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March 10, 2011 – Calgary, Canada – 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.
• 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:
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.
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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