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Press release from CNW Group

Athabasca Oil Sands Corp. Announces Filing of 2010 Fourth Quarter Financial Statements

Wednesday, March 02, 2011

Athabasca Oil Sands Corp. Announces Filing of 2010 Fourth Quarter Financial Statements06:00 EST Wednesday, March 02, 2011CALGARY, March 2 /CNW/ - Athabasca Oil Sands Corp. (TSX:  ATH) announces it has filed its financial statements and management's discussion and analysis (MD&A) for the year ended December 31, 2010.  These documents can be retrieved electronically from SEDAR ( or from AOSC's website ( Updates 2010 ActivitiesAthabasca's fourth quarter marked the successful culmination of a significant year of growth for the company. It announced it was accelerating multi-phase developments at its wholly-owned Hangingstone and Dover West assets and the regulatory application was filed in December for the Dover commercial project.A wholly-owned subsidiary of PetroChina International Investment Company Limited acquired all of the shares of a wholly-owned subsidiary of the company that owned a 60% interest in the MacKay River and Dover commercial oil sands projects in February, for cash consideration of $1.9 billion. Two months later, Athabasca completed Canada's largest energy IPO (initial public offering) and raised $1.35 billion (gross) by issuing 75 million common shares. It was also listed on the Toronto Stock Exchange (TSE) under the trading symbol ATH.  At year-end it had a market capitalization of $6.0 billion.In June, the company reported it had approximately 8.591 billion barrels of contingent resources (best estimate) and 114 million barrels of probable reserves, a 20% increase in total resources over the previous year-end's third-party estimates. With the Hangingstone area acquisitions in the latter half of 2010 (described below), these figures further increased to 8.820 billion barrels of contingent resources (best estimate) and 114 million barrels of probable reserves.According to Bill Gallacher, chair of the board, Athabasca delivered a strong performance in 2010 while maintaining a solid balance sheet. "The company has emerged as a major Canadian in-situ oil sands developer and performed well despite the recent global economic downturn. Many companies have gone to geologically challenging and politically unstable areas to search for oil. Athabasca chose to focus on Alberta."The company has drilled enough wells to delineate billions of barrels of bitumen trapped in the oil sands, Gallacher adds. "Once developed, we expect these resources should provide a reliable, secure and sustainable source of energy for future generations."On December 31, the company held 2.5 million acres (net) of mineral leases and permits and has the second largest in-situ bitumen resource base in northern Alberta. The current portfolio of oil sands projects offers the potential of peak production rates of 500,000 to 800,000 barrels/day and an overall life of about 40 years.Development at Hangingstone Accelerated (100%)One of the highlights of 2010 was the addition of acreage in the Hangingstone area through the acquisition of Excelsior Energy Limited (75%) and through an asset acquisition from Bounty Development Ltd. (25%). This allowed Athabasca to build its resource base and announce plans for a multi-phase development of more than 70,000 barrels/day at peak production.Sveinung Svarte, Athabasca's president and CEO says, "We are the sole owners of our combined Hangingstone asset. This gives our employees the opportunity to bring in a modest, but important project to demonstrate we can build and develop a SAGD operation on-time and on-budget. It's a significant step to continue to de-risk our bitumen barrels and bring production on-stream as soon as possible."The company anticipates it will file a regulatory application in the first half of 2011 for a 12,000 barrels/day steam assisted gravity drainage (SAGD) project. It expects the Energy Resources Conservation Board (ERCB) will take approximately 14 months to review it and, once approvals are granted, another year to construct the central processing facilities. The company plans to build certain components large enough for subsequent phases.  First steam could be as early as late 2013 with the approximately 25,000 barrels/day second phase planned for first steam three years later.Dover West Development Fast-Tracked (100%)Athabasca was pleased to announce it had fast-tracked development at Dover West where it plans to file a regulatory application in the second half of 2011 for a 12,000 barrels/day SAGD project with production from the Cretaceous oil sands, in addition to developments of the bitumen accumulations in the high quality Leduc reef carbonate reservoir. This winter (2010-2011) the company is drilling a number of wells to conduct two tests of the performance of the Leduc formation. The first test consists of injecting steam into the reservoir to evaluate the use of steam for bitumen recovery. The second test will use thermal assisted gravity drainage (TAGD) to assess its effectiveness and gauge if conductive heating is more appropriate."Since the company owns nearly all of the Leduc reef in the Athabasca region, it is up to us to demonstrate which of the methods will produce commercial amounts of bitumen, in the most efficient way and with the smallest environmental footprint," reports Svarte. "The tests we have conducted in the laboratory have been extremely promising.  