US Oil Sands Inc. Announces Approval of U.S. Patent Application & Filing of Resource Evaluation Report
CALGARY, April 22, 2014 /CNW/ - US Oil Sands Inc. ("US Oil Sands" or the "Company") (TSXV: USO), a company focused on oil sands exploration and production in Utah, today announced approval of its U.S. patent application and the filing of its 2013 independent resource evaluation report.
"The successful approval of our U.S. patent application marks another important step towards reinforcing our Company's environmental and cost-effective technological advantages in the oil sands mining space," said Cameron Todd, CEO of US Oil Sands. "We believe our bio-solvent based approach to oil sands extraction is a true game changer for the industry, as it has the dual-benefit of reducing the environmental footprint of an oil sands project and lowering capital expenditures by as much as 75% when compared to existing oil sands mining projects."
Approval of United States Patent Application
US Oil Sands has received notification from the United States Patent and Trademark Office ("USPTO") that allows the Company's U.S. patent application relating to its bitumen extraction process. The Company will be formally issued the patent after the Company finalizes issuance procedures with the USPTO.
The Company has previously been granted a patent by the Canadian Intellectual Property Office in 2012 and has completed the international filing of a patent application through World Intellectual Property Organization (WIPO) in October 2007.
The approval of the U.S. patent application and the granting of a Canadian patent provides a key, strategic advantage for the Company, as no commercial oil sands mining process has yet been implemented that can operate with the overall reduced environmental footprint that US Oil Sands' process provides. In addition, the Company believes its low capital cost allows the Company's extraction process to be economically deployed to a broad range of smaller deposits, previously deemed out of reach for oil sands mining operations using traditional extraction processes.
US Oil Sands' 32,005 acres of bitumen leases in Utah's Uinta Basin make it the largest bitumen lease-holder of State lands in the U.S., and the Company's permitted PR Spring Project is expected to be the first commercial bitumen extraction project in the U.S. US Oil Sands' extraction process is effective on both oil-wet deposits such as those found in the US and internationally, and water-wet deposits such as those found in Canada's Athabasca region. Traditional extraction processes, developed decades ago, are effective on the water-wet oil sands found in Canada, however, they remain economically and environmentally ineffective at extracting bitumen from oil-wet deposits that are found in other parts of the world. Following commercial production of Phase 1 of the PR Spring Project, expected in 2015, the Company intends to expand deployment of its proprietary process outside the State of Utah.
Resource Evaluation Report
The Company engaged Calgary-based Sproule Unconventional Limited ("Sproule") to complete an independent resource evaluation reportdated February 28, 2014 (the "Sproule Report") incompliance with National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities. The Sproule Report details the bitumen resource assessment of the Company's PR Spring property in Utah, as of February 28, 2014, and incorporates the results of the 184 wells drilled and cored on the Company's PR Spring development block in 2011 and 2012. Sproule's independent best estimate of discovered resource is 184.3 million barrels and remains unchanged from the prior year.
US Oil Sands' PR Spring property lies within the State of Utah's PR Spring Special Tar Sand Area and consists of four leases that encompass 5,930 acres. The Company also holds leases on an additional 26,075 acres that have not been explored and therefore not evaluated in the Sproule Report. US Oil Sands currently holds 100% working interest in its Utah-based assets.
