US Oil Sands Inc. Announces Third Quarter Results and Advances Utah
Expansion Plans
CALGARY,
Nov. 8, 2012 /CNW/ - US Oil Sands
Inc. ("US Oil Sands" or the "Company") (TSXV: USO), a
company focused on oil sands exploration and production in
Utah, today announced that it has
filed its unaudited interim financial statements ("Interim
Report") for the nine month period ended September 30, 2012 ("Q3 2012") along with
the management discussion and analysis ("MD&A") of the
financial results of US Oil Sands for such period.
A copy of the aforementioned documents may be
found for viewing on the System for Electronic Document Analysis
and Retrieval website at www.sedar.com as well as US Oil Sands'
website at www.usoilsandsinc.com.
SELECTED THIRD QUARTER OPERATIONAL &
FINANCIAL HIGHLIGHTS:
- Completed 2012 field work program including drilling 37 core
holes to define new project areas on the PR Spring Development
Block
- Received Canadian patent on proprietary bitumen extraction
methodology
- Favourable ruling by Utah Administrative Law Judge supporting
PR Spring Permit
- Substantial progress on joint venture investment process
"Our third quarter was characterized by
significant advancement of our PR Spring Project both for Phase 1
which we expect to construct during 2013, and additional expansion
phases which we plan to develop to a total of 20,000 barrels per
day in subsequent years," said Cameron
Todd, CEO of US Oil Sands. "During the quarter, we executed
another successful field program on our 5,930 acre development
project, while also receiving approval of the Canadian
patent. Regulatory affairs were furthered by the favorable
ruling from an independently appointed Utah Administrative Judge
which ultimately underscored the exceptional environmental
attributes that our oil sands extraction process possesses. We view
these events as significant milestones as we head towards the PR
Spring Project's mine construction program in 2013 and subsequent
expansion over the following 5 years."
THIRD QUARTER HIGHLIGHTS
Major activities in the third quarter ("Q3
2012") included completion of the 2012 field work program and
continuation of work with engineering consultants and equipment
suppliers on equipment specification and orders for the PR Spring
Phase 1 Development Project.
A coring program consisting of 37 core holes,
drilled to an average depth of approximately 200 feet, delineated
additional commercial bitumen deposits on the PR Spring development
block. The program was highly successful as all wells found bitumen
pay, and several new mine areas are being designed. The
results of these core holes will be integrated into the Company's
resource models and evaluated by the Company's independent resource
evaluators for inclusion in the annual resource report in
compliance with National Instrument 51-101 - Standards for
Disclosure of Oil and Gas Activities.
The Company also completed additional testing of
mining equipment on the PR Spring test mine, as well as water
supply capabilities for the project.
On August 29,
2012, the Company received the Recommended Order from
Administrative Law Judge Sandra K.
Allen who was appointed by the Utah Department of Environmental Quality to
preside over the May 16-17, 2012
hearing. The hearing was initiated through a Request for
Agency Action filed by a Utah-based environmental organization in
April 2011 against the Utah Division
of Water Quality claiming that the Division of Water Quality
improperly issued a permit-by-rule to the Company. Judge Allen's
Recommended Order issued to the Utah Water Quality Board supported
the Company's conclusion that shallow groundwater has not been
located and may be assumed absent in the project area. The
Judge further found that "US Oil Sands' proposed operation does not
present a greater than de minimis risk of affecting the
groundwater." Judge Allen's Recommended Order denied the
relief sought by the intervener in its Request for Agency Action
and was considered by the Utah Department of Environmental
Quality's Water Quality Board in its October
24, 2012 meeting, which was authorized to rule in the
matter. The Utah Department of
Environmental Quality's Water Quality Board voted by a 9-2 margin
to support the Company's permit and the decision was published on
November 1, 2012 by the chairman of
the Water Quality Board.
