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VIOLATION OF UNITED STATES SECURITIES LAW.
Osum Oil Sands Corp. ("Osum" or the "Company") today announced that it has
entered into definitive agreements with a group of investors to issue, on a
private placement basis, $500 million in equity securities. The placement will
consist of 21.2 million common shares at $12.50 per share for total gross
proceeds of approximately $265 million as well as 18.8 million callable common
share purchase warrants, each exercisable into one common share at any time
without conditions by Osum, at a price of $12.50 per common share for additional
aggregate gross proceeds of $235 million. Funding is expected to occur on or
about January 18th, 2012 subject to satisfaction of customary conditions. Upon
completion of this placement, Osum will have raised in excess of $1 billion in
private equity since inception.
The financing was led by a combination of new and existing shareholders. The new
shareholder group was led by KERN Partners ("KERN") and included Government of
Singapore Investment Corporation ("GIC") and two large Canadian institutional
investors, while existing major shareholders Warburg Pincus LLC ("Warburg
Pincus") and Blackstone Capital Partners ("Blackstone") participated for a
significant portion of the financing. The placement also included a substantial
investment by funds and accounts under management by BlackRock Financial
Management Inc. ("BlackRock").
Steve Spence, Osum's President & CEO, commented: "We are pleased to welcome
these new investors to our top tier shareholder base that we believe will
support the Company well into the future. Our ability to attract this
significant level of investment from such a sophisticated group of investors in
these difficult financial markets is a testament to the strength of our assets,
strategy and team."
The proceeds from this financing, together with Osum's existing working capital,
will be used to fund ongoing Saleski pilot operating and capital costs, fully
fund Osum's share of the 10,700 barrel per day commercial demonstration project
on the Saleski Joint Venture lands, this winter's delineation program on the
Company's 100% projects at Saleski and certain pre-sanction commercial
preparation costs at Taiga.
Success at Osum's projects in the Saleski Carbonates has been substantial in
2011 with the Company having added over 82,000 net acres of land and nearly 1.1
billion barrels (net) of Best Estimate Contingent Resources through both
acquisitions and additional geological and reservoir work. These additions have
brought Osum's total land position in the Saleski region to over 173,000 net
acres and total Best Estimate Contingent Resources to approximately 3.4 billion
barrels (net), ranking the Company third in the area next to Husky Energy and
Shell Canada. The SAGD pilot project at Saleski began operations in December
2010. The results are providing valuable insights into how to best develop the
Grosmont carbonate resource. Preparatory work for a second commercial project in
the region is also ongoing with an extensive core well and seismic program
planned on both the Saleski East and West project areas for this winter.
Osum's Taiga project in the prolific Cold Lake region continues to advance
towards commercialization. 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 is targeting regulatory approval in 2012. With the submission
of this application and as a result of the proximity of the project to existing
in situ production of 340,000 barrels per day, Osum was assigned 359 million
barrels of proved plus probable reserves by its independent reserve auditors. In
anticipation of regulatory approval, the Company continues to advance its
detailed and long-lead engineering with completion expected in 2012.
Credit Suisse Securities (Canada), Inc., Scotia Waterous Inc. and Barclays
Capital Canada Inc. acted as placement agents for Osum. McCarthy Tetrault LLP
acted as Canadian legal counsel while Paul, Weiss, Rifkind, Wharton & Garrison
LLP acted as United States legal counsel to Osum. Stikeman Elliot LLP acted as
legal counsel to the KERN led shareholder group.
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 bitumen-bearing carbonates. Osum's mission is to unlock Canada's
unrealized bitumen resource potential. Additional information on the Company is
available at www.osumcorp.com.
About KERN
KERN is a leading Calgary based, energy focused private equity firm. KERN
manages $1.1 billion directly across three funds, and through partnership with
its current limited partners has a well-established co-investment program that
represents $750 million of commitments. KERN focuses its investment program on
Canadian and international early stage and emerging energy companies. Cobalt
Energy International (CEI - NYSE) and MEG Energy (MEG - TSX) are two examples of
KERN's co-invest companies that have subsequently become public companies.
For more information about KERN, please visit www.kernpartners.com.
About GIC
GIC is a global investment management company established in 1981 to manage
Singapore's foreign reserves. With a network of offices in nine cities worldwide
and headquartered in Singapore, GIC invests internationally in equities, fixed
income, natural resources, treasury and currencies, real estate, private equity
and infrastructure. Since its inception, GIC has grown from managing a few
billion dollars, to well above US$100 billion today. With a portfolio this size,
GIC is amongst the world's largest fund management companies. GIC strives to
achieve good long-term returns on assets under its management, to preserve and
enhance Singapore's reserves.
For more information about GIC, please visit www.gic.com.sg.
About Warburg Pincus
Warburg Pincus is a leading global private equity firm. The firm has more than
$30 billion in assets under management. Its active portfolio of more than 125
companies is highly diversified by stage, sector and geography. Warburg Pincus
is a growth investor and an experienced partner to management teams seeking to
build durable companies with sustainable value. Founded in 1966, Warburg Pincus
has raised 13 private equity funds which have invested more than $40 billion in
over 650 companies in more than 30 countries.
Since inception, the firm has provided approximately $6 billion of equity for
companies around the world involved in oil and gas exploration and production,
midstream, power generation, oilfield technology and related services, and
alternative energy development including the following: Antero Resources, Bill
Barrett Corporation (NYSE: BBG), Canbriam Energy, Encore Acquisition Company,
Explora Petroleum, Kosmos Energy (NYSE: KOS), Laredo Petroleum (NYSE: LPI), MEG
Energy (TSX:MEG), Newfield Exploration (NYSE: NFX), Omega Energia, Spinnaker
Exploration, Suniva and Targa Resources (NYSE: NGLS, TRGP).
The firm is headquartered in New York with offices in Amsterdam, Beijing,
Frankfurt, Hong Kong, London, Luxembourg, Mumbai, San Francisco, Sao Paulo and
Shanghai.
Further information is available at www.warburgpincus.com.
About Blackstone
Blackstone is one of the world's leading investment and advisory firms and is an
experienced and active investor in the energy and natural resources sector. We
seek to create positive economic impact and long-term value for our investors,
the companies we invest in, the companies we advise and the broader global
economy. We do this through the commitment of our extraordinary people and
flexible capital. Our alternative asset management businesses include the
management of private equity funds, real estate funds, hedge fund solutions,
credit-oriented funds, collateralized loan obligation vehicles (CLOs) and
closed-end mutual funds. Blackstone also provides various financial advisory
services, including mergers and acquisitions advisory, restructuring and
reorganization advisory and fund placement services.
Further information is available at www.blackstone.com.
Cautionary Information and Forward Looking Statements
Certain statements contained in this press release, including the documents
incorporated by reference, 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, that the conditions and timing to closing set out in the
Investment Agreement will be satisfied, the credit quality of the counterparties
to the warrants, as well as assumptions relating to machinery development or
production delays, changing environmental regulations, the ability to obtain
regulatory approval for our projects, the ability to attract and retain business
partners, the ability to exploit hydrocarbon resources with our technology,
future levels of government funding, the need to obtain and maintain proprietary
rights over our technology, competition from other technologies, the ability to
access the capital required for 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 in Canada and thus, Osum is
not subject to regulation by any Canadian stock exchange. Our securities are
also not registered under the United States Securities Act of 1933 nor are they
traded on any securities or stock exchange in the United States. As a result, we
are not presently subject to the reporting, certification or other requirements
imposed on U.S. registered issuers under, among other things, 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.
Disclosure of Reserves and Resources
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 sub classified
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.
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