearwater West is designed to extract the area's bitumen through low pressure steam-assisted gravity drainage (LP SAGD) and expanding solvent (ES) SAGD using stacked SAGD well pairs. The operating parameters from Computer Modeling Group's STARS reservoir simulation suggests an average production rate of up to 4,500 bpd over three years once the project is fully operational, an average operating steam to oil ratio of 2.0 over the project life and a recovery factor ranging from 50% to 55%. If the Clearwater West project receives all the necessary approvals and the pilot project is successful, commercial production is expected to be up to 10,000 bpd once a commercial project is fully operational.
A significant development at Clearwater West in the third quarter of 2009 was the signing of a definitive agreement with the Fort McMurray Regional Airport Commission ("FMAC"). The agreement creates an economic relationship between Alberta Oilsands and the FMAC by outlining the rights, obligations and commercial terms of a GORR and warrants Alberta Oilsands is granting the FMAC in return for access to certain airport lands related to the Clearwater West project (so long as the Company's operations do not interfere with the safety or proper operation of the airport), and to work with Alberta Oilsands on planning and logistics of any operation on airport lands. Although we have always had a positive relationship with the FMAC, this agreement entrenches the relationship, allows us to expedite the development of our Clearwater West project and has the potential to provide considerable economic benefits to both parties for years to come.
As part of the formal agreement, Alberta Oilsands granted the FMAC a 2% GORR on the oilsands rights held by AOS in 88-8-W4M: Sections 21 and 22 in the Clearwater West project area, as well as four million warrants to purchase Alberta Oilsands shares at a weighted average price of $0.75 per share.
It should be noted that assessments of Alberta Oilsands' properties, production and prospects constitute forward-looking statements. 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 that could cause actual events or results to differ materially from those projected in the forward-looking statements. See "Forward-looking Statements and Information."
Clearwater East and North
Alberta Oilsands also has potential project areas south and north of the Clearwater River. The three Clearwater project areas total 28 sections of oil sands leases at a 100% working interest. Both Clearwater West and Clearwater East are in the McMurray formation bitumen sand isopach (thickness) trend mapped by the Alberta Geological Survey. The Company believes each area has the potential to support its own commercial project. In 2010/2011 Alberta Oilsands plans to drill core holes at Clearwater East and Clearwater North.
Hangingstone East
Alberta Oilsands and its partner have launched a core hole drilling program designed to explore the potential for an oil sands project at Hangingstone East. In 2008, Alberta Oilsands entered into an agreement whereby Alberta Oilsands pooled its 23 sections in Hangingstone with the partner's 15.5 sections in the adjacent Halfway Creek properties. Each partner now has a 50% working interest in 38.5 sections of contiguous land 45 kilometres southwest of Fort McMurray along Highway 63. The partners have agreed to work jointly on the assets throughout 2010. To determine the potential for this area to support a commercial bitumen project, 13 core holes (6.5 net) have been drilled on this block in the 2009/2010 drilling season. Alberta Oilsands spent $572,000 in 2009 in Hangingstone East on core hole drilling and seismic data. There is a 3% gross overriding royalty applicable to this property which Alberta Oilsands is responsible for the total burden.
Review of Conventional Operations
Although we remain focused on Alberta's oilsands, we also have relevant conventional assets to support our oilsands development. Our conventional assets provide modest cash flow to help defray administrative costs.
Our Ladyfern Slave Point discovery well (Hamburg 13-29) continues to produce and provide cash flow. The well came on stream on April 1, 2009 and produced an average of 1.0 million cubic feet net to the Company of natural gas per day during the fourth quarter of 2009. Alberta Oilsands has earned 11 sections (5.5 net) of land in the area. The Company plans a follow up to this well by drilling in a prospect at Ladyfern South (Hamburg) 05-05-095-12W6 location. Due to access, this will likely occur in the first quarter of 2011.
In the third quarter, we drilled and abandoned a well at 16-29-57-12W5M at Mahaska. Prospect potential remains at Mahaska which may be pursued at a later date. The Mahaska area consists of 18 sections (9 net) targeting the Blueridge (Nisku) potential. Two farm-in Hines Creek area locations were drilled in November and December 2009. The Dixonville 09-13-086-02W6 location was abandoned as it did not encounter any hydrocarbon accumulations. The Jack 06-30-085-03W6 location was drilled to target depth and was cased. The open hole logs indicated likely hydrocarbon potential; however, upon completion, the zone produced only formation water. The wellbore was subsequently plugged and abandoned. AOS earned 50% in 17 sections of petroleum and natural gas rights in the area.
