UTS Energy Corp. on Monday announced that it has signed the final documentation associated with the transaction announced Sept. 19, 2007, whereby its current partners, Petro-Canada and Teck Cominco, will each earn a further five percent working interest in the Fort Hills Project.
Petro-Canada and Teck Cominco will contribute a combined $750 million on UTS' behalf beyond the original obligation of $2.5 billion. As a result, UTS is effectively funded up to the first $7.5 billion of Fort Hills Project expenditures, with a $250 million further contribution by UTS over the period. Based on the current expenditure profile, the $7.5 billion is expected to be reached during the fourth quarter of 2009.
"We are pleased to have completed the latest agreement with our partners," said Will Roach, President and Chief Executive Officer of UTS. "A 20% working interest in the Fort Hills Project is an appropriate and meaningful level of participation for UTS. This transaction plus the recent $275 million equity issue has put into place the financing necessary for the next two years. It also offers UTS financial flexibility and time to put in place the remaining funding for Phase 1 of the Fort Hills Project. Moreover, this transaction and the equity issuance allow UTS the opportunity to demonstrate the potential value of our assets outside of the Fort Hills Project, which we are aggressively delineating over the next two drilling seasons."
The resulting working interests in the Fort Hills Partnership are Petro-Canada with 60%, Teck Cominco with 20% and UTS with 20%. The earn-in is structured in a manner consistent with the current Fort Hills agreements.
UTS Energy Corp. is based in Calgary, Alberta.