We expect to get more definitive answers from our eight to 10 month field experiments at Dover West."Dover Files Commercial Project Application (40%)As planned, Dover Operating Corp. (Dover OPCO) filed its regulatory application in December to construct a 250,000 barrels/day oil sands project at Dover. The initial phase is estimated at about 50,000 barrels/day and approvals are expected to take approximately 24-months. Dover OPCO was formed by Athabasca and Cretaceous Oil Sands Holdings Limited, a wholly-owned subsidiary of PetroChina International Company Limited, to build and manage this project and the MacKay River commercial development."This milestone is important for both Dover OPCO and Athabasca," Svarte adds. "We believe there is significant opportunity for production growth at Dover, once we incorporate what we have learned from the MacKay River project. We aspire to soon have a proven-track record of low-cost operations and an excellent record of environmental stewardship."AOSC's Financial ReviewAs of December 31, the company had $1.8 billion of working capital, including cash, cash equivalents and short-term investments. Management believes Athabasca's working capital, combined with the second loan from PetroChina (and if the put/call option is not exercised, PetroChina's third loan), is sufficient to fund its expenses into 2014, based on current plans.Athabasca is a dynamic bitumen 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.  It is traded on the TSX under the symbol ATH.NOTE TO ANALYSTS AND EDITORS:Sveinung Svarte will present Athabasca's updated story with a live webcast presentation at:First Energy/Société Générale New York Energy ConferenceThursday, March 10, 2011 8:25 AM ESTTo listen and view this online event, please visit: will be available in an archived link for 30 days following at this site.The presentation will also be available at 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 estimated future commitments; proposed experimental testing in the Dover West area and the results there from; business plans; development of the MacKay River and Dover oil sands projects; timing of facilities construction and production at MacKay River; estimated initial and full production of the MacKay River and Dover projects; timing of submission of the Dover project's commercial application; AOSC's plans with respect to the Birch and Grosmont assets; timing of completion of the Excelsior transaction, AOSC's plans with respect to the assets to be acquired from Excelsior and the expected benefits to be received by AOSC from such 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; the impact that AOSC's transaction with the PetroChina subsidiary (as described in the News Release) will have on AOSC, including on AOSC's financial condition and results of operations;  the receipt of all required regulatory, shareholder and other third party approvals of the Excelsior transaction; the completion of the Excelsior transaction on the terms and on the schedule outlined in this New Release; 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 ("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 impact of the exercise of the Put/Call Options (as defined in the Prospectus) on AOSC; failure to meet the conditions precedent to the exercise by AOSC of the Put/Call Options, including failure to receive regulatory approval for the MacKay River oil sands project and/or the Dover oil sands project when anticipated or at all; failure to obtain necessary regulatory approvals for completion of the Put/Call Option transactions on the terms and conditions set forth in the Put/Call Option Agreement; failure to meet development schedules and potential cost overruns; increases in operating costs can make projects uneconomic; the effect of diluent and natural gas supply constraints and increases in the costs thereof; gas over bitumen issues affecting operational results; 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 (including without limitation on the PetroChina subsidiary) 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; the Excelsior transaction may not close when planned or at all; the failure of AOSC and Excelsior to obtain the necessary security holder, Court, regulatory and other third party approvals or satisfy the other conditions to proceed with the Excelsior transaction; 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 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  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.For further information: Heather Douglas Vice President, Communications & External Affairs (403) 532-7408