HONG KONG, Nov. 13, 2012
/PRNewswire/ -- Sunshine Oilsands Ltd. (the "Corporation" or
"Sunshine", HK: 2012) today is pleased to announce its unaudited
interim financial results for the three and nine month periods
ended September 30, 2012. All figures
are in Canadian dollars unless otherwise stated. Please see the
attached announcement for further information.
Highlights
Operational Update - Third Quarter of 2012:
Sunshine is a major holder and developer of oil sands resources,
with approximately 70 billion barrels of total Petroleum Initially
In Place ("PIIP"). The Corporation is focused on development of
these assets with the first phase of a 10,000 barrels per day
project, currently under construction at West Ells, scheduled for
start up in mid 2013. Sunshine is also progressing regulatory
approvals for two additional 10,000 barrels per day (total 20,000
barrels per day) projects at Thickwood and Legend Lake. Approvals
are expected in the first half of 2013. With over 4.96 billion
barrels of contingent resources and 445 million barrels of proved
plus probable ("2P") reserves, the Corporation has significant
commercial development potential. In addition, Sunshine has
recently updated its commercial development plans in the West Ells,
Thickwood and Legend Lake areas and is now targeting over 300,000
barrels per day of production from these areas, representing a 50%
increase in previously announced commercial production targets.
West Ells Development
As of September 30, 2012,
$110.9 million has been incurred for
West Ells equipment, engineering, construction, civil works,
drilling, completions and other project related expenditures. The
Project is currently on schedule and on budget for completion. The
Corporation estimates total capital investment for its West Ells
100,000 barrels project to approximate $3.5
billion. Sunshine remains focused on West Ells Phase One
construction, which has an initial production rate of 5,000 barrels
per day, followed by an already approved expansion to the planned
production capacity of 10,000 barrels per day. First steam is
expected to commence in mid-2013 and first production is expected
in the fourth quarter of 2013.
The access road to West Ells is now complete and ready for heavy
hauls. This will ensure that project milestones are met and that
the project will be completed on schedule for first steam in mid
2013. Subsequent to quarter end, on October
10, 2012, pilings for the Central Process Facility ("CPF")
commenced. As well, some of the major equipment, including a gas
turbine generator and an evaporator was in transit to marshalling
yards. Other major equipment still to be received includes steam
generators, free water knockout, pumps, and heat exchangers. Civil
construction of the CPF is approximately 40% finished, with
facilities general engineering approximately 75% complete.
In addition to the road and CPF, the first of Well Pad 2 SAGD
well pairs spudded on October 29,
2012. The camp is fully functional, and the borrow pits are
complete and in use. For capital commitments, 100% of the long lead
equipment has been ordered and approximately 80% of the secondary
long lead equipment has been procured. Phase 1 downhole completion
and production equipment have been ordered and drilling rigs
arrived on August 20, 2012. Drilling
rigs for the observation wells were mobilized and were spudded on
October 26, 2012. No major delays
have been encountered.
Thickwood and Legend Lake
In addition to the progress made on the 10,000 barrel per day
project applications approvals for both the Thickwood and Legend
Lake projects, the Corporation has progressed the Front End
Engineering and Design ("FEED") for Thickwood. This work is
approximately 10% complete. In addition, detailed baseline
environmental data collection is ongoing and is expected to be
completed by the end of 2012. This work provides information
required for project applications larger than 12,000 barrels per
day in anticipation of future commercial development plans.
Cold flow assets
The Corporation continues with the exploration and development
of its Muskwa heavy oil assets. As at September 30, 2012, five pads with 39 development
wells have produced a cumulative total of approximately 305,000
barrels. Muskwa cumulative production for the first 9 months of
2012 is barrels approximately 168,000, representing an average of
625 barrels per day. The Corporation continued production
optimization activities in the Muskwa field by implementing new
technologies and techniques for enhancing production, sand clean
out and other types of wellbore stimulations. The Corporation also
commenced construction of its planned pad extension to accommodate
future drilling. The Corporation received regulatory approval to
install electric heaters on two horizontal wellbores at its Muskwa
operations. Field work commenced late in the summer and is
scheduled to be completed in mid-fourth quarter of 2012. Muskwa
remains in the resource definition stage for the Corporation's
financial reporting purposes. As a result, the Corporation
capitalizes all costs incurred to date including operating costs
net of revenues.
