Unconventional Oil

[johnlw]

UTS Energy to JV on lease 14 with Teck


UTS Energy Corp (C:UTS)
Shares Issued 427,447,073
Last Close 4/18/2007 $4.51
Thursday April 19 2007 - News Release

Dr. William Roach reports

UTS ANNOUNCES TECK COMINCO BUYS A 50% WORKING INTEREST IN LEASE 14

UTS Energy Corp. has entered into a letter of intent with Teck Cominco Ltd. under which Teck Cominco will acquire a 50-per-cent interest in lease 14 for $200-million. Teck Cominco has had an option to acquire 50 per cent of lease 14 since 2005. The price is based on a value of $1.00 per barrel and an assumed bitumen resource for 100 per cent of lease 14 of approximately 400 million barrels. Closing of the transaction is conditional on customary conditions, including settlement of definitive documentation.

"We are very pleased to partner once again with Teck Cominco. This investment aligns UTS's and Teck Cominco's holdings into a 50:50 venture on the west side of the Athabasca River, and, we firmly believe, provides tangible benefits to both companies," said William Roach, president and chief executive officer. "This transaction has a profound impact on UTS in three fundamental ways. Firstly, it fully repays UTS's $80-million obligation to Teck Cominco for our share of the 50:50 land acquisition programs. Secondly, it effectively funds UTS's share of the joint exploration and delineation program for the next two to three years. Thirdly, and perhaps most importantly, this transaction provides a new benchmark for the value of bitumen barrels in the ground on the west side of the Athabasca River, where UTS and Teck Cominco have found substantial oil sands about six miles north of lease 14 in the lease 311 area."

The transaction is expected to close in the third quarter of 2007 with the final adjustment to take place once the full analysis of the lease 14 drilling results is complete. The purchase price may be adjusted based on the resource estimate to reflect a maximum of 500 million barrels or a minimum of 300 million barrels at $1 per barrel. This is consistent with our previously disclosed estimate contained in our annual information form. Results of the detailed core analyses and the independent engineering estimate of bitumen resources are expected by the fourth quarter of 2007.

"We believe that lease 14 contains sufficient exploitable crude bitumen resource to support a stand-alone or a satellite mining project of 50,000 barrels per day of bitumen," Dr. Roach continued, "Further, based on initial review of well logs from lease 311 and the surrounding area, we believe that we now have a significant resource base outside of the Fort Hills project."

Lease 14 is located in the Athabasca oil sands area and comprises approximately 7,147 acres (2,858 hectares) in township 98, ranges 10 and 11 W4, on the west side of the Athabasca River, and across from the northern boundary of the Fort Hills oil sands project. It is approximately 20 kilometres north of Syncrude's Aurora North operations, and a similar distance north of CNRL's Horizon project. Lease 14 is situated between Shell Canada Ltd.'s oil sands leases 9 and 17, which are at the southern end of the proposed Pierre River mine.

Lease 311 comprises approximately 11,520 acres (4,608 hectares) and is located 10 kilometres north of lease 14 in township 100, range 11 W4 in the Athabasca oil sands area. Lease 311 is owned jointly with Teck Cominco on a 50:50 basis. UTS and Teck Cominco also jointly own leases 477, 610 and 840, contiguous and directly to the north of lease 311 (comprising about 43,520 acres, or 17,408 hectares), and leases 468 and 470, contiguous and directly west of lease 311 (comprising about 10,240 acres, or 4,096 hectares).

As a result of the successes from this winter's exploration program, UTS and Teck Cominco have commenced developing preliminary plans for a program of up to 400 core holes next winter. The focus of next year's program will be to delineate lease 311 and the surrounding area comprising of leases 468, 470 and 477 extensively with approximately 300 additional core holes. A further 70 to 100 core holes will target continued evaluation of the other exploration leases which may include some drilling on jointly held insitu leases.

For additional information on leases 14 and 311, please refer to the company's annual information form filed on SEDAR.