MESSAGE TO OUR SHAREHOLDERS
While we continue to experience constrained market valuations in the Canadian junior energy sector in the third quarter, we are encouraged by recent investment activity in oil sands. Recent announcements by major companies moving ahead with large projects draws investor attention to the oil sands industry and re-confirms the potential that exists in this large resource located in a politically stable country. We believe that as we advance our projects through the various stages of development that investors will see the potential opportunity in an independent company in an industry that is increasingly dominated by the majors.
To that end, during the third quarter we maintained our focus on our major asset, the Audet Lands, and completed the preliminary engineering of a 12,000 barrel per calendar day steam assisted gravity drainage commercial facility designed to produce approximately 104 million barrels of bitumen over its life. We believe there is sufficient developable resource at Audet to support ultimate production levels of up to 30,000 barrels per day.
The Class 4 capital cost estimates completed by major, third party engineering companies for the project total $550 million, implying a capital intensity of just under $46,000 per barrel per calendar day of bitumen production. The plant has been designed to have sufficient steam capacity to operate at a steam to oil ratio (“SOR”) of 2.5 but the average operating SOR is expected to be 2.05. We are in the process of completing the required environmental studies and plan to submit a regulatory application for the Audet Lands project in the fourth quarter.
With respect to our 100% working interest on Birch Mountains Lands, we are finalizing data analysis on the 2D seismic acquired during the first quarter of 2013. Promising drill targets have been identified and we are in the early stages of planning a drilling program for this area.
We will stay focused on the exploration and development activities that we think will ultimately create long-term value for our shareholders as we advance our projects towards commercialization. We appreciate the support of our long term shareholders and welcome new shareholders who are recognizing the value creation opportunity in our company.
President and Chief Executive Officer
Calgary, Alberta, Canada
November 18, 2013