JOC ARCHIVES

November 5, 2012

Oilsands company plans Peace River area expansion

Baytex Energy Corp. is planning the expansion of a recently opened oilsands operation in the Peace River area of northwest Alberta by the end of the year, while buying undeveloped leases nearby to start construction of a new production facility in 2014.

“The acquisition of these oilsands leases is consistent with Baytex’s strategy to build upon our existing heavy oil and thermal expertise,” said James Bowzer, president and CEO of Baytex.

“These leases are adjacent to our existing Cold Lake operations, and the SAGD (Steam Assisted Gravity Drainage) project complements our existing thermal operations at Seal and Kerrobert.”

Baytex is a medium size oil and gas producer based in Calgary, which began operation of a 10-well commercial cyclic steam stimulation (CSS) project at Seal in the Peace River area in 2011.

In 2012, Baytex has a $400 million capital budget for exploration and development, with about 60 per cent being invested in heavy oil operations.

The majority of this investment is being directed to horizontal well development at Seal.

This budget also includes funding to begin drilling and facility construction on a second module of commercial thermal development at Seal, which is planned as a 15-well CSS project.

The company expects to start development of the second module during the fourth quarter of 2012, subject to the receipt of regulatory approvals.

Earlier this month, Baytex signed a deal to buy about 46 sections of undeveloped oilsands leases in the Cold Lake area for $120 million.

Although the seller is remaining private, it has been widely reported that the sellers are the U.S. billionaire Koch brothers.

In March, the Alberta Energy Resources Conservation Board approved the 10,000-bpd Gemini oilsands project on a 1,200 hectare property, which was proposed by the Canadian branch of Koch Industries Inc.

Regulatory approval has been received for the construction and operation of a two-stage bitumen recovery scheme using SAGD.

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