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Press release from CNW Group

Athabasca Accelerates Development at Hangingstone and Dover West

Monday, November 29, 2010

Athabasca Accelerates Development at Hangingstone and Dover West06:00 EST Monday, November 29, 2010CALGARY, Nov. 29 /CNW/ - Athabasca Oil Sands Corp. (TSX:  ATH) announces it has approved the accelerated development of its Hangingstone and Dover West bitumen properties, located in northern Alberta.Hangingstone Multi-Phase DevelopmentThe first phase of the Hangingstone development is anticipated to be commissioned as a 12,000 barrels/day steam assisted gravity drainage (SAGD) demonstration project.  First steam could be as early as late 2013.  Athabasca expects to file its regulatory application for this first phase in the second half of 2011.  It is the initial segment of a multi-phase development plan in the Hangingstone area.  The second phase development is estimated at 25,000 barrels/day, with start-up possibly as early as 2016.According to Sveinung Svarte, Athabasca's president and CEO, the November 9, 2010 acquisition of Excelsior Energy Limited resulted in a project area with sufficient resources to obtain critical size and economy of scale. "The currently identified contingent resource base supports the development of a project of more than 70,000 barrels a day," Svarte says. "In addition, the company has also entered into an agreement with Bounty Developments Ltd. to acquire the remaining 25% interest in the Hangingstone acreage acquired through the purchase of Excelsior."Dover West DevelopmentThe company is also pleased to report an acceleration of planned production for its Dover West area, containing approximately 2.0 billion barrels of contingent resources (best estimate) in the Cretaceous oil sands and approximately 2.7 billion barrels of contingent resources (best estimate) in the Leduc carbonate rock of Devonian age. Svarte says of Dover West, "The Leduc carbonate reef has a net pay of up to 100 to 150 metres and this gives us the potential of 250,000 barrels a day ultimate production from this reservoir.  We also believe the oil sands could produce another 165,000 barrels a day."The company currently plans to file a regulatory application the second half of 2011, for a demonstration SAGD project of a size up to a 12,000 barrels/day and first steam possibly as early as year-end 2014.  Subsequent phases will likely be sized between 25,000 and 35,000 barrels/day.Athabasca has applied for regulatory approval to conduct two experimental tests at Dover West.  The first test will use steam injection to evaluate SAGD in the Leduc.  The second is a two-well conduction heating trial to assess the effectiveness of thermal assisted gravity drainage (TAGD) in the same zone.Ultimate Development Potential"Our enviable financial position of more than $1.8 billion in working capital enables us to move quickly to develop the Hangingstone and Dover West projects earlier than anticipated," Svarte adds.  "These are aggressive targets and we are excited by the prospect of faster bitumen production.  Assuming the first phase at Hangingstone goes as planned, our strategy is rapidly get the second phase underway for a commercial project."Athabasca currently plans to undertake an ambitious field operations program this winter with drilling activity in the Birch, Grosmont, Dover West and Hangingstone areas.  The company expects to employ 14 drilling rigs to drill approximately 140 core-hole wells.  Since seismic acquisition is an important aspect of oil sands delineation, the current plan is to acquire three 3D seismic surveys of approximately 60 square kilometres in addition to approximately 130 kilometres of 2D seismic data.Bill Gallacher, Athabasca's chair of the board says, "Athabasca has an excellent portfolio of short, medium and long-term assets to develop.  We expect these assets will deliver production growth for the next 40 years as each project is developed and brought on-stream."Athabasca is a dynamic oil sands company formed to develop and produce bitumen in the Athabasca region of northeastern Alberta.  It was incorporated in 2006 with a goal to use the latest technology to produce bitumen in a sound and safe manner.  It has excellent assets, talented people and is well financed.The company's shares are traded on the Toronto Stock Exchange under the trading symbol ATH.  It has a current market capitalization of $4.9 billion.NOTE TO ANALYSTS AND EDITORS:  Sveinung Svarte will presentAthabasca's updated story with a live webcast presentation at FirstEnergy/Société Générale Montreal Energy ConferenceThursday, December 2, 2010, 9:50 AM ESTTo listen and view this online event, please visit:  http://jetslides.tv/lobby/316. The presentation is now available at www.aosc.com.Reader AdvisoryThis News Release contains forward-looking information that involves various risks, uncertainties and other factors. All statements other than statements of historical fact are forward-looking statements. The use of any of the words "anticipate", "plan", "continue", "estimate", "expect", "may", "will", "project", "should", "believe", "predict", "pursue" and "potential" and similar expressions are intended to identify forward-looking statements. The forward-looking information is not historical fact, but rather is based on AOSC's current plans, objectives, goals, strategies, estimates, assumptions and projections about AOSC's industry, business and future financial results. