PetroChina, Athabasca Oil Sands Enter into Principles of JV Agreement

Athabasca Oil Sands announced that, subject to certain customary approvals, it has entered into a series of agreements with PetroChina International Investment Company Limited (PetroChina International), a wholly-owned subsidiary of PetroChina Company Limited (PetroChina), pursuant to which PetroChina will acquire a 60 per cent working interest in AOSC's MacKay River and Dover oil sands projects for a consideration of Cdn $1.9 billion. The agreements also provide for certain financing arrangements for AOSC. The projects are located in the centre of the Athabasca area in northeastern Alberta and have been independently assessed to contain approximately five billion barrels of best case contingent bitumen resource.

"Oil sands projects are very capital-intensive long-term investments and difficult to fully finance in the traditional equity market," said Bill Gallacher, Chairman, AOSC. "AOSC therefore decided to look for joint venture partners, and these strategic joint venture arrangements with PetroChina, one of the world's largest energy companies, can ensure that the MacKay River and Dover projects will be developed in timely manner, which is excellent news for Alberta and the rest of Canada."

He added that AOSC recently visited several of PetroChina's oil facilities in northeastern China where PetroChina operates a number of heavy-oil projects using sophisticated technologies, including various SAGD processes and firefloods. "Their field developments, operational methods, heavy-oil experience and research facilities are world class, and as a partner they will bring these very valuable attributes to the MacKay River and Dover projects in Alberta."

As joint venture partners, AOSC and PetroChina International intend to use common in-situ methods to develop their oil sands projects. AOSC has filed regulatory applications for approval of two pilot projects within the project areas with Alberta's Energy Resources Conservation Board and intends to file a regulatory application for the first 35,000 bbl/d phase of the MacKay River commercial project at the end of 2009.