Osum Expands its Position in the Grosmont Carbonates
May 12 2011 - 8:07AM
Marketwired Canada
NOT FOR DISTRIBUTION TO UNITED STATES NEWS WIRE SERVICES OR FOR DISSEMINATION IN
THE UNITED STATES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A
VIOLATION OF UNITED STATES SECURITIES LAW.
Osum Oil Sands Corp. ("Osum" or the "Company"), a private pure play in-situ oil
sands developer, announced today that it has acquired a total of 51 sections
(32,640 acres) of oil sands leases in the Saleski Grosmont carbonate region. The
new leases, located within townships 85 and 86, ranges 20 and 21, are contiguous
to Osum's existing carbonate holdings complementing the previous 100% owned
Saleski land and the Company's joint venture lands.
Osum's total Grosmont carbonate holdings, including the newly acquired leases,
are pictured here http://media3.marketwire.com/docs/511osu1.pdf. Additional
imagery is available at
http://www.osumcorp.com/about-osum/project-areas/saleski/.
GLJ Petroleum Consultants ("GLJ") was engaged as an independent qualified
reserve evaluator to evaluate the new leases in accordance with National
Instrument 51-101 ("NI 51-101") and the Canadian Oil and Gas Evaluation Handbook
("COGEH"). GLJ also evaluated all four of Osum's other existing project areas:
Taiga (Cold Lake), Saleski JV, Saleski 100% and Liege as part of the December
31, 2010 reserve and resource assessment.
The new lease area will be referred to as "Saleski West" and consequently the
land previously named "Saleski 100%" will now be referred to as "Saleski East".
Reserves and resources included in this press release are stated on a working
interest basis.
Highlights
-- GLJ has assigned 870 million barrels of best estimate contingent
resources (P50) to Saleski West, which includes Grosmont C & D horizons
and Ireton. This represents a 36% increase in Osum's best estimate
contingent resources bringing the corporate total to 3,258 million
barrels, plus 360 million barrels of proved plus probable (2P) reserves.
-- GLJ estimates that the contingent resources at Saleski West could
support total production of 80,000 bbls/day which increases Osum's total
long-term sustained production potential from its reserve and resource
base by 30% to 350,000 bbls/day.
-- With the addition of Saleski West the aggregate 8% pre-tax net present
value of Osum's best estimate contingent resources has increased by
$4,204 million (39%) to $15,026 million as assessed by GLJ using
January 1, 2011 pricing. The 8% pre-tax net present value of Osum's
2P reserves is $2,056 million.
Steve Spence, Osum's President & CEO, commented, "We are very pleased with this
strategic acquisition and what it adds to our already substantial inventory of
development opportunities. The contiguous nature of our substantial land
position in the Saleski Grosmont carbonate trend will allow for integrated
development and expansion of commercial projects well into our future."
Osum continues to drive forward on its existing holdings in the Grosmont
carbonate play at Saleski. A SAGD pilot project on the joint venture lands in
Saleski began operations in December 2010. The results from this pilot are
expected to provide valuable insights into how to best develop the Grosmont
carbonate resource, which can be applied across all of Osum's carbonate assets.
Work towards commercializing the Company's 100% acreage in the region is also
ongoing with an extensive 19 well core program completed this past winter in
Saleski East.
In the Company's other core area in Cold Lake, a commercial application and
Environmental Impact Assessment was filed for the 35,000 barrel per day Taiga
Project in December 2009 and Osum is targeting regulatory approval in 2011.
First oil from the Taiga Project is anticipated in 2014.
This new acquisition, together with recent crown land acquisitions contiguous to
Saleski East, brings Osum's total land holdings in the Saleski region to
approximately 6 1/2 gross townships (124,032 net acres) of contiguous land plus
34 sections (21,920 net acres) in the Cold Lake region.