As announced on September
6, 2012, the Company received notice of the approval of the
patent application relating to its bitumen extraction process from
the Canadian Intellectual Property Office. The Company has since
made the required filings and fees and expects the Original Letters
of Patent to be issued in the name of US Oil Sands Inc. by the end
of 2012.
PR Spring Expansion Project
Based on the results of the Company's coring
programs, several new project areas have been identified for
development on the PR Spring Development Block. The Company is
developing engineering mine plans for these areas and intends to
apply for permits to expand the project. The Company plans to
use the existing Phase 1 plant site to increase targeted processing
capacity to a total of 20,000 BPD by 2017. Notable synergies will
be gained through the use of existing infrastructure at the Phase 1
site, and the Company's concurrent mine reclamation practices are
expected to result in a minimal increase to the project
footprint.
Through construction of this project, the
Company expects to invest approximately $300
million in development. This investment will have a
significant positive impact on the Utah and US economies. Through the resulting
increase in energy production, Utah will benefit from job creation, taxes and
royalty revenues which the State directs to public education
through the School and Institutional Trust Lands
Administration.
OUTLOOK
For the remainder of 2012, the Company will
continue to focus on advancing the PR Spring Project towards a
robust field/mine construction program in 2013. More specifically,
additional engineering, procurement of major equipment, and final
site design of the PR Spring Project Area are all expected to take
place during the balance of 2012. The majority of process equipment
fabrication and mine construction on the Phase 1 project will occur
in 2013.
Management intends to continue its pursuit of
opportunities to add additional resource lands by assessing growth
opportunities both in Utah as well
in other oil sands areas.
With the assistance of Dundee Capital Markets
Inc. and EAS Advisors, LLC, US Oil Sands is also continuing the
process of marketing and closing a joint venture financing. This
process is ongoing, with Management remaining committed to finding
a partner that best fits the financial and technical/strategic
requirements of the PR Spring Project, its future expansion phases
and potential new projects.
ABOUT US OIL SANDS LTD.
US Oil Sands is engaged in the exploration and
development of oil sands properties and, through its wholly owned
United States subsidiary US Oil
Sands (Utah) Inc., has a 100%
interest in bitumen leases covering 32,005 acres of land in
Utah's Uinta basin. The Company
plans to develop its oil sands properties using its proprietary
extraction process which uses a bio-solvent to extract bitumen from
oil sands without the need for tailings ponds. The Company is in
the pre-production stage, anticipating the majority of process
equipment fabrication and mine construction on Phase 1 to be
undertaken 2013, and developing capacity on its PR Spring
Development Block through additional expansion phases to a total of
20,000 barrels per day in subsequent years.
The foregoing information contains
forward-looking information relating to the future performance of
the Company including information relating to the development and
construction of the PR Spring Project, commencement of commercial
production, resource estimates, target production levels and joint
venture financing arrangements. Forward looking information is
subject to a number of known and unknown risks, uncertainties and
other factors that may cause actual results to differ materially
from those anticipated in our forward looking statements. Such
risks and other factors include, among others, the actual results
of exploration activities, changes in world commodity markets or
equity markets, the risks of the petroleum industry including,
without limitation, those associated with the environment, delays
in obtaining governmental approvals, permits or financing or in the
completion of development or construction activities, title
disputes, change in government and changes to regulations affecting
the oil and gas industry, and other risks and uncertainties
detailed from time to time in the Company's filings with the
Canadian securities administrators (available at www.SEDAR.com).
Forward-looking statements are made based on various assumptions
and on management's beliefs, estimates and opinions on the date the
statements are made. Should one or more of these risks and
uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those described
in the forward-looking information contained herein. The Company
undertakes no obligation to update forward-looking statements if
these assumptions, beliefs, estimates and opinions or other
circumstances should change, except as required by applicable
law.
Neither TSX Venture Exchange nor its Regulation
Services Provider (as that term is defined in the policies of the
TSX Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
SOURCE US Oil Sands Inc.