Sunshine Oilsands Ltd.: Update on West Ells Project Capital Cost Estimate and Construction Schedule

HONG KONG, April 22, 2013 /PRNewswire/ -- Sunshine Oilsands Ltd. ("Sunshine") (HKEX: 2012; TSX: SUO) has undertaken a detailed review of its cost estimate and schedule for the West Ells SAGD Project, currently under construction near Ft. McMurray, Alberta. The installed cost for the Project was previously estimated at approximately $468 million, excluding contingencies and $30 million for the shared, multi-project main access road, with first steam scheduled for the third quarter of 2013. 

While good progress and important milestones have been achieved on the Project, several factors have contributed to an assessment that the West Ells project will see minor delays and higher costs. Sunshine now expects Phase 1 first steam to be injected in late Q3 or early Q4.

Total (Phase 1 and 2) direct costs at West Ells are now estimated at approximately $496 million, excluding the road and further contingencies. This new figure is based on our revised cost and presentation format, with certain expenditure items now allocated out to other areas of investment or cost categories. 

The Project's current status for selected areas of activity is summarized as:

• Drilling of the first eight well pairs for the 5,000 bpd Phase 1 is now complete, with well completions underway.  The drilling rig will now move to the second well pad required for the additional 5,000 bpd Phase 2, scheduled to be brought on line in the first quarter of 2014.
• Approximately 75% of the piles have been set for Phase 1, with Phase 1 piling expected to be completed by the end of May.
• Module procurement is well underway, with 5 modules completed and the balance of Phase 1 modules under construction.
• Field constructed storage tanks are 60% complete.
• About 80% of the operations team has been hired and is expected to move to the site over the next two months to assist with facility turnover, commissioning and start up.

With the currently anticipated cost increases, and after allowing for expenditures for costs and investments in other categories of activity, Sunshine forecasts its 2013 overall capital needs to grow by approximately $30 million.  This estimate assumes certain investments relating to development of future projects will be deferred if necessary.  Overall funding for 2013 and 2014 will continue to come from a combination of cash on hand, borrowing, and potential joint ventures, as well as revenue from early stage production from West Ells in 2014. Sunshine intends to use the Company's revolving credit facility of up to $200 million as a source of funding, with availability and size subject to meeting certain tests. Sunshine has notified its lending group of the increased capital cost at West Ells.  The Company continues to monitor markets to optimize its sources of funding. 

ABOUT SUNSHINE OILSANDS LTD.

Sunshine Oilsands Ltd. is one of the largest non-partnered holders of oil sands leases by area in the Athabasca oil sands region, which is located in the province of Alberta, Canada. Since the Company's incorporation on 22 February 2007, Sunshine has secured over one million acres of oil sands leases (equal to approximately 7% of all granted leases in this area).

The Company's principal operations are the exploration, development and production of its diverse portfolio of oil sands leases. Its principal operating regions in the Athabasca area are at West Ells, Thickwood, Legend Lake, Harper, Muskwa, Goffer, Pelican and Portage. Sunshine's oil sands leases are grouped into three main asset categories: clastics, carbonates and conventional heavy oil.

FORWARD-LOOKING INFORMATION AND DISCLAIMER

This announcement may contain forward-looking information that is subject to various risks, uncertainties and other factors. All statements other than statements and information of historical fact are forward-looking statements. The use of any words "estimate", "forecast", "expect", "project", "plan", "target", "vision", "goal", "outlook", "may", "will", "should", "believe", "intend", "anticipate", "potential", and similar expressions are intended to identify forward-looking statements. Forward-looking statements are based on Sunshine's experience, current beliefs, assumptions, information and perception of historical trends available to Sunshine, and are subject to a variety of risks and uncertainties including, but not limited to those associated with resource definition and expected reserves and contingent and prospective resources estimates, unanticipated costs and expenses, regulatory approval, fluctuating oil and gas prices, expected future production, the ability to access sufficient capital to finance future development and credit risks, changes in Alberta's regulatory framework, including changes to regulatory approval process and land-use designations, royalty, tax, environmental, greenhouse gas, carbon and other laws or regulations and the impact thereof and the costs associated with compliance. Although Sunshine believes that the expectations represented by such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. Readers are cautioned that the assumptions and factors discussed in this information release are not exhaustive and readers are not to place undue reliance on forward-looking statements as our actual results may differ materially from those expressed or implied. Sunshine disclaims any intention or obligation to update or revise any forward-looking statements as a result of new information, future events or otherwise, subsequent to the date of this announcement, except as required under applicable securities legislation. The forward-looking statements speak only as of the date of this announcement and are expressly qualified by these cautionary statements. Readers are cautioned that the foregoing lists are not exhaustive and are made as at the date hereof. For a full discussion of our material risk factors, see "Risk Factors" in our most recent Annual Information Form, "Risk Management" in our current MD&A and risk factors described in other documents we file from time to time with securities regulatory authorities, all of which are available on the Hong Kong Stock Exchange at www.hkexnews.hk, on the SEDAR website at www.sedar.com or our website at www.sunshineoilsands.com.

This document does not constitute and is not an offer to sell or a solicitation of an offer to buy common shares of the Company in the United States (including its territories and possessions, any State of the United States and the District of Columbia) or elsewhere.

SOURCE Sunshine Oilsands Ltd.