A detailed pro forma breakdown of Osum's total reserves, resources, and net
asset values as assessed by GLJ as of February, 2011 including those at Saleski
West is provided below:
Reserves
Proved plus
Proved plus Probable plus
Proved Probable Possible
Reserves (1P) Reserves (2P) Reserves (3P)
Asset (MMbbl) (MMbbl) (MMbbl)
----------------------------------------------------------------------------
Cold Lake - 359 533
Saleski JV - - -
Saleski East - - -
Saleski West - - -
Liege - - -
----------------------------------------------------------------------------
- 359 533
Resources
Best Estimate
Contingent
Asset Resources (MMbbl)
----------------------------------------------------------------------------
Cold Lake 104
Saleski JV 1,089
Saleski East 680
Saleski West 870
Liege 515
----------------------------------------------------------------------------
3,258
Corporate Total
----------------------------------------------------------------------------
Low Estimate Contingent 711
Best Estimate Contingent 3,258
High Estimate Contingent 5,503
----------------------------------------------------------------------------
Net Present Value
Pre-tax (MM$, 8%) Pre-Tax (MM$, 10%)
----------------------------------------------------------------------------
2P Reserves 2,056 1,423
3P Reserves 2,764 1,883
Low Estimate Contingent 2,512 1,537
Best Estimate Contingent 15,026 9,486
High Estimate Contingent 28,085 17,714
----------------------------------------------------------------------------
ALL REFERENCES TO THE FEBRUARY 2011 GLJ ASSESSMENT REFLECT THE JANUARY 2011 GLJ
ASSESSMENT FOR THE COMPANY'S RESERVE AND RESOURCE BASE AT THAT DATE, PLUS A
FEBRUARY 2011 GLJ ASSESSMENT OF A PROPERTY ACQUIRED BY OSUM IN FEBRUARY 2011 -
ALL USING THE GLJ JANUARY 2011 PRICE FORECAST.
The reserve and resource estimates herein were extracted from reports prepared
by GLJ, an independent professional petroleum engineering firm, in accordance
with Canadian Securities Administrators' National Instrument 51-101 (NI 51-101)
and the Canadian Oil and Gas Evaluation Handbook.
Under NI 51-101, proved reserves are those reserves which can be estimated with
a high degree of certainty to be recoverable. It is 90 percent likely that
actual remaining quantities will exceed estimated proved reserves. Probable
reserves are those additional reserves that are less certain to be recovered
than proved reserves. It is equally likely that the actual remaining quantities
recovered will be greater or less than the sum of proved plus probable reserves.
Possible reserves are those additional reserves that are less certain to be
recovered than probable reserves. There is only a 10 percent probability that
the quantities actually recovered will equal or exceed the sum of proved plus
probable plus possible reserves.
Contingent Resources are those quantities of petroleum estimated, as of a given
date, to be potentially recoverable from known accumulations using established
technology or technology under development, but which are not currently
considered to be commercially recoverable due to one or more contingencies.
Contingencies may include factors such as economic, legal, environmental,
political, and regulatory matters, or a lack of markets. Contingent Resources
are further classified in accordance with the level of certainty associated with
the estimates and may be subclassified based on project maturity and/or
characterized by their economic status. Resource estimates are described as
follows: Best Estimate - This is considered to be the best estimate of the
quantity that will actually be recovered from the accumulation. If probabilistic
methods are used, there should be at least a 50 percent probability (P50) that
the quantities actually recovered will equal or exceed the best estimate.; High
Estimate - This is considered to be an optimistic estimate of the quantity that
will actually be recovered. It is unlikely that the actual remaining quantities
recovered will exceed the high estimate. If probabilistic methods are used,
there should be at least a 10 percent probability (P10) that the quantities
actually recovered will equal or exceed the high estimate. Low estimate - this
is considered to be a conservative estimate of the quantity that will actually
be recovered from the accumulation. If probabilistic methods are used, the term
reflects a P90 confidence level.
