UTS announces an adjustment to its contingent bitumen resource estimates
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TSX Trading Symbol: UTS
Sproule Unconventional Limited ("Sproule") has prepared an independent opinion of the contingent bitumen resources of UTS effective as of
"The most noticeable change to this year's reporting is at Fort Hills, where the best estimate company gross to UTS has been reduced by 98 million barrels of contingent bitumen resources," said
Howard Lutley, Vice President, Mining and Extraction, added, "The adjustment in mineable resource is largely driven by the requirements of the Energy Resources Conservation Board's Directive 74: Tailings Performance Criteria and Requirements for Oil Sands Mining Schemes. These resources are not lost permanently, but if eventually produced, will be subject to higher mining costs to recover since the dried tailings overlying the resource will have to be removed in addition to the existing overburden. This may be feasible in the later years of the mine life."
There is also a change at Frontier, where the best estimate company gross to UTS was reduced by 49 million barrels of contingent bitumen resources. This change is due to a revision to the west wall of the pit shell.
UTS has a 20 percent working interest in the Fort Hills Project and a 50 percent working interest in each of the Frontier and Equinox Projects. The reported resource estimates from 2009 are shown in the following table:
UTS Energy Contingent Bitumen Resources(1)
as of December 31, 2009
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Project Company Gross to UTS
Project Millions of Barrels Millions of Barrels
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Low Best High Low Best High
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Fort Hills 2,400 3,390(2) 4,350 480 678 870
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Frontier 930 1,450 2,550 465 725 1,275
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Equinox 230 330 380 114 166 189
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Total(3) 3,560 5,170 7,280 1,059 1,569 2,334
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(1) The term "contingent resources" is taken from 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 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. There is no certainty
that it will be commercially viable to produce any portion of the
contingent bitumen resources.
(2) The current Fort Hills Long Range Mine Plan is the basis of the Best
Estimate.
(3) Properties in summation have differing contingencies and have been
rounded.
Norwest, an independent geological and engineering consulting company, provided UTS and Teck Resources Limited ("Teck") with pit shell analyses for the Frontier Project pursuant to a report dated
"The Frontier and Equinox Projects provide a combined diversified asset base of some 891 million barrels of company gross contingent bitumen resources to UTS with significant added upside potential should oil prices rise above current levels and should our activities on our exploratory lands continue to show promise," said
Methodology
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'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 COGE Handbook.
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 project stage.
There is no certainty that any of the Fort Hills Project, 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 Fort Hills Project, 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; in the case of the Fort Hills Project, the acceptance within the Fort Hills partnership of the updates to the Fort Hills Project scope, timing, costs estimates and final Board of Directors approval of each of the Fort Hills Partnership general and limited partners; and those other risks and contingencies described below and under "Risk Factors" in UTS' annual information form 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.
UTS' Current Projects
UTS was instrumental in re-establishing the Fort Hills Oil Sands Project and is the principal founder of the Fort Hills Energy Limited Partnership. UTS holds a 20 percent working interest in the Fort Hills Project, a mature mining project, located 90 kilometres north of Fort McMurray.
Beyond the Fort Hills Project, UTS has identified additional development opportunities through a successful and ongoing lease acquisition and exploration program. UTS has a 50 percent working interest in each of the Frontier and Equinox Projects with its partner Teck. 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 north-eastern Alberta approximately 100 kilometres north of Fort McMurray and 500 kilometres northeast of
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
FORWARD-LOOKING INFORMATION: Except for statements of historical fact relating to UTS, this news release contains "forward-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: Dr. William J. F. Roach, President and Chief Executive Officer or Howard Lutley, Vice President, Mining and Extraction at (403) 538-7030
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