Harvest Operations Announces Acquisition of the BlackGold Oilsands Project

abarrelfullabarrelfull wrote on 04 Mar 2014 08:04

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Aug. 6th, 2010

Harvest Operations Corp. (TSX:HTE.DB.B) (TSX:HTE.DB.D) (TSX:HTE.DB.E) (TSX:HTE.DB.F) (TSX:HTE.DB.G) is pleased to announce that it has closed the acquisition of the BlackGold Oilsands Project (the "Acquisition") from Korea National Oil Corporation (KNOC) for C$374 million. The Acquisition was financed by Harvest with the issuance of additional shares to KNOC.

Acquisition Highlights:

  • Located in northeastern Alberta near Conklin and is in close proximity to a number of major oilsands developments;
  • The project has existing ERCB approval for a Phase 1 project of 10,000 bpd and has made an application for a Phase 2 project that would increase production to 30,000 bpd;
  • The project will utilize Steam Assisted Gravity Drainage (SAGD) - a proven production technology that uses horizontal drilling and thermal stimulation;
  • 259 mmboe of Proved plus Probable reserves as at December 31, 2009 as determined independently by GLJ Petroleum Consultants Ltd in accordance with National Instrument 51-101;
  • An incremental 30 million barrels of best estimate contingent resource also determined independently by GLJ Petroleum Consultants Ltd;
  • 100% working interest and operatorship;

Project costs for the first phase of the project (10,000bpd) during 2010-2012 are estimated at $ 450 - $500 million which includes drilling cost of 15 SAGD well pairs for start up. The steam generation and fluid processing facility has been committed to at a fixed cost of $312 million.

Harvest's upstream capital budget for 2010 will increase to $415 million to allow for the 2010 development costs of the project. KNOC has agreed to inject additional capital into Harvest in order to fund the 2010 BlackGold project costs.

Financing Highlights:

Harvest and KNOC have agreed to the issuance of 4.7 million shares at a price of C$10.00 per share to KNOC for a total cash consideration of $47 million as the first part of the capital injection necessary to fund the previously mentioned capital increase. It is expected the funding for the increase in capital will take place on August 20, 2010.

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