Contingent resources were assigned in regions with lower core-hole drilling
density than the reserve regions and are outside current areas of application
for development. These resource estimates are not classified as reserves at this
time, pending further reservoir delineation, project application, facility and
reservoir design work. Contingent resources entail commercial risk not
applicable to reserves, which have not been included in the net present
valuation. There is no certainty that it will be commercially viable to produce
any portion of the contingent resources.
----------------------------------------------------------------------------
----------------------------------------------------------------------------
GLJ Forecast Pricing (as utilized in the GLJ 2010 Report)
----------------------------------------------------------------------------
Lloyd Blend
Crude Oil
Light and Stream Quality
Medium Exchange at Hardisty Inflation
Forecast Crude Oil Rate Current Natural Gas Rate
----------------------------------------------------------------------------
WTI at
Cushing Alberta Spot
Oklahoma at Plant Gate
(US$/bbl) US$/Cdn$ (Cdn$/bbl) (Cdn$/mmbtu) %/year
----------------------------------------------------------------------------
2011 88.00 0.980 74.58 3.92 0%
2012 89.00 0.980 74.55 4.51 2%
2013 90.00 0.980 73.73 5.06 2%
2014 92.00 0.980 74.83 5.52 2%
2015 95.17 0.980 77.44 5.97 2%
2016 97.55 0.980 79.39 6.28 2%
2017 100.26 0.980 81.62 6.50 2%
2018 102.74 0.980 83.65 6.65 2%
2019 105.45 0.980 85.88 6.80 2%
2020 107.56 0.980 87.61 6.95 2%
2021+ +2%/yr 0.980 +2%/yr +2%/yr 2%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
About Osum
Osum is a privately held Alberta based company focused on the application of
environmentally responsible in situ recovery technologies within Canada's oil
sands and carbonates. Additional information on the Company is available at
www.osumcorp.com.
Cautionary Information and Forward Looking Statements
Certain statements contained in this press release may contain projections and
"forward-looking statements" within the meaning of that phrase under Canadian
and U.S. securities laws. When used in this document, the words "may", "would",
"could", "will", "intend", "plan", "anticipate", "believe", "estimate", "expect"
and similar expressions may be used to identify forward-looking statements.
Those statements reflect our current views with respect to future events or
conditions, including prospective results of operations, financial position,
predictions of future actions or plans or strategies.
Certain material factors and assumptions were applied in drawing our conclusions
and making those forward-looking statements. By their nature, those statements
reflect management's current views, beliefs and assumptions and are subject to
certain risks, uncertainties, known and unknown, and assumptions, including,
without limitation, machinery development or production delays, changing
environmental and other regulations, the ability to attract and retain business
partners, the ability to exploit hydrocarbon resources with our technology, the
need to obtain and maintain proprietary rights over our technology, competition
from other technologies, the ability to access the capital required for project
development, research, technology development, operations and marketing, the
need to generate positive cash flow in the foreseeable future, changes in energy
prices and currency levels.
Many factors could cause our actual results, performance or achievements to be
materially different from any future results, performance or achievements that
may be expressed or implied by these forward-looking statements. Should one or
more of these risks or uncertainties materialize, or should the assumptions
underlying our projections or forward-looking statements prove incorrect, our
actual results may vary materially from those described in this press release as
intended, planned, anticipated, believed, estimated, or expected. We do not
intend and do not assume any obligation to update these forward-looking
statements whether as a result of new information, plans, events or otherwise.
Our securities are not traded on any stock exchange and thus, Osum is not
subject to regulation by any Canadian stock exchange. Osum is not a reporting
issuer in Canada and its securities are not registered under the United States
Securities Act of 1933. As a result, we are not presently subject to the
reporting, certification or other requirements imposed on Canadian Reporting
Issuers or U.S. registered issuers under, among other things, applicable
Canadian securities legislation or the U.S. Sarbanes-Oxley Act of 2002 ("SOX").
This release is provided for information purposes only and shall not constitute
an offer to sell or the solicitation of an offer to buy, nor shall there be any
sale of the common shares in any jurisdiction (including the United States) in
which such offer, solicitation or sale would be unlawful.
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