Osum Announces Year End Reserve and Resource Assessment
11 March 2011 - 10:27AM
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 its year end reserves and contingent resources
as of December 31, 2010. GLJ Petroleum Consultants ("GLJ") was engaged as an
independent qualified reserve evaluator to evaluate Osum's year end reserves and
resources in accordance with National Instrument 51-101 ("NI 51-101") and the
Canadian Oil and Gas Evaluation Handbook ("COGEH"). GLJ was commissioned to
evaluate all four of Osum's identified project areas: Taiga (Cold Lake), Saleski
JV, Saleski 100% and Liege. Reserves and resources included in this press
release are stated on a working interest basis.
Highlights
- Proved plus probable ("2P") reserve additions totaled 40 million barrels (12%
increase) bringing total 2P reserves to 359 million barrels. The increase was
driven primarily by the optimization of the Taiga Project in Cold Lake from a
three-phase to a two-phase development scheme.
- Best estimate contingent resources increased by 283 million barrels (13%) to
2, 388 million barrels. This growth in best estimate contingent resource
occurred on Osum's existing leases and was a result of delineation and other
assessment work.
- GLJ estimates that Osum's reserve and resource base could support production
of up to 270,000 bbls/day.
- Osum's 8% pre-tax net present value of its 2P reserves increased by 104% to
$2,056 million while the net present value of best estimate contingent resources
increased by 35% to $10,822 million.
Steve Spence, Osum's President & CEO, commented, "We are very pleased with such
a meaningful addition to our quality reserve and resource base. This provides
clear evidence of our ability to de-risk our projects and move them further up
the value chain."
Osum filed a commercial application and Environmental Impact Assessment for the
35,000 barrel per day Taiga Project at Cold Lake in December 2009 and
anticipates regulatory approval in 2011. First oil from the Taiga Project is
anticipated in 2014.
Osum also continues to drive forward on its other core area in the Grosmont
Carbonate play at Saleksi. A SAGD pilot project on the joint venture lands in
Saleski, began operations in December 2010. The results from this pilot are
expected to provide valuable insights into how to best develop the Grosmont
carbonate resource. Work towards commercializing the Company's 100% acreage in
the region is also ongoing with an extensive core well program currently
underway.
A more detailed breakdown of reserves, resources, and net asset values as
assessed by GLJ is provided below:
Reserves
Proved plus Probable
Proved Reserves plus
(1P) Proved plus Probable Possible Reserves (3P)
Asset (MMbbl) Reserves (2P) (MMbbl) (MMbbl)
----------------------------------------------------------------------------
Cold Lake - 359 533
Saleski JV - - -
Saleski 100% - - -
Liege - - -
----------------------------------------------------------------------------
- 359 533
Resources
Best Estimate
Contingent
Asset Resources (MMbbl)
----------------------------------------------------
Cold Lake 104
Saleski JV 1,089
Saleski 100% 680
Liege 515
----------------------------------------------------
2,388
Corporate Total
----------------------------------------------------
Low Estimate Contingent 623
Best Estimate Contingent 2,388
High Estimate Contingent 3,997
----------------------------------------------------
Net Present Value
Pre -tax (MM$, 8%) Pre-Tax (MM$, 10%)
----------------------------------------------------------------------------
2P Reserves 2,056 1,423
3P Reserves 2,764 1,883
Low Estimate Contingent 2,424 1,529
Best Estimate Contingent 10,822 6,830
High Estimate Contingent 20,250 12,786
----------------------------------------------------------------------------
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 Stream
Light and Quality at
Medium Exchange Hardisty Inflation
Forecast Crude Oil Rate Current Natural Gas Rate
----------------------------------------------------------------------------
WTI at Alberta
Cushing Spot at
Oklahoma 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%
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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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