Drilling of the Wildmint, B.C. prospect was initiated in the fourth quarter of 2009 and drilled into the first quarter of 2010. The Windmint c-5-d 94-H-1 wellbore remains standing with positive gas indications. The commerciality of this drill remains inconclusive. A vertical seismic profile (VSP) was acquired after drilling the well to total depth. The operator may recommend, subject to further interpretation of the VSP and additional seismic data, to drill a sidetrack well in the fourth quarter of 2010.
Alberta Oilsands' conventional production in 2009 averaged 233 boe/d, comprising 66 bbls/d of oil and natural gas liquids (NGLs) and 1,004 mcf/d of natural gas. The current production of approximately 200 boe/d includes 50 boe/d from the Company's legacy conventional properties and approximately 150 boe/d of natural gas and NGLs from the Ladyfern (Hamburg) 13-29 well.
Financial and Operating Summary
Financial
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Three months ended December 31
2009 2008 2007
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Statement of Operations and Deficit
Petroleum and natural gas
sales ($) 826,073 366,542 475,589
Petroleum & natural gas sales per
boe ($) 40.63 59.98 74.86
Daily sales volumes (boe 6:1) 222 66 69
Net loss for the period ($) (1,035,940) (1,985,137) (1,002,898)
Net loss per share - basic and
diluted ($) (0.01) (0.02) (0.02)
Statement of Cash Flows
Funds used in operations ($)(1) (776,513) (485,453) (418,165)
Cash flow used in operations ($) (932,314) (397,166) (508,543)
Capital expenditures ($) 3,202,536 4,990,133 4,683,196
Weighted average number of shares
- basic and diluted 91,763,951 79,651,375 53,278,147
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Years ended December 31
2009 2008 2007
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Statement of Operations and Deficit
Petroleum and natural gas
sales ($) 2,979,929 2,032,513 2,980,974
Petroleum & natural gas sales per
boe ($) 35.10 91.39 67.08
Daily sales volumes (boe 6:1) 233 61 122
Net loss for the year ($) (3,660,479) (4,734,313) (2,754,755)
Net loss per share - basic and
diluted ($) (0.04) (0.07) (0.06)
Statement of Cash Flows
Funds used in operations ($)(1) (1,822,947) (1,666,344) (748,317)
Cash flow used in operations ($) (1,981,138) (1,257,504) (581,763)
Capital expenditures ($) 12,724,649 15,623,603 20,221,545
Total assets ($) 59,100,404 56,416,889 37,083,599
Total liabilities ($) 6,859,459 8,640,602 6,002,376
Shareholders' equity ($) 52,240,945 47,776,287 31,081,223
Weighted average number of shares
- basic and diluted 82,704,408 68,689,821 42,765,794
(1) Alberta Oilsands' method of calculating funds from operations may
differ from that of other corporations and, accordingly, may not be
comparable to measures used by other corporations. Alberta Oilsands
calculates funds from operations by taking cash flow from operating
activities as determined under GAAP before the change in non-cash
working capital related to operating activities and abandonment
expenditures incurred.
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Three months ended Years ended
December 31 December 31
2009 2008 2009 2008
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Production
Oil and NGL (bbls/day) 51 59 66 54
Natural gas (mcf/day) 1,030 43 1,004 43
boe/day (6:1) 222 66 233 61
2009 2008 2009 2008
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Commodity Prices
Oil and NGL ($/bbl) 74.51 61.96 63.17 96.63
Natural gas ($/mcf) 5.11 7.29 4.02 8.67
boe ($/boe) 40.63 59.98 35.10 91.39
Revenues
Oil and NGL ($) 342,162 337,413 1,506,985 1,896,386
Natural gas ($) 483,911 29,129 1,472,944 136,127
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Total ($) 826,073 366,542 2,979,929 2,032,513
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2009 2008 2009 2008
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Royalties ($) 234,847 64,683 409,963 298,470
% of revenues 29 17 14 15
$/boe 11.48 10.58 4.82 13.42
Production and
transportation
expenses ($) 379,180 179,301 1,529,898 806,421
$/boe 18.54 29.34 17.99 36.26
Netbacks 2009 2008 2009 2008
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Revenue ($/boe) 40.63 59.98 35.10 91.39
Royalties ($/boe) 11.48 10.58 4.82 13.42
Operating expenses ($/boe) 18.54 29.34 17.99 36.26
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Field netbacks ($/boe) 10.61 20.06 12.29 41.71
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Outlook
Alberta Oilsands' working capital of $9.7 million as at December 31, 2009 provides the Company with financing for the remaining flow-through commitment expenditures of $5.0 million, fund the balance of the general and administrative expenses that are in excess of the Company's conventional petroleum production and provide financing for additional capital expenditures on both the conventional assets as well as the oil sands properties.