The Board of Directors of the Corporation is pleased to announce
the results of the Corporation and its wholly-owned subsidiaries
for the three and nine month periods ended September 30, 2012 together with comparative
figures for the corresponding period in 2011 as follows:
President's Message to Shareholders
We are pleased to present to you the unaudited interim financial
results including the interim financial statements and management's
discussion and analysis of Sunshine Oilsands Ltd. ("Sunshine") for
the three and nine months ended September
30, 2012. This report presents a discussion of key
highlights for the first nine months of 2012, a performance update,
summary comments on developments and our 2013 outlook.
We would like to extend our sincere gratitude to you, our
shareholders, for your continued support and interest in Sunshine.
At Sunshine, we believe we have the assets and experience to
continue to pursue significant value-added opportunities. We
continue to focus on executing milestone undertakings in the West
Ells project area, where first steam is scheduled for mid-2013.
West Ells has an initial production target rate of 5,000 barrels
per day, which will be followed by an approved expansion to a
planned production capacity of 10,000 barrels per day. In addition
to West Ells activities, Sunshine is progressing regulatory
approvals for two additional 10,000 barrels per day projects, one
in Thickwood and one in Legend Lake.
Operational Review
At the start of the third quarter, we released the results of
our updated independently prepared Reserves and Resource Reports
(the "Reserves and Resource Reports"). These reports, dated
May 31, 2012, were prepared by GLJ
Petroleum Consultants Ltd. and DeGolyer and MacNaughton Canada
Limited and the results confirmed a substantial increase in our
recognized reserves and resources base.
Main highlights of the independently prepared Reserves and
Resource Reports include the following:
- 69 billion barrels of Total Petroleum Initially In Place
("PIIP"),
- 5 billion barrels of Best Estimate Contingent Resources with an
aggregate pre-tax PV10% value of $6.9
billion (increase of 1.9 billion barrels representing 63%
growth);
- 80 million barrels of proved ("1P") reserves with an aggregate
pre-tax PV10% value of $312 million
(increase of 78 million barrels);
- 445 million barrels of proved plus probable ("2P") reserves
with an aggregate pre-tax PV10% value of $918 million (increase of 26 million barrels);
and
- 603 million barrels of proved plus probable plus possible
("3P") reserves with an aggregate pre-tax PV10% of $1.6 billion (increase of 42 million
barrels).
The Reserves and Resources Reports confirmed significant
increases in PIIP and Best Estimate Contingent Resource recognition
in both the clastics and carbonates categories. PIIP recognition
increased by approximately 24 billion barrels to approximately 69
billion barrels. Clastics Best Estimate Contingent Resource
recognition increased by 1.2 billion barrels to 3.6 billion barrels
primarily due to the Corporation's drilling program in its core
areas of Harper, Opportunity and Pelican Lake. Carbonates Best
Estimate Contingent Resource recognition increased in the core
areas of Goffer, Muskwa and Portage, adding over 700 million
barrels. Based on this, our current share price is trading at a
significant discount to our PV10% resource and reserves value. At a
10% discount rate for 2P and Best Estimate Contingent Resource
before taxes, this equates to approximately HK$21.40 per share.
During the third quarter, development of our first phase Steam
Assisted Gravity Drainage ("SAGD") project at West Ells progressed
well. Activities throughout the summer and increasing through the
fall period continued to advance construction and development at
the West Ells site. The access road was completed as were the
borrow pits. Our camp is now fully functional. Pilings for the
Central Process Facility commenced on October 10, 2012. In addition, following quarter
end, some of the major equipment was in transit to marshalling
yards. Drilling rigs for the observation wells were mobilized and
our first SAGD well pair was spudded subsequent to quarter end on
October 29, 2012. No major delays
have been encountered in our planned West Ells construction
schedule.
Thickwood and Legend Lake continue to advance through the
regulatory process with approvals currently expected by mid-2013
for an initial10,000 barrels per day of production in each
area.
Financial Review
The successful completion of the initial public offering ("IPO")
on March 1, 2012 and the Listing on
the Stock Exchange of Hong Kong Limited have been significant
achievements. Sunshine raised gross proceeds of HK$4.5 billion (approximately $570 million) and secured significant investments
from cornerstone investors. With this financing, we secured a
financial platform that validates our business intent to develop
our large oil sands asset base.
Subsequent to the end of the third quarter, the Corporation
successfully secured a $200 million
credit facility with a syndicate of financial institutions, led by
Alberta Treasury Branches and Bank of China
(Canada). This oversubscribed facility was expanded from its
original size due to strong support from financial institutions
that included Bank of America N.A., Canada Branch, HSBC Bank
Canada, Morgan Stanley Senior Funding, Inc., Scotiabank,
Toronto-Dominion Bank, UBS AG Canada Branch and Industrial and
Commercial Bank of China (Canada).
