Athabasca Oil Sands Corp. Announces 2012 Capital Budget

CALGARY, Dec. 20, 2011 /CNW/ - Athabasca Oil Sands Corp.

'Athabasca is moving into the development phase of its projects and is focused on advancing towards production and positive operating cash flow,' says Sveinung Svarte, president and CEO. 'This is the largest capital budget in Athabasca's history and we are confident we have the capacity to effectively execute our strategy. Our growing production should bring significant value to our shareholders.'

100% Owned Assets

Oil Sands Division

The oil sands budget includes $227 million to be invested in the Hangingstone area. The majority of the funds are targeted to progress development of Athabasca's first 12,000 barrels/day (bbl/d) steam assisted gravity drainage (SAGD) project. The Company expects to receive regulatory approval in 2012, with first production anticipated in 2014. The remainder of the Hangingstone budget is for 3D seismic and delineation drilling activities associated with subsequent development projects in the area.

Athabasca has budgeted $131 million to be invested in the Dover West area. The Company is constructing a permanent road to provide year round access to the Dover West area. The budget also includes funds for regulatory and engineering activities for the first oil sands development project in the area.  Athabasca filed a regulatory application for a 12,000 bbl/d SAGD project earlier this month. The Company previously announced it also filed an application for a pilot project designed to extract bitumen from the Leduc Formation using thermal assisted gravity drainage (TAGD) technology. The budget includes funds to progress this pilot project through regulatory, engineering and procurement activities.

At Birch, $45 million has been budgeted to prepare a regulatory application for a 12,000 bbl/d SAGD project.

Light Oil Division

The Company's budget for its light oil division is $403 million with $310 million to be spent on drilling and completions. Athabasca plans to initially focus on the development of the Montney Formation in its Kaybob and Simonette asset areas. To facilitate this development, Athabasca is building a 12 inch, 63 kilometre pipeline from the Kaybob area to the Keyera Simonette gas processing facility. The pipeline and associated processing facilities will minimize the Company's dependence on third parties and will facilitate reaching its target production rate of 8,000 - 10,000 barrels of oil equivalent per day by the end of 2012.

In addition to the primary Montney development wells, the Company plans to continue appraisal and development of its highly prospective Duvernay, Nordegg and Charlie Lake acreage position.   Athabasca holds over 1.7 million acres of petroleum and natural gas rights in Alberta.

Joint Venture Assets

MacKay River and Dover (40%)

The Company has budgeted $202 million (net) for activities related to its projects at MacKay River and Dover. The majority of these funds will be directed toward the 35,000 bbl/d (gross) MacKay River Phase 1 project. Athabasca's share will be financed from funds available under the loan agreements with Cretaceous Oilsands Holdings (Cretaceous), a wholly owned subsidiary of PetroChina. If the put or call option relating to the MacKay River project is exercised, Athabasca's share of joint venture capital spending will be reduced by the balance of any remaining portion of the MacKay River budget.

2012 Capital Expenditures

The capital expenditures budgeted for 2012 are as follows:

                                            

    ($ Millions)                           2012 Budget

    100%OwnedAssets                                   

    OilSands Division                                 

      Hangingstone                                 227

      Dover West                                   131

      Birch                                         45

    Total Oil Sands Division                       403

    LightOil Division                                 

      Seismic                                       14

      Facility & Infrastructure                     79

      Development & Exploration Drilling           310

    Total LightOil Division                        403

    Corporate assets and other                      13

    Total 100% Owned Assets                        819

    JointVenture Assets (net)                         

    MacKay River                                   187

    Dover                                           15

    Grosmont                                         1

    Total Joint Venture Assets                     203

    Total Capital Expenditures                   1,022

Athabasca has sufficient funding to cover its 2012 capital program with $1.35 billion of cash and short term investments (September 30, 2011). In addition, the Company currently has approximately $615 million available from loans under the Cretaceous joint venture arrangements to be used on the MacKay and Dover projects.

Athabasca is a dynamic company focused on development of oil resource plays in Alberta, Canada. It has accumulated a large, high quality resource base suitable for extraction of extra heavy crude oil (bitumen) and light oil. The Company is well financed and with its excellent assets and talented people, Athabasca is poised to become a major Canadian oil producer. It is traded on the TSX under the symbol ATH.

Conference Call Today December 20, 2011

7:30 am Mountain Time (9:30 am Eastern Time)

Athabasca Oil Sands Corp. will host a conference call today to discuss the 2012 capital budget, December 20, 2011 at 7:30 a.m. MT (9:30 a.m. ET). To participate, please dial 1-888-231-8191 (toll-free in North America) or 1-647-427-7450 approximately 15 minutes prior to the conference call.

An archived recording of the call will be available from approximately 10:30 a.m. MT on December 20 until midnight on December 27, 2011 by dialing 1-855-859-2056 (toll-free in North America) or 1-416-849-0833 and entering conference password 35693766.

