OPTI Canada Announces First Quarter 2009 Results
04:00 EDT Tuesday, April 28, 2009
TSX: OPC
CALGARY, April 28 /CNW/ - OPTI Canada Inc. (OPTI) announced today the Company's financial and operating results for the quarter ended March 31, 2009.
The Long Lake Project (the Project) is the first to use OPTI's integrated OrCrude(TM) process. Our proprietary process is designed to substantially reduce operating costs compared to other oil sands projects while producing a high quality, sweet synthetic crude.
"We are pleased to have successfully produced and sold our first upgraded premium synthetic crude this quarter, and to have demonstrated that our technology works," said Chris Slubicki, President and Chief Executive Officer. "We expect that improvements being made to the water treatment system will significantly enhance steam injection, and therefore bitumen production in the second quarter and lead to a substantial ramp-up in PSC(TM) production."
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Includes $369 million pre-tax asset impairment provision related to working interest sale to Nexen. (2) Capital expenditures related to Phase 1 and future phase development. Capitalized interest, hedging gains/losses and non-cash additions or charges are excluded. (3) Common shares outstanding at March 31, 2009 after giving effect to the exercise of common share options would be approximately 203 million common shares. >>
PROJECT STATUS
In the first quarter of 2009, OPTI reached a significant milestone with the production and sale of first PSC(TM) from the Long Lake Project. We have recently produced approximately 15,000 barrels per day (bbl/d) gross of on-spec, high quality PSC(TM), upgraded from low-value bitumen. All major process units in the Upgrader are operational, and preparation is underway to transition gasifier feed from vacuum residue to ashphaltenes, the final step in OrCrude(TM) commissioning. Synthesis gas from the Upgrader has been used in SAGD operations, decreasing operating costs by reducing the requirement for purchased third-party natural gas. During the initial operating period, we expect periods of downtime but anticipate that the stability of operations will continue to improve. Upgrader reliability is improving with 4 days of operation in February, 16 days of operation in March and 20 days of operation to date in April. We expect Upgrader capacity during ramp-up will be capable of processing all of the forecasted SAGD volumes and we expect the Project to reach full capacity of approximately 58,500 bbl/d of PSC(TM) and other products by late 2010.
The Long Lake reservoir continues to perform as expected given the amount of steam that has been injected into the reservoir. Steam generation has been limited by the ability to treat water during the ramp-up period. At full production, approximately 90 to 95 percent of the water injected into the reservoir is recycled. During ramp-up, it is necessary to add cold source water to the recycled hot produced water in order to increase our overall steam volumes over time. Temperature limitations in the water treating system have limited the ability to materially increase steam volumes. A number of changes to the water treating system have been implemented, which include adding supplementary heat to the hot lime softeners and improvements to the filtration system. We expect this will increase steam injection rates and bitumen production.
Steam generation in the first quarter totalled approximately 66,000 bbl/d day, with bitumen production averaging approximately 13,400 bbl/d. With certain changes to the water treating system recently implemented, recent steam volumes have averaged approximately 80,000 bbl/d. As a result, bitumen volumes have begun to ramp-up and April volumes to April 25 averaged approximately 16,000 bbl/d. Given steaming constraints, allocation of steam is necessary and accordingly only 40 of 81 well pairs are presently in production mode. With inconsistent steam injection the average steam to oil ratio (SOR) for these wells ranges between 4.0 and 5.0. We continue to expect a long term SOR of 3.0. As further improvements are made to the water treatment system and steam generation increases, all remaining wells will be brought on. We expect SAGD volumes to increase consistently from current production to full capacity of 72,000 bbl/d by late 2010. During the SAGD ramp-up period in 2009 and 2010, we also expect to process up to 10,000 barrels per day of third party bitumen.
COMPLETION OF ASSET SALE AND DEBT FACILITY AMENDMENT
On January 27, 2009, OPTI announced that we had significantly enhanced our liquidity with the completion of the sale of a 15 percent working interest in our joint venture assets to our partner Nexen for $735 million. Effective January 1, 2009 , OPTI has a 35 percent working interest in all joint venture assets, including Phase 1 of the Project, all future phase reserves and resources, and future phases of development. All Project and operating employees who accepted offers from Nexen were transitioned effective April 1, 2009.
CORPORATE UPDATE
OPTI also announced today the appointment of Kiren Singh to Vice President and Treasurer. Ms. Singh, who joined OPTI in 2008 as Treasurer, has over 20 years of experience in corporate and project finance and corporate insurance with Canadian and international energy leaders including Mobil and ExxonMobil. Ms. Singh holds an MBA from the University of Calgary and a Chartered Financial Analyst designation.