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. No assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this News Release should not be unduly relied upon. These statements speak only as of the date of this News Release. In particular, this News Release may contain forward-looking statements pertaining to the following: AOSC's capital expenditure programs; the estimated quantity of AOSC's Probable and Possible Reserves and Contingent Resources; AOSC's drilling plans; AOSC's plans for, and results of, exploration and development activities;; AOSC's plans with respect to the Birch and Grosmont assets; the completion of the acquisition of the remaining  25% interest in the Hangingstone asset; AOSC's plans with respect to its Hangingstone and Dover West assets including the timing for submission of the applications for and receipt of project approvals, the expected timing of first steam and the projected size of subsequent phases, anticipated future production from and the subsequent development of the Hangingstone and Dover West assets; the pro-forma effect of the Excelsior transaction on AOSC's resources and undeveloped land position; and the timing for receipt of regulatory approvals. With respect to forward-looking statements and forward-looking information contained in this News Release, assumptions have been made regarding, among other things: AOSC's ability to obtain qualified staff and equipment in a timely and cost-efficient manner; the regulatory framework governing royalties, taxes and environmental matters in the jurisdictions in which AOSC conducts and will conduct its business; the applicability of technologies for the recovery and production of AOSC's reserves and resources; future capital expenditures to be made by AOSC; future sources of funding for AOSC's capital programs; AOSC's future debt levels; geological and engineering estimates in respect of AOSC's reserves and resources; the geography of the areas in which AOSC is conducting exploration and development activities; and AOSC's ability to obtain financing on acceptable terms. Actual results could differ materially from those anticipated in these forward-looking statements as a result of the risk factors set forth above and under the headings "Notice to Investors -Forward-Looking Statements" and "Risk Factors" in the Company's prospectus dated March 30, 2010, which is available on the SEDAR website at www.sedar.com ("Prospectus"), including: fluctuations in market prices for crude oil and bitumen blend; general economic, market and business conditions; dependence on the PetroChina subsidiary as the joint venture participant in the MacKay River and Dover oil sands projects; variations in foreign exchange and interest rates; factors affecting potential profitability; the global financial crisis; uncertainties inherent in estimating quantities of reserves and resources; AOSC's status and stage of development; uncertainties inherent in Steam Assisted Gravity Drainage ("SAGD"), Cyclic Steam Stimulation ("CSS") and other bitumen recovery processes; the potential for adverse consequences in the event that AOSC defaults under certain of the PetroChina Transaction Agreements (as defined in the Prospectus); environmental risks and hazards and the cost of compliance with environmental regulations, including greenhouse gas regulations and potential Canadian and U.S. climate change legislation; failure to obtain or retain key personnel; the substantial capital requirements of AOSC's projects; the need to obtain regulatory approvals and maintain compliance with regulatory requirements; extent of, and cost of compliance with, government laws and regulations and the effect of changes in such laws and regulations from time to time; changes to royalty regimes; political risks; failure to accurately estimate abandonment and reclamation costs; risks inherent in AOSC's operations, including those related to exploration, development and production of oil sands reserves and resources, including the production of oil sands reserves and resources using SAGD, CSS or other in-situ technologies; the potential for management estimates and assumptions to be inaccurate; long term reliance on third parties; reliance on third party infrastructure for project facilities; failure by counterparties to make payments or perform their operational or other obligations to AOSC in compliance with the terms of contractual