Alberta Oilsands Posts Third Quarter Results, Reduces Capital Budget
Alberta Oilsands Inc. has announced its financial highlights for the three and nine months ended September 30, 2008.
Despite challenging market conditions, Alberta Oilsands' strong balance sheet has allowed it to adhere to its growth plan in the third quarter of 2008, keeping the Company on track to apply for a development permit in 2009 for its first oilsands pilot project. Alberta Oilsands is confident that its financing and field activities to date have positioned the Company to prove up sufficient bitumen resources to support one or more 10,000 barrel per day thermal oilsands in-situ projects on the Athabasca fairway of Northern Alberta.
Developments at Alberta Oilsands during the third quarter of 2008 included the following:
- An independent engineering update by Ryder Scott Company that resulted in a 59% increase in contingent (recoverable) resources, from 216 million barrels in October 2007 to 320 million barrels in June 2008.
- Raised $15.5 million by way of a bought-deal equity financing in August 2008.
- Obtained a net present value report by Ryder Scott Company that estimates the unrisked total value of Alberta Oilsands' Clearwater West and Clearwater East project areas at $464 million. The report uses a West Texas Intermediate oil price of US$55 per barrel and is before income tax and discounted at 10% per annum.
- Completed the quarter with working capital of $20.0 million
- Through Platform Resources Inc., a wholly subsidiary of Alberta Oilsands, has acquired two exploration concessions in Kenya, in the East African rift basin, as part of the Company's conventional legacy effort.
Although share prices and commodity prices have both declined significantly recently, the Company believes it has sufficient cash flow from conventional production and working capital to pursue its plans despite
current financial markets volatility.
Alberta Oilsands' current budget is aligned to focus its financial resources towards the development of the Clearwater project. Consequently, the 2009 capital budget has been reduced from $21 million to $13 million and may be revisited in the context of the financial markets.
Alberta Oilsands believes it has the potential to produce more than 60,000 barrels of oil per day from its existing oilsands properties. The Company has four potential in-situ projects and two additional prospect areas, maintains control over its capital program, holds a large land position and has a strong balance sheet. Alberta Oilsands raised $15.5 million in August 2008 to augment its working capital position and to fund the fall and winter 2008/2009 drilling programs.
The Company believes it has sufficient working capital to execute its 2008/2009 oilsands core drilling programs, to complete the requirements for a pilot project application in 2009, and to continue operations until the middle of 2010 when the application is expected to be approved and financial and commodity markets are expected to be much healthier.
Alberta Oilsands expects the impact of Alberta's new royalty program on its internal rate of return to be minimal. The Company believes that any impact of the revisions will be offset by new technologies that will lower
operating and capital costs. The Company intends to be very prudent in bringing value to its assets.
Management is acutely aware of the general financial conditions and has reduced the Company's capital program to defer exploratory projects while focusing on those projects that will get the Company to initial oilsands production as soon as possible. Alberta Oilsands believes that its philosophy of prudent capital management in these uncertain times will keep it well positioned to create long term value for shareholders.
- Alberta Oilsands Welcomes New Executive Member (Oct 18)
- Africa Oil, Alberta Oilsands Get Govt OK for Kenya Blocks (Aug 18)
- Alberta Oilsands Waves Goodbye to VP (Jul 07)