As a result of OPTI's ongoing corporate transition to that of a non-operating entity, Bill King, formerly VP Development, is no longer with the company. OPTI's senior management consists of: Chris Slubicki, President and Chief Executive Officer; Travis Beatty, VP Finance and CFO; Joe Bradford, VP Legal and Administration and Corporate Secretary; Kiren Singh, VP and Treasurer; and Al Smith, VP Marketing.
PROJECT STATUS
In the first quarter of 2009, OPTI reached a significant milestone with the production and sale of first PSC(TM) from the Long Lake Project. We have recently produced approximately 15,000 barrels per day (bbl/d) gross of on-spec, high quality PSC(TM), upgraded from low-value bitumen. All major process units in the Upgrader are operational, and preparation is underway to transition gasifier feed from vacuum residue to ashphaltenes, the final step in OrCrude(TM) commissioning. Synthesis gas from the Upgrader has been used in SAGD operations, decreasing operating costs by reducing the requirement for purchased third-party natural gas. During the initial operating period, we expect periods of downtime but anticipate that the stability of operations will continue to improve. Upgrader reliability is improving with 4 days of operation in February, 16 days of operation in March and 20 days of operation to date in April. We expect Upgrader capacity during ramp-up will be capable of processing all of the forecasted SAGD volumes and we expect the Project to reach full capacity of approximately 58,500 bbl/d of PSC(TM) and other products by late 2010.
The Long Lake reservoir continues to perform as expected given the amount of steam that has been injected into the reservoir. Steam generation has been limited by the ability to treat water during the ramp-up period. At full production, approximately 90 to 95 percent of the water injected into the reservoir is recycled. During ramp-up, it is necessary to add cold source water to the recycled hot produced water in order to increase our overall steam volumes over time. Temperature limitations in the water treating system have limited the ability to materially increase steam volumes. A number of changes to the water treating system have been implemented, which include adding supplementary heat to the hot lime softeners and improvements to the filtration system. We expect this will increase steam injection rates and bitumen production.
Steam generation in the first quarter totalled approximately 66,000 bbl/d day, with bitumen production averaging approximately 13,400 bbl/d. With certain changes to the water treating system recently implemented, recent steam volumes have averaged approximately 80,000 bbl/d. As a result, bitumen volumes have begun to ramp-up and April volumes to April 25 averaged approximately 16,000 bbl/d. Given steaming constraints, allocation of steam is necessary and accordingly only 40 of 81 well pairs are presently in production mode. With inconsistent steam injection the average steam to oil ratio (SOR) for these wells ranges between 4.0 and 5.0. We continue to expect a long term SOR of 3.0. As further improvements are made to the water treatment system and steam generation increases, all remaining wells will be brought on. We expect SAGD volumes to increase consistently from current production to full capacity of 72,000 bbl/d by late 2010. During the SAGD ramp-up period in 2009 and 2010, we also expect to process up to 10,000 barrels per day of third party bitumen.
COMPLETION OF ASSET SALE AND DEBT FACILITY AMENDMENT
On January 27, 2009, OPTI announced that we had significantly enhanced our liquidity with the completion of the sale of a 15 percent working interest in our joint venture assets to our partner Nexen for $735 million. Effective January 1, 2009 , OPTI has a 35 percent working interest in all joint venture assets, including Phase 1 of the Project, all future phase reserves and resources, and future phases of development. All Project and operating employees who accepted offers from Nexen were transitioned effective April 1, 2009.
CORPORATE UPDATE
OPTI also announced today the appointment of Kiren Singh to Vice President and Treasurer. Ms. Singh, who joined OPTI in 2008 as Treasurer, has over 20 years of experience in corporate and project finance and corporate insurance with Canadian and international energy leaders including Mobil and ExxonMobil. Ms. Singh holds an MBA from the University of Calgary and a Chartered Financial Analyst designation.
As a result of OPTI's ongoing corporate transition to that of a non-operating entity, Bill King, formerly VP Development, is no longer with the company. OPTI's senior management consists of: Chris Slubicki, President and Chief Executive Officer; Travis Beatty, VP Finance and CFO; Joe Bradford, VP Legal and Administration and Corporate Secretary; Kiren Singh, VP and Treasurer; and Al Smith, VP Marketing.
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