Alberta Oilsands submitted an application for the Company's first oil sands pilot (Phase 1) project to the Energy Resource Conservation Board and Alberta Environment on January 15, 2010. The application moves Alberta Oilsands one step closer to its vision of a 10,000 barrel per day steam-assisted gravity drainage (SAGD) commercial bitumen extraction project at Clearwater West.
Alberta Oilsands realizes it will not be able to reach the potential of its oil sands assets on its own. Fortunately, financial and potential joint-venture partners have shown considerable interest in partnering with the Company in the development of its assets. The renewed interest in Alberta Oilsands is related both to continued efforts internally as well as a resurgence of interest in the oil sands in general...
Interim Filings
The Company will file its MD&A and consolidated financial statements and notes thereto as at and for the year ended December 31, 2009 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 MD&A as at and for the year ended December 31, 2009, 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.
Disclosure of Resources - "Resources" are quantities of petroleum that are estimated to exist originally in naturally occurring accumulations, including the quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations, prior to production, plus those estimated quantities in accumulations yet to be discovered.
"Contingent resources" are defined as those quantities of petroleum estimated, on 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.
There is no certainty that it will be commercially viable for the Company to produce any portion of the bitumen resources detailed in this news release. The estimated future net revenues and values contained in this news release do not necessarily represent the market value of such resources. The high level of uncertainty associated with the Company's possible recovery of any of these resources is the result of various risks and uncertainties including: current uncertainties around the specific scope and timing of the development of the Company's Fort-McMurray properties; the ability of the Company to finance any potential oil sands projects at its Fort-McMurray properties; proposed reliance on technologies that have not yet been demonstrated to be commercially applicable in oil sands applications; lack of regulatory approvals; the uncertainty regarding marketing plans for production from the subject areas; and improved estimation of project costs. There are a number of inherent risks and contingencies associated with such development, including commodity price fluctuations, project costs and those other risks and contingencies discussed in more detail in the sections entitled "Forward-looking Statements and Information" in this news release.
Resources, undiscovered resources and contingent resources do not constitute, and should not be confused with, reserves.
Forward-looking Statements and Information - Certain information regarding the Company set forth in this news release, including management's assessment of the Company's future plans, operations, properties, production and prospects contains forward looking information and statements that involve substantial known and unknown risks and uncertainties. In some cases, forward looking information and statements can be identified by terminology such as "may", "will", "should", "intends", "expects", "projects", "plans", "anticipates", "targets", "believes", "potential", "estimates", "continues", "designed", "objective", "maintain", "schedule" and similar expressions or statements that certain events or conditions "may" or "will" occur. In particular, this news release contains forward-looking statements and information with respect to: (i) possible in-situ development (including the timing of such development) on the Company's oilsands properties, including in respect of pilot projects and further development in respect of its Clearwater West, East and North project areas located in its Fort McMurray properties and the joint development of its Hangingstone East project area with its pooling partner in the area; (ii) expectations regarding future developments costs and the ability to fund such costs; (iii) the Company's plans with respect to its conventional properties and expected results relating thereto; (iv) future values that may be attributable to the Company's oil and gas properties; (v) the ability of the current working capital levels of the Company to maintain future capital expenditures; (vi) the Company's projected capital budget; (vii) successful results from the Company's core drilling program; (viii) crude oil, natural gas and bitumen production levels; (ix) the continued economic viability of the Company's projects; * a regulatory regime that will be conducive to the Company completing its projects (including in respect of environmental regulation and royalty rates); and (xi) projections of market prices and the demand for the commodities the Company produces or intends to produce. Such forward-looking statements and information are based on the opinions, assumptions 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 and information. These factors include the inherent risks involved in the exploration and development of oilsands 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 oilsands-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 financial statements and management discussion and analysis for the year ended December 31, 2009 and the Company's current Annual Information Form all of which are available at www.sedar.com. The Company undertakes no obligation to update such forward-looking statements or information if circumstances or management's estimates or opinions should change, unless required by law.
Statements relating to "resources" are deemed to be forward looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the described resources exist in the quantities predicted or estimated, and can be profitably produced in the future. See "Disclosure of Resources" in this news release.
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.
Alberta Oilsands is a technically driven high growth energy company focused on the development and conversion of the Company's oilsands resources to reserves and the creation of long term sustainable value by increasing production and cash flow on relevant conventional oil and natural gas assets.
%SEDAR: 00020297E
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, [email protected]; or Chad Dust, Executive Vice-President, T: (403) 538-3191, [email protected]; Company website: www.aboilsands.ca
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