Reader Advisory

This News Release contains forward-looking information that involves various risks, uncertainties and other factors. All statements other than statements of historical fact are forward-looking statements. The use of any of the words 'anticipate', 'plan', 'continue', 'estimate', 'expect', 'may', 'will', 'project', 'should', 'believe', 'predict', 'pursue' and 'potential' and similar expressions are intended to identify forward-looking statements. The forward-looking information is not historical fact, but rather is based on AOSC's current plans, objectives, goals, strategies, estimates, assumptions and projections about AOSC's industry, business and future financial results. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. No assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this News Release should not be unduly relied upon. These statements speak only as of the date of this News Release. In particular, this News Release may contain forward-looking statements pertaining to the following: AOSC's capital expenditure programs; AOSC's drilling plans; AOSC's plans for, and results of, exploration and development activities; AOSC's estimated future commitments and business plans;AOSC's plans with respect to the the Corporation's oil sands and light oil assets; and the timing for receipt of regulatory approvals. With respect to forward-looking statements and forward-looking information contained in this News Release, assumptions have been made regarding, among other things: existing and future well production rates, well drainage areas, success rates of future well drilling, and production growth; the timing of completion of facilities, including pipelines, the number of drilling rigs to be operated, AOSC's ability to obtain qualified staff and equipment in a timely and cost-efficient manner; the regulatory framework governing royalties, taxes and environmental matters; the applicability of technologies for the recovery and production of AOSC's reserves and resources; the sufficiency of budgeted capital expenditures to carry out planned activities future capital expenditures to be made by AOSC; future sources of funding for AOSC's capital programs; geological and engineering estimates in respect of AOSC's reserves and resources; the geography of the areas in which AOSC is conducting exploration and development activities;  and AOSC's ability to obtain financing on acceptable terms. Actual results could differ materially from those anticipated in these forward-looking statements as a result of the risk factors set forth above and in the Company's Annual Information Form dated March 28, 2011, which is available on the SEDAR website at www.sedar.com ('AIF'), including: fluctuations in market prices for crude oil, natural gas and bitumen blend; general economic, market and business conditions; variations in foreign exchange and interest rates; factors affecting potential profitability; uncertainties inherent in estimating quantities of reserves and resources; AOSC's status and stage of development; uncertainties inherent in Steam Assisted Gravity Drainage ('SAGD'), Cyclic Steam Stimulation ('CSS'), Thermal Assisted Gravity Drainage ('TAGD') and other bitumen recovery processes; the potential impact of the exercise of the Put/Call Options (as defined in the AIF) on AOSC; failure to meet development schedules and potential cost overruns; increases in operating costs can make projects uneconomic; the effect of diluent and natural gas supply constraints and increases in the costs thereof; gas over bitumen issues affecting operational results; environmental risks and hazards and the cost of compliance with environmental regulations, including greenhouse gas regulations and potential Canadian and U.S. climate change legislation; failure to obtain or retain key personnel; the substantial capital requirements of AOSC's projects; the need to obtain regulatory approvals and maintain compliance with regulatory requirements; extent of, and cost of compliance with, government laws and regulations and the effect of changes in such laws and regulations from time to time; changes to royalty regimes; political risks; failure to accurately estimate abandonment and reclamation costs; risks inherent in AOSC's operations, including those related to exploration, development and production of oil sands, crude oil and natural gas  reserves and resources, including the production of oil sands reserves and resources using SAGD, CSS, TAGD or other in-situ technologies and the production of crude oil and natural gas using multistage fracture and other stimulation technologies; the potential for management estimates and assumptions to be inaccurate; incorrect assessments of the value of acquisitions; long term reliance on third parties; reliance on third party infrastructure for project facilities; failure by counterparties to make payments or perform their operational or other obligations to AOSC in compliance with the terms of contractual arrangements between AOSC and such counterparties and the possible consequences thereof; the potential lack of available drilling equipment and limitations on access to AOSC's assets; aboriginal claims; seasonality; hedging risks; risks associated with establishing and maintaining systems of internal controls; insurance risks; claims made in respect of AOSC's operations, properties or assets; competition for, among other things, capital, the acquisition of reserves and resources, export pipeline capacity and skilled personnel; the failure of AOSC or the holder of certain licenses or leases to meet specific requirements of such licenses or leases; risks arising from future acquisition activities; volatility in the market price of the common shares. In addition, information and statements relating to 'reserves' and 'resources' are deemed to be forward-looking information and statements, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves and resources described exist in the quantities predicted or estimated, and that the reserves and resources described can be profitably produced in the future. The assumptions relating to AOSC's reserves and resources are contained in the reports of GLJ Petroleum Consultants Ltd. dated effective April 30, 2011 and  DeGolyer and MacNaughton Canada Limited dated effective April 30, 2011. The risks and uncertainties referred to above are described in more detail in AOSC's AIF which is available on the SEDAR website at www.sedar.com.  See also AOSC's financial statements and Management's Discussion and Analysis for the year ended December 31, 2010 and for the current interim financial period, which are also available on SEDAR. Readers are cautioned that the foregoing list of risk factors should not be construed as exhaustive. The forward-looking statements included in this News Release are expressly qualified by this cautionary statement. AOSC does not undertake any obligation to publicly update or revise any forward-looking statements except as required by applicable securities laws.

'BOEs' may be misleading, particularly if used in isolation.  A BOE conversion ratio of six thousand cubic feet of natural gas to one barrel of oil equivalent (6 Mcf: 1 bbl) is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Athabasca Oil Sands Corp

CONTACT:

Media Financial Community



Heather Douglas Tracy Robinson



Vice President, Communications & Manager, Investor Relations

External Affairs



(403) 532-7408 (403) 532-7446



hdouglas@aosc.comtrobinson@aosc.com