Sproule's resource assessment of the evaluated areas is listed below:
| DISCOVERED PETROLEUM (BITUMEN) INITIALLY-IN-PLACE(1), P.R. SPRING LEASE, UTAH | ||
| Development Area
| Area (acres)
| Best Estimate(2) (MMbbl)
|
| Permitted Mine Plan Area(3): | ||
| North Pit | 61.8 | 4.5 |
| West Pit | 30.5 | 2.3 |
| Sub-total | 92.2 | 6.8 |
| Mine Plan Area yet to be permitted (4): | ||
| South Pit | 66.7 | 2.7 |
| Proposed and Permitted Mine Plan Area Sub-Total | 159.0 | 9.5 |
| Area without formally submitted Mine Plans(5) | 5,771.0 | 174.8 |
| TOTAL LEASE | 5,930.0 | 184.3 |
| Notes: | |
| (1) | Discovered petroleum initially-in-place (equivalent to Discovered Bitumen Initially-in-Place ("BIIP")) is that quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations on Company lands prior to production. The petroleum type for this property is crude bitumen. |
| (2) | These are the gross best estimate total BIIP in place within the lease and/or proposed and permitted mine area on the Company-interest lands, without regard for working interests, royalties or other encumbrances. |
| (3) | The Company anticipates production will begin in 2015. The Company is currently optimizing the mine design pit sequencing to open the initial pit with the least overburden and most attractive TV:BIP ratio. |
| (4) | High-density (2.5-acre spacing) drilling has been completed for this area and detailed mine planning is currently being undertaken by Norwest Corporation; however, an application has not yet been made for a revision to the Company's existing mining permits to include this area; as such, there is no certainty at this time that this area will be developed. |
| (5) | This area has been defined on an exploratory 40-acre spacing, with some ~10-acre infill coring in proposed future pit areas. The ~10-acre spacing used is adequate for initial pit delineation and estimation of recoverable ore volumes. High-density pre-production drilling and detailed mine plans have not yet been developed for this area; as such, there is no certainty at this time that this area will be developed; if developed, there is no certainty that it will be commercially viable to produce any portion of these resources. There is no certainty that any portion of the resources will be developed or, if developed, there is no certainty as to the timing of such development or whether it will be commercially viable to produce any portion of the resources. |
The in-place volumes within the current mine plan areas have been classified as discovered resources, based on core hole data, assays, test pit results, outcrop data and geological mapping. Although it is not possible to identify either the exploitable portion of the discovered resources or the recoverable portion of those resources until the final mine plans are incorporated into the geological model, Sproule is confident that contingent resources will be assigned to the three proposed and permitted mine pits once this has been done. In 2011, the Company identified four additional prospective mine pit areas that were further delineated with infill coring in 2012 and are currently undergoing design configuration and recoverable resource quantification. Since that work is expected to closely follow this assessment, Sproule believes the most specific classification, as of the effective date of this report, is discovered resources. Until a forthcoming economic evaluation is completed, there is no certainty that it will be commercially viable to produce any portion of these resources.
ABOUT US OIL SANDS LTD.
US Oil Sands is engaged in the exploration and development of oil sands properties and, through its wholly owned United States subsidiary US Oil Sands (Utah) Inc., has a 100% interest in bitumen leases covering 32,005 acres of land in Utah's Uinta Basin. The Company plans to develop its oil sands properties using its proprietary extraction process which uses a bio-solvent to extract bitumen from oil sands without the need for tailings ponds. The Company is in the pre-production stage, anticipating the commencement of bitumen production and sales in 2015.
The foregoing information contains forward-looking information relating to the future performance of the Company including information relating to resource estimates, the development and construction of the PR Spring Project, commencement of commercial production and corporate development activities. Forward looking information is subject to a number of known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those anticipated in our forward looking statements. Such risks and other factors include, among others, the actual results of exploration activities, changes in world commodity markets or equity markets, the risks of the petroleum industry including, without limitation, those associated with the environment, delays in obtaining governmental approvals, permits or financing or in the completion of development or construction activities, title disputes, change in government and changes to regulations affecting the oil and gas industry, and other risks and uncertainties detailed from time to time in the Company's filings with the Canadian securities administrators (available at www.SEDAR.com). Forward-looking statements are made based on various assumptions and on management's beliefs, estimates and opinions on the date the statements are made. Should one or more of these risks and uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in the forward-looking information contained herein. The Company undertakes no obligation to update forward-looking statements if these assumptions, beliefs, estimates and opinions or other circumstances should change, except as required by applicable law.
Discovered bitumen resources or discovered bitumen initially-in-place is that quantity of bitumen that is estimated, as of a given date, to be contained in known accumulations on Company lands prior to production. Best estimate is considered to be the best estimate of the quantity that will actually be in-place. It is equally likely that the actual remaining quantities in-place will be greater or less than the best estimate. There is no certainty that it will be commercially viable to produce any portion of the resources. Additional information relating to resource estimates is contained in the Company's Statement of Resources Data and Other Oil and Gas Information for the year ended December 31, 2013 dated April 4, 2014 and available on SEDAR at www.sedar.com.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
SOURCE US Oil Sands Inc.
Contact
US Oil Sands Inc., Cameron Todd, CEO or Glen Snarr, President and CFO, Suite 1600, 521 - 3rd Avenue SW, Calgary, Alberta T2P 3T3, Tel: +1 403 233 9366, Email: info@usoilsandsinc.com, Website: www.usoilsandsinc.com; Investor Relations, Jeremy Dietz, 300 - 5th Avenue SW, 10th Floor, Calgary, Alberta T2P 3C4, Tel: +1 403 218 2833, Email: jdietz@equicomgroup.com