Osum Announces $500 Million Private Placement

Posted: Dec. 23, 2011

Attracts New World Class Investors & Equity Value Approaches $2 Billion

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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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FOR FURTHER INFORMATION PLEASE CONTACT:

Osum Oil Sands Corp.
Justin Robinson
Manager, Communications
jrobinson@osumcorp.com
www.osumcorp.com

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