This credit facility positions the Corporation well to complete
construction of the West Ells project, to fund front end costs of
the Thickwood project and to advance program and regulatory
development to expand capacity for the West Ells, Thickwood and
Legend Lake projects.
During September, the Corporation commenced a share buyback
program that ran from September 16 to
October 12, 2012. During that time, the Corporation
repurchased approximately 61 million shares. Sunshine continues
with an active investor relations effort throughout Asia, North
America and globally. We continue to emphasize the
attractiveness of the Corporation's value in communications with
existing shareholders and with potential new shareholders. In order
to increase the incentive for North American shareholders to buy
our stock, we applied and obtained conditional approval to list our
Class "A" common voting shares on the Toronto Stock Exchange.
Joint Venture Initiatives
Joint venture discussions continued during the third quarter. We
are pleased to confirm that we are continuing to work with Sinopec
International Petroleum Exploration and Production Corporation,
with whom we have a Memorandum of Understanding for strategic
cooperation, as well as other parties who have expressed interest
for involvement in our development of our attractive assets. We
look forward to reporting details of matured joint venture
discussions in a timely manner.
Corporate Review
The Corporation consistently maintains a disciplined approach in
health, safety and environmental issues and remains committed to
operating in a socially responsible manner with regularly conducted
emergency response training, and safety and environmental audits of
our operating facilities. We had no significant incidents to report
during the third quarter of 2012.
Sunshine also remains committed to working with local
stakeholders as we build an organization that is intended to be
meaningful in a global context.
Strategic Positioning
Sunshine has recently updated its commercial development plans
in the West Ells, Thickwood and Legend Lake areas and is now
targeting over 300,000 barrels per day of production from these
areas, representing a 50% increase in previously announced
commercial production targets.
With approximately 70 billion barrels of PIIP, Sunshine has a
significant presence in the north-western part of the Athabasca oil sands region that represents an
opportunity for investors seeking value growth. Our outlook for the
remainder of 2012 and looking ahead to 2013 is one of significant
promise. With over 4.96 billion barrels of contingent resources and
445 million barrels of 2P reserves, Sunshine has significant
commercial development potential with considerable upside. We are
confident that our internal development and evaluation efforts
complemented with broadening the market's understanding of
Sunshine's assets, will result in share price appreciation over
time. We continue to work towards first steam at West Ells by
mid-2013. Production from West Ells will provide immediate cash
flows to re-invest in our other planned capital projects, Thickwood
and Legend Lake. This should, combined with anticipated expansion
applications and approvals for our projects, increase probable and
proved reserves, which are typically ascribed to higher values in
active markets.
Sunshine has achieved several milestones during the first nine
months of 2012. These would not have been possible without the
committed efforts of our Board of Directors and our dedicated,
hard-working employees. We will continue to seek out and attract
talented people to sustain a high level of excellence in execution
of our corporate development plans. We believe in the immense
potential of our asset base and understand that to increase
shareholder value, we need to remain disciplined and focused on
project milestones and within our financial means. We look forward
to a busy winter season and are excited by the potential of our
planned development projects.
John Zahary
President and Chief Executive Officer
November 14, 2012
About Sunshine Oilsands Ltd.
Sunshine Oilsands Ltd. is one of the largest non-partnered
holders of oil sands leases by area in the Athabasca oil sands region, which is located
in the province of Alberta,
Canada. Since the Company's incorporation on 22 February 2007, Sunshine has secured over
464,897 hectares (1,148,785 acres) of oil sands leases (equal to
approximately 7% of all granted leases in this area).
The Company's principal operations are the exploration,
development and production of its diverse portfolio of oil sands
leases. Its principal operating regions in the Athabasca area are at West Ells, Thickwood,
Legend Lake, Harper, Muskwa, Goffer, Pelican and Portage.
Sunshine's oil sands leases are grouped into three main asset
categories: clastics, carbonates and conventional heavy oil.
For further enquiries, please contact:
Sunshine Oilsands
Ltd.
|
|
Mr. John
Zahary
|
Mr. David
Sealock
|
President &
CEO
|
Executive VP,
Corporate Operations
|
|
Tel:
+1-403-984-1446
|
Email:
investorrelations@sunshineoilsands.com
|
Website:
www.sunshineoilsands.com
|
SOURCE Sunshine Oilsands Ltd.