arrangements between AOSC and such counterparties and the possible consequences thereof; the potential lack of available drilling equipment and limitations on access to AOSC's assets; aboriginal claims; seasonality; hedging risks; risks associated with establishing and maintaining systems of internal controls; insurance risks; claims made in respect of AOSC's operations, properties or assets; the potential for adverse consequences as a result of the change of control provisions in the PetroChina Transaction Agreements; competition for, among other things, capital, the acquisition of reserves and resources, export pipeline capacity and skilled personnel; the failure of AOSC or the holder of certain licenses or leases to meet specific requirements of such licenses or leases; risks arising from future acquisition activities; risks relating to the reliance on financial information, including that financial information does not reflect the added costs that AOSC expects to incur as a public entity; volatility in the market price of the common shares; the effect that the issuance of additional securities by AOSC could have on the market price of the common shares; incorrect assessment of the value of the Excelsior transaction; failure to realize the anticipated benefits of the Excelsior transaction; and risks relating to AOSC's dividend policy. In addition, information and statements in this News Release relating to "reserves" and "resources" are deemed to be forward-looking information and statements, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves and resources described exist in the quantities predicted or estimated, and that the reserves and resources described can be profitably produced in the future. The assumptions relating to AOSC's reserves and resources are contained in the reports of GLJ Petroleum Consultants Ltd. dated effective April 30, 2010, DeGolyer and MacNaughton Canada Limited dated effective April 30, 2010 and the report of McDaniel & Associates Consultants Ltd. dated effective December 31, 2009. The risks and uncertainties referred to above are described in more detail in AOSC's prospectus dated March 30, 2010 and in AOSC's Statement of Oil and Gas Reserves Data and Other Oil and Gas Information for the Year Ended December 31, 2009, each of which is available on the SEDAR website at www.sedar.com.  See also AOSC's press release issued on June 9, 2010 and its material change report dated June 18, 2010.  Readers are cautioned that the foregoing list of risk factors should not be construed as exhaustive. The forward-looking statements included in this News Release are expressly qualified by this cautionary statement. AOSC does not undertake any obligation to publicly update or revise any forward-looking statements except as required by applicable securities laws.Note on Dover West Leduc Carbonate Resources The company's resources at its Dover West Leduc Carbonates asset is contained in carbonate reservoirs. SAGD and Cyclic Steam Stimulation ("CSS"), the proposed in-situ bitumen recovery processes to develop this asset, are considered to be "technology under development" in carbonate reservoirs. The successful development of the company's carbonate reservoirs depends on, among other things, the successful development and application of SAGD and CSS or other recovery processes to carbonate reservoirs. Although the technology has been developed for application to non-carbonate reservoirs, there are no known successful commercial projects that use SAGD or CSS to recover bitumen from carbonate formations and there exists a large range in the expected recoverable volumes, the lower end of which may not be economically viable. The principal risks associated with SAGD and CSS recovery in carbonate reservoirs are (i) the possibility of unexpected steam channelling which would increase steam requirements resulting in increased costs and potentially reduced economically recoverable bitumen volumes, and (ii) potential mechanical operating problems due to production of fines which could cause wellbore plugging and reduced bitumen production rates and potential interruption of surface production operations. Although the technical risks associated with "technology under development" have been accounted for in the independent resource evaluation of the Dover West Leduc Carbonates asset, the timeline for verification of "technology under development" has inherent uncertainty. Development will involve significant capital expenditures and a lengthy time to project payout and project payout is not assured. If a pilot project and/or the technology under development do not demonstrate potential commerciality in carbonate reservoirs then the company's projects on these assets may not proceed and this may occur only after significant expenditures have been incurred by the company.For further information: Heather DouglasVice President, Communications & External Affairs(403) 532-7408    hdouglas@aosc.com