MESSAGE TO OUR SHAREHOLDERS
During the first quarter of 2014 there has been an improvement in sentiment towards the Canadian upstream oil and gas sector. With a substantial increase in corporate and asset transactions to date versus last year, modestly improving valuation metrics and improved access to capital, we are optimistic that there will be a more constructive market environment as we continue our review of strategic options for the Company. Over the coming weeks we will continue to work with our advisors from RBC Capital Markets and will report back to shareholders as we determine the preferred way forward.
We continue to advance our Audet project work through stakeholder engagement and meetings with the regulators as issues are identified for clarification and discussion. We are still awaiting a more definitive description of new regulatory requirements that will apply to shallow steam assisted gravity drainage (SAGD) projects as announced by the Alberta Energy Regulator in January of this year. Until we have clarity on the new requirements we will limit spending on Audet to those activities required to advance the regulatory process. We are optimistic that with the depth and quality of technical studies completed by SilverWillow on the reservoir and caprock at Audet, that we will be able to make a strong case for project approval.
Similarly, we are maintaining a constrained level of technical activity on our Birch Mountains assets. We have the approvals largely in place to conduct a drilling program this coming winter should this be determined as the best way forward following our strategic review process.
While we face an uncertain future as we work our way through our strategic alternatives, we remain convinced that we have significant value identified in our well delineated Audet SAGD Project as well as promising upside potential in our Birch Mountains oil sand leases. We thank you, our shareholders, for your continued support
President and Chief Executive Officer
Calgary, Alberta, Canada
May 14, 2014