Oilsands Quest Provides Update on Strategic Alternatives Review Process and Plans Rights Offering to Advance SAGD Projects Toward Commercial Development
CALGARY, July 6, 2011 /CNW/ --
NYSE Amex: BQI
CALGARY, July 6, 2011 /CNW/ - Oilsands Quest Inc. (NYSE Amex: BQI)
('Oilsands Quest,' 'OQI' or 'the Company') has assessed the results of
the formal strategic alternatives process launched on August 17, 2010,
which explored options to enhance shareholder value. After opening a
data room and holding discussions with several entities in recent
months, Oilsands Quest has achieved a clear understanding of asset
development that potential partners or purchasers are seeking. In order
to advance its assets to the next level of certainty toward commercial
development, Oilsands Quest intends to pursue funding through a rights
offering, under which all existing shareholders will be eligible to
purchase, on an equal, proportional basis, additional shares of the
Company.
'We have always planned to partner with a larger entity at some point,
because building a commercial oil sands project is beyond the financial
or operational capability of a company our size,' said Oilsands Quest
Chief Executive Officer Garth Wong. 'We have heard from potential
partners and purchasers that they would like to see us advance and
confirm our understanding of our reservoirs in three principal areas
prior to entering into a transaction. Specifically, at Axe Lake we need
to operate our planned pilot project and further delineate the glacial
till cap. At Wallace Creek, we believe we would enhance value by
further delineating the bitumen resource. While we will continue to
pursue opportunities to partner or sell assets, we have concluded that
we must drive ahead to raise the funds to complete these activities.'
The proceeds from the rights offering will be used to advance the
Company's development plan. The key operational priorities are to:
-- operate the planned pilot project at Axe Lake in order to
demonstrate that the Axe Lake reservoir can be produced using
proven steam-assisted gravity drainage (SAGD) technology;
-- conduct additional overburden testing in order to further
refine the aerial extent of the glacial till that overlies the
reservoir and demonstrate its extent and integrity as a cap for
SAGD production; and
-- advance the Wallace Creek project through additional
delineation programs.
The Company expects to provide further details regarding the planned
rights offering in the near-term.
Under the formal strategic alternatives process, a Special Committee of
the Board of Directors considered all alternatives to increase
shareholder value, including strategic financing opportunities, asset
divestitures, joint ventures and/or a corporate sale, merger or other
business combination. TD Securities Inc. ('TD Securities') acted as our
financial advisor for the process.
As part of this process, TD Securities and the Company contacted a large
number of national and international energy companies and institutional
investors. While a number of parties signed confidentiality agreements,
were granted access to the Company's data room and carried out detailed
due diligence, the process did not result in any compelling proposals
to Oilsands Quest. Feedback from parties in the process has illustrated
that potential future partners or acquirers require a further level of
development, reducing the remaining areas of uncertainty, in order to
be prepared to make a substantial investment. The Company is therefore
seeking funding to advance its assets toward commercial development,
while remaining open to offers of joint venture opportunities, asset
sales or other alternatives.
'In proceeding to the Rights Offering, we want to remind investors of
the opportunity we have available with this company,' said Mr. Wong.
'Our three 100 per cent-owned oil sands project opportunities together
have ultimate production potential of 100,000 barrels of bitumen per
day. We were pioneers at Oilsands Quest in exploring the eastern edge
of the oil sands basin, and today the activity in the basin is moving
toward us as exploration activity increases on lands close or adjacent
to ours by companies such as Imperial Oil Limited, Cenovus Energy Inc.,
SilverBirch Energy Corporation and Grizzly Oil Sands Inc. With interest
and development growing in our area of the basin, we remain confident
that once we prove the viability of the Axe Lake reservoir through
pilot and overburden testing, and further delineate Wallace Creek, we
will achieve the value recognition that our long-term investors have
been seeking.'
Webcast
Oilsands Quest has scheduled a webcast to discuss with stakeholders the
rights offering and the future plans for the Company. The webcast will
take place at 9:00 a.m. EDT (7:00 a.m. MDT) on Wednesday, July 6, 2011.
To participate in the webcast, investors should visit the following
link:
http://w.on24.com/r.htm?e=332509&s=1&k=977E28B2DD9C39F189E4D534284B7174
A statement from Garth Wong, President & CEO, will be followed by an
electronic question and answer period. A recording of the webcast will
be available on the company's website, at www.oilsandsquest.com.
TD Newcrest Unconventional Energy Conference
Oilsands Quest will be presenting at the 2011 Unconventional Energy
Conference on Wednesday, July 6, 2011 in Calgary, Alberta. The
presentation will be available for viewing at www.oilsandsquest.com.
Cautionary statement about forward-looking statements
This news release includes certain statements that may be deemed to be
'forward-looking statements.' All statements, other than statements of
historical facts, included in this news release that address
activities, events or developments that our management expects,
believes or anticipates will or may occur in the future are
forward-looking statements. Such forward-looking statements include
discussion of such matters as:
-- the amount and nature of future capital, development and
exploration expenditures;
-- the timing of exploration and development activities;
-- potential reservoir recovery optimization processes; and
-- business strategies and development of our business plan and
drilling programs.
Forward-looking statements are statements other than relating to
historical fact and are frequently characterized by words such as
'plan', 'expect', 'project', 'intend', 'believe', 'anticipate',
'estimate', 'potential', 'prospective' and other similar words or
statements that certain events or conditions 'may' 'will' or 'could'
occur. Forward-looking statements such as references to Oilsands
Quest's drilling program, geophysical programs, reservoir field testing
and analysis program, preliminary engineering and economic assessment
program for a first commercial project, and the timing of such programs
are based on the opinions and estimates of management at the date the
statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or
results to differ materially from those anticipated in the
forward-looking statements, which include but are not limited to risks
inherent in the oil sands industry, regulatory and economic risks, land
tenure risks, lack of infrastructure in the region in which the
company's resources are located and risks associated with the company's
ability to implement its business plan. The Company undertakes no
obligation to update forward-looking information if circumstances or
management's estimates or opinions should change, except as required by
law. The reader is cautioned not to place undue reliance on
forward-looking statements.
About Oilsands Quest
Oilsands Quest Inc. (www.oilsandsquest.com) is exploring and developing oil sands permits and licences, located in
Saskatchewan and Alberta, and developing Saskatchewan's first
commercial oil sands discovery. It is leading the establishment of the
province of Saskatchewan's emerging oil sands industry.
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Investor Relations
Email: ir@oilsandsquest.com
Investor Line: 1-877-718-8941