Baytex Announces Acquisition Of Oil Sands Leases And Approved SAGD Project

abarrelfull wrote on 04 Oct 2012 12:51
Tags: baytex canada n-america oil-sands

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Baytex Energy Corp. ("Baytex") (TSX, NYSE: BTE) is pleased to announce that it has entered into an agreement to acquire a 100% working interest in approximately 46 sections of undeveloped oil sands leases in the Cold Lake area of northeast Alberta. Total consideration for the acquisition of $120 million (before closing adjustments and costs) will be funded by drawing on Baytex's revolving credit facility. The acquisition is expected to close in early October.

The undeveloped oil sands leases are proximal to our core heavy oil assets at Cold Lake and are prospective for both thermal and cold development. Regulatory approval has been received for the construction and operation of a two-stage bitumen recovery scheme using steam-assisted gravity
drainage ("SAGD"). Baytex anticipates moving forward with a pilot SAGD project in 2013. Upon success of the pilot project, construction of a commercial 5,000 bbl/d SAGD project would commence in 2014 with initial production in 2016. In addition to the currently approved SAGD project, Baytex has identified additional areas that are prospective for thermal development.

The acquisition adds an approved SAGD project to Baytex's asset portfolio, which currently includes thermal recovery projects at Seal in the Peace River Oil Sands and at Kerrobert in southwest Saskatchewan. Once developed, thermal recovery projects provide a source of long life, low decline
production. Developing these projects will reduce our corporate decline rate and enhance our ability to continue to execute our growth and income model over the long term.

Reserves associated with the identified SAGD project total approximately 43.7 million barrels on a proved plus probable basis (100% bitumen), effective August 31, 2012, as evaluated by Sproule Associates Limited in accordance with National Instrument 51-101 "Standards of Disclosure for Oil and Gas
Activities". Over the life of this project, we estimate that finding, development and acquisition costs will approximate $12.50 per barrel.
Commenting on the acquisition, James Bowzer, President and Chief Executive Officer, said: “The acquisition of these oil sands leases is consistent with Baytex’s strategy to build upon our existing heavy oil and thermal expertise. These leases are adjacent to our existing Cold lake operations, and the SAGD project complements our existing thermal operations at Seal and Kerrobert. Beyond the thermal potential, we have also identified opportunities for cold horizontal development on the acquired lands.”

To view a map of the acquired lands along with Baytex’s existing land position in the Cold Lake region, please visit the following link or Baytex's website at www.baytex.ab.ca.

• Baytex Announces Acquisition Of Oil Sands Leases And Approved SAGD Project

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