AOSC acquires new bitumen acreage

October 7, 2008 CALGARY -- Athabasca Oil Sands Corp. (AOSC) said it has acquired a 50% stake in a bitumen joint venture with an undisclosed company.

AOSC said the venture -- which it will operate -- involves 750,000 acres that are on trend with Royal Dutch Shell plc's holdings in the western part of the Athabasca oilsands region of northern Alberta.

Shell's Grosmont bitumen holdings, acquired for roughly a half-billion dollars by its wholly-owned Sure Northern Energy Ltd. subsidiary, are in carbonate rock, not the conventional sands from which bitumen is commercially produced.

There has never been commercial production from bitumen-bearing carbonates in Alberta. Shell is awaiting regulatory approval for a pilot test.

Shell has said it may be in a position to decide whether to proceed with commercial development of its bitumen carbonates by the middle of next decade, depending on its pilot results.

Meanwhile, AOSC plans to drill between 20 and 30 appraisal wells in the area next winter. The principal geological targets are the Devonian Grosmont and Nisku formations while the Cretaceous Bluesky, Grand Rapids and Viking Formations are secondary targets.

The company said the Alberta Energy Resources Conservation Board estimates the Grosmont and Nisku formations in the Athabasca region hold up to 415 billion bbls of original bitumen in place.

A decision on the timing of a pilot test on AOSC's joint venture acreage will be made after next winter's appraisal drilling, President Sveinung Svarte said in an e-mail from London, where he is presenting at the FirstEnergy Capital Corp./Société Générale conference.

At the start of this year the privately held start-up said it had already raised more than $400 million for its previously announced oilsands plans (DOB, Jan. 16, 2008).

In addition, the company raised another $400 million in debt financing during the past summer. Svarte said the acquisition of the joint venture lands was contemplated in the outline of the latest financing, which closed on July 31.

That financing brought the total debt and equity raised by AOSC to about $804 million. Asked about the impact of the global financial crisis, Svarte wrote: "We are fully funded until the early part of 2010 and should not be too affected."

Meanwhile, the company's previously announced plan for a 2,000-bbl-a-day pilot test in the conventional oilsands remains on track and is tentatively scheduled to be onstream in 2010.

AOSC said it is now the largest lease holder in the Athabasca region with a net working interest of more that 1.3 million acres.

The company operates more than 1.7 million acres. Any recoverable resources added through next winter's drilling will be in addition to AOSC's current seven billion bbls (most likely case) and 11 billion bbls (high case) contingent recoverable resources as provided by recent independent resource evaluations, the company said.

© 2008 Nickle’s Energy Group.