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Athabasca gains oil, gas lands in Alberta

Bitumen-filled fracture from Athabasca's Dover West asset in the Leduc formation

Athabasca Oil Sands Corp. , which sold major oil sands assets last year to a Chinese oil company, says it has acquired more than one million acres of petroleum and natural gas rights in the Deep Basin areas of northwestern Alberta.

The lands were acquired through Crown sales and from third-parties, the Calgary company said Tuesday.

Last year, PetroChina International Investment Co. Ltd. struck a deal to buy a 60-per-cent stake in Athabasca's MacKay River and Dover projects for $1.9-billion and other financing arrangements.

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Bill Gallacher, Athabasca's chairman, said the property acquisitions are "a strategic opportunity" for the company as it refocuses some of its activities in the wake of the PetroChina deal and future development of its oil sands business.

"The Deep Basin area may lead to important early oil and natural gas liquids production while we are continuing the work to bring our oil sands projects on-stream."

The company had about $1.8-billion in working capital at the end of 2010.

"This is an excellent way for Athabasca to use its cash until needed for our oil sands development," Mr. Gallacher said in a release. "This area offers the potential for a very short pay-back time and plans are to reinvest in Athabasca's oil sands assets."

Sveinung Svarte, Athabasca's president and CEO, said the company hopes to seek "early stage oil development opportunities" from the new acquisitions.

"This area contains several formations which are now successfully emerging as very prospective for production of oil and liquids-rich natural gas, with the combined application of horizontal drilling and multi-stage fracture technology. Several offset operators have drilled successful wells in the Duvernay, Montney, Doig, Nordegg and Wilrich formations, to name a few. We hope to do the same."

The company's initial plan is to drill up to six horizontal wells this year to test several of the prospective formations.

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