UTS Energy Corp. on Thursday announced that it has finalized its budget for 2009.
The Fort Hills Partnership has proposed a budget of $540 million for 2009, of which $24.5 million is UTS' share, and approved the first quarter of 2009 expenditures of $215 million, of which $8.6 million is UTS' share. During this first quarter, Petro-Canada as Operator will reassess the project scope, budget and schedule in parallel with negotiating the lease extension agreement with the Alberta Government. UTS' analysis of this budget, in combination with our expectations with respect to overall project budget reductions, suggests that UTS' Fort Hills funding from the earn-ins from both Petro-Canada and Teck will now extend until the first quarter of 2011.
"The Fort Hills budget is designed to provide the Fort Hills Partnership sufficient time to work together, and with the Alberta Government, to come to agreement on the best size and schedule for the Fort Hills Project," said William Roach, President and Chief Executive Officer. "This will also allow more time for the capital markets to normalize prior to UTS needing the requisite Fort Hills financing."
UTS also approved an engineering and exploration drilling program for its lands owned jointly with Teck (on a 50/50 basis) on the West and East sides of the Athabasca River. The exploration program will comprise in the order of 60 wells, strategically located, with a view to maximize the resource potential per dollar spent. UTS' share of this 2009 budget is $17 million. This somewhat reduced engineering and exploration budget is designed to maximize the exploration upside while husbanding our cash resources carefully. "This engineering and exploration budget, plus the UTS corporate G&A, will be significantly less than, and as such, entirely funded by the final Lease 14 (Equinox Project) payment installment of $40 million from Teck due at the end of the second quarter of 2009," said Dr. Roach.
UTS is focused on the creation of shareholder value through exploration, development, production and upgrading of bitumen from the Athabasca oil sands deposits in north-eastern Alberta. UTS was instrumental in re-establishing the Fort Hills Oil Sands Project and is the principal founder of the Fort Hills Energy Limited Partnership. The Fort Hills Project, located 90 kilometers north of Fort McMurray, is held by UTS with a 20% working interest, Teck with a 20% working interest and Petro-Canada with a 60% working interest and operatorship. Beyond the Fort Hills Project, through land acquisitions and exploration program, UTS holds 50% working interest in an additional 113,964 hectares (284,907 acres) of oil sands prospective leases located primarily on the west side of the Athabasca River. UTS is committed to responsible resource development by conducting its business in a manner that reduces environmental effects, protects workers' and communities' health and safety and recognizes stakeholder interests.
UTS Energy Corporation is based in Calgary, Alberta.