MESSAGE TO OUR SHAREHOLDERS
As I described in the first quarter 2014 message to shareholders and my presentation at the Annual General Meeting, we are facing challenging times at SilverWillow. Our strategic process is still in progress and we continue to engage with industry participants and investors who are active in the sector.
Investor interest in the junior oil sands sector is constrained due to a combination of issues. The deferral of review of certain shallow Steam Assisted Gravity Drainage (SAGD) project applications by the Alberta Energy Regulator (AER) impacts a number of companies. Industry is engaging with the AER in a formal consultation process as new regulations are developed which will apply to shallow SAGD projects such as SilverWillow’s Audet project. It is uncertain as to when consultation will be completed and new requirements issued and there is no assurance that our Audet project will be approved. These processes which engage industry and other stakeholders commonly take many months to complete, so until regulatory clarity is obtained, we will be unable to materially advance the development and extraction of the 1.8 billion barrels of Discovered Resources in place at Audet.
The uncertainty is further compounded by delays in approvals for pipelines and restrictions on foreign investment in oil sands companies under certain conditions. With these constraints recognized, our task is to work with the opportunities we have to find value for our shareholders from our 100 percent owned asset base of oil sands leases.
Early in July our Board of Directors approved a plan to significantly curtail corporate activity until some of the issues and uncertainties are resolved. As a result, the employment of the technical and administrative staff was terminated in order to minimize operating costs. We acknowledge the valuable contribution the staff have made to the successful implementation of our corporate plans to date and wish them well in future opportunities. Similarly, the remaining executive team will operate with substantially reduced hours and salaries while managing the demands of the business and working to advance our projects at Audet and Birch Mountains. As one of many cost saving measures we have eliminated the quarterly review by the Auditors of our interim financial statements. Our current estimates indicate that with implementation of these measures that our current cash resources should last well into 2016.
While the news has not been good for SilverWillow we believe we have taken the necessary steps to preserve the viability of the company and position ourselves for future opportunities as some of the challenges are resolved. We thank you, the shareholders, for remaining with SilverWillow, and hope to report positive progress in the coming quarters.
President and Chief Executive Officer
Calgary, Alberta, Canada
August 21, 2014