UTS added its Frontier Project to its contingent bitumen resource status following the results of an independent review of bitumen resources for its three major oil sands projects.
"These results demonstrate the ability of UTS and, specifically, its Exploration and Development Team to create long-term value," said William Roach, President and Chief Executive Officer. "Working alongside our partners, we have managed to create value from our initial assessment of the lands in 2005, to posting and purchasing the associated oil sands rights in 2006 and 2007, and then pursuing the exploration and delineation, to the point where we are currently planning oil sands mining projects based on significant contingent resources."
The three year exploration program has resulted in identifying two additional oil sands mining projects: the Equinox oil sands project ("Equinox Project") and Frontier oil sands project ("Frontier Project"), in both of which UTS holds a 50% working interest and Teck holds the other 50%.
UTS engaged Sproule Unconventional Limited ("Sproule") to prepare an independent opinion of the contingent bitumen resources of UTS effective as of December 31, 2008 (the "Sproule Report"). This included a geological evaluation of the Fort Hills Project and the Frontier Project, and an audit of the Equinox Project. Sproule also reviewed the methodology used to estimate these volumes from the current mine planning or preliminary pit design basis.
"These are very encouraging results, particularly in light of current commodity prices. As these prices recover, we would hope to see the improved economics reflected in our contingent resources as we can envisage higher recoverable volumes at each of the Frontier and Equinox Projects," said Dr. Roach.
Norwest Corporation, an independent geological and engineering consulting company, provided UTS and Teck with pit shell analyses for the Frontier Project pursuant to a report dated December 18, 2008. Utilizing standard mining criteria, Norwest developed preliminary ""mine pits with a total volume to bitumen-in-place ("TV:BIP") cutoff of 12:1 and 16:1. The Alberta Energy Resources Conservation Board considers TV:BIP 12:1 to be the minimum economic limit for surface mineable bitumen volumes. The TV:BIP ratio measures the total volume of material (overburden and oil sands) relative to the volume of bitumen in place; it considers how much material must be removed to access the oil sands as well as the ore grade, or in addition to the richness of the deposit. Given the prevailing cost/revenue environment in the oil sands industry a TV:BIP 16:1 pit was also developed to show the incremental potential for the area. The "Best" and "High" estimates used by Sproule and summarized in the table above are based on the mine pits developed by Norwest using a TV:BIP of 12:1 and 16:1 respectively.
"The Frontier and Equinox Projects provide a combined diversified asset base of some 940 million barrels of contingent bitumen resources net 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 Dr. Roach.
UTS has completed a preliminary drilling program on Leases 610 and 840, which constitute the northern extension of the Frontier Project, but additional infill drilling is required to fully define the resource potential in this area. On Lease 421 in the Firebag area, UTS has previously announced that five core holes, drilled in 2008, all encountered high grade oil sands, with thicknesses ranging from 10 to 25 meters. UTS is currently undertaking additional drilling on Lease 421 and expects to announce those findings shortly.
UTS has a 20% working interest in the Fort Hills Project and a 50% working interest in each of the Frontier and Equinox Projects. UTS also holds a 50% interest in other prospective oil sands leases.
The Fort Hills Project is an oil sands project to develop, mine, extract, potentially upgrade and sell the recoverable bitumen found in the Alberta Oil Sands Lease Nos. T05, 008 and T52, which cover a contiguous area of approximately 18,684 hectares (approximately 46,170 acres) and are located in northeastern Alberta approximately 90 kilometres north of Fort McMurray and 500 kilometers northeast of Edmonton.
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 kilometers north of Fort McMurray and 500 kilometers 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 kilometers north of Fort McMurray and 500 kilometers northeast of Edmonton.
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