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Providing coverage of Alaska and northern Canada's oil and gas industry
April 2006

Vol. 11, No. 16 Week of April 16, 2006

New player takes oil sands stage

Developer North American Oil Sands teams with Paramount Resources on a quarter of a million gross acres, 1.13B barrels

Gary Park

For Petroleum News

North American Oil Sands Corp. is the latest to emerge from the shadows and join companies in the oil sands line up as it assembles the pieces for an operation that could yield 160,000 barrels per day within 10 years.

The private developer, backed by a leading energy venture fund and a division of Canada’s largest private pension plan, has teamed up with Paramount Resources to control 224,000 gross acres holding an estimated 1.13 billion barrels of recoverable bitumen.

Under a deal reached in late March, Paramount will transfer its current 50 percent interest in a joint venture to North American, giving each equal stakes in four leases, in return for about 50 percent of the common shares of North American and two out of seven seats on the board of directors.

Because oil sands projects require significant development capital, converting from a joint venture to an equity interest allows Paramount to “participate in the value created from the development of these attractive assets without further funding,” said Paramount President Jim Riddell.

Paramount has contributed C$30 million to the oil sands company to complete recent acquisitions and fund its share of a drilling and seismic program that is currently under way.

North American will finance the on-going development of the leases by raising capital through debt and stock markets.

North American Chief Executive Officer Pat Carlson said the deal accelerates plans to complete a 10,000 bpd project by late 2008. The combination of interests will “eliminate the joint venture mechanics, enhance our flexibility to bring in a strategic partner and create a more valuable larger entity,” he said.

Since its incorporation in 2001, North American has raised C$96 million in private equity and assembled a team with experience in land acquisition and the steam-assisted gravity drainage technology used in the oil sands and upgrading. The executive team averages more than 30 years’ experience in similar projects and many have played key roles in other bitumen recovery projects.

The project, called Kai Kos Dehseh, is planned to include an upgrading facility, with the first phase scheduled to start processing 70,000 bpd in 2011 and expand to 160,000 bpd in 2014.

The upstream component is being designed around five distinct hubs and four smaller satellite hubs, ranging in size from 10,000 bpd to 40,000 bpd.

North American anticipates filing for regulatory approval in the current quarter once an appraisal of its winter drilling is completed.

The company’s shareholders include ARC Energy Venture Fund 3, ARC Energy Venture Fund 4, Teacher’s Private Capital, a division of Ontario Teachers’ Pension Plan and members of the management team. l






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