Fort Hills partner UTS sees Fort Hills starting up in late 2015

CALGARY — The very earliest at which crude will begin flowing out of the Fort Hills oilsands project will be late 2015, the chief executive of UTS Energy Corp. (TSX:UTS) said Monday.

CALGARY — The very earliest at which crude will begin flowing out of the Fort Hills oilsands project will be late 2015, the chief executive of UTS Energy Corp. (TSX:UTS) said Monday.

“You have to have some patience,” Will Roach told analysts on a conference call Monday to discuss his company’s third-quarter results.

“I understand from the shareholder perspective that’s not always very attractive. But these oilsands assets are long-term in nature, very high capital intensity and you have to spend the right time to get the right technologies and the right strategy to develop them.”

Suncor Energy Inc. (TSX:SU) is the operator of Fort Hills with a 60 per cent stake; UTS and Vancouver-based miner Teck Resources Ltd. (TSX:TCK.B) evenly split the rest.

Suncor inherited the Fort Hills interest through its merger with Petro-Canada in August.

On Friday, Suncor chief executive Rick George said moving ahead with Fort Hills would not be a priority in 2010 and expansions to its Firebag project would be first in the queue.

“Obviously it is not in this first leg. It’s hard for us to see project economics beating Firebag 3 or 4 for other projects that we have, certainly in the near term,” George said.

UTS expected its partner would make that decision, given that the Firebag is much further along in development than Fort Hills.

“This comes as no surprise and actually we’re quite constructively looking at this development,” Roach said.

“We think it will take about a year to sort out the best way to develop Fort Hills and it shows really that there’s quite complicated and large opportunities for synergies with the Suncor infrastructure.”

On a conference call with analysts Friday to go over its spending plans for next year, George said Suncor would target an average of 10 to 12 per cent annual production growth in the oilsands through to 2020.

Fort Hills will need to come on stream some time in the next decade in order for Suncor to meet that target, Roach said.

Ray Reipas, vice-president of energy at Teck Resources Inc., said the mining company is talking with its partners.

“We are committed to working with Suncor and UTS to optimize the Fort Hills project in both its design and schedule,” Reipas said.

UTS is in a “waiting game” until Suncor makes a decision on Fort Hills late next year, wrote UBS Investment Research analyst Andrew Potter in a note to clients Monday.

“Despite the lack of clarity concerning Fort Hills, the market for oil sands transactions appears to be heating up with resource valuations coming back in-line to 2008 levels,” he said.

“This should provide some positive read-through for UTS with the potential for the company to be an acquisition target.”

In addition to Fort Hills, UTS also splits ownership of the Frontier and Equinox oilsands properties with Teck.

UTS recently sold its half-interest in the Lease 421 area to Imperial Oil Ltd. (TSX:IMO) and its U.S. parent company ExxonMobil Corp. (NYSE:XOM) for $250 million.

That transaction marked the end of a strategic review triggered by a hostile takeover bid from French energy giant Total S.A.’s Canadian arm earlier this year.

Another small oilsands player, Opti Canada Inc. (TSX:OPC), is in the midst of a strategic review of its own, in which a sale of the company or its assets are being weighed.

On Monday, Opti said it intends to fund that process through a US$425 million private placement offering of senior secured notes.

Late Friday UTS said it lost $4.7 million in the third quarter compared with a loss of $936,000 a year ago.

The loss for the quarter ended Sept. 30 amounted to a penny per share compared with a loss of $936,000 or 0.2 cents per share a year ago.

Revenue totalled $205,000, down from $3 million.

UTS shares rose four cents, or 1.9 per cent, to $2.17 on the Toronto Stock Exchange Monday.

Just Posted

WATCH: Central Albertans learn about farm life at Sunnybrook Farm Museum

Pioneer Days Festival in Red Deer Saturday-Sunday

Number of seniors who play bridge in Red Deer growing

Red Deer Bridge Club has been around for close to 60 years

PHOTOS: Buccaneers battle Wolfpack in AFL semifinal

The Central Alberta Buccaneers battled the Calgary Wolfpack in the Alberta Football… Continue reading

Raising awareness for Bikers Against Child Abuse

Second annual Raise A Ruckus Against Child Abuse was held at the Red Deer Radisson Hotel Saturday

Central Alberta Yogathon cancelled Saturday

Due to air quality concerns the fourth annual event will take place Sept. 15

VIDEO: Central Albertans learn about Icelandic poet at Stephansson House

Harvest Fair and Quilt Show hosted at Stephansson House in Spruce View Sunday

Trump says his White House counsel not a ‘RAT’ like Nixon’s

BRIDGEWATER, N.J. — President Donald Trump insisted Sunday that his White House… Continue reading

Wildfire moves closer to Glacier National Park’s scenic road

MISSOULA, Mont. — A wildfire in Montana’s Glacier National Park is forcing… Continue reading

Prime Minister Trudeau, Premier Couillard march in Montreal’s Pride parade

MONTREAL — Thousands of cheering spectators lined the streets of Montreal on… Continue reading

All eyes on Andrew Scheer as Conservative convention set for Halifax

OTTAWA — After a week of internal caucus squabbles, Conservative Leader Andrew… Continue reading

Canadians fear for relatives trapped amid flooding in Indian state of Kerala

In the wake of deadly flooding in the Indian state of Kerala,… Continue reading

Indonesia’s Lombok island jolted by multiple quakes

SEMBALUN, Indonesia — Strong earthquakes jolted the Indonesian tourist island of Lombok… Continue reading

Afghan president calls for Eid cease-fire, Taliban to reply

KABUL — Afghan President Ashraf Ghani has called for a conditional cease-fire… Continue reading

Montreal may have less influence after October provincial election

MONTREAL — When Coalition Avenir Quebec Leader Francois Legault recently dismissed the… Continue reading

Most Read

Five-day delivery plus unlimited digital access for $185 for 260 issues (must live in delivery area to qualify) Unlimited Digital Access 99 cents for the first four weeks and then only $15 per month Five-day delivery plus unlimited digital access for $15 a month