Canadian Oil Sands Trust

Canadian Oil Sands Trust

October 28, 2009 17:45 ET

Canadian Oil Sands Provides 2010 Budget

CALGARY, ALBERTA--(Marketwire - Oct. 28, 2009) - Canadian Oil Sands Trust (TSX:COS.UN) (the "Trust" or "Canadian Oil Sands" or "we") today announced our Budget for 2010. Unless otherwise noted, all figures are based on Canadian Oil Sands' 36.74 per cent working interest in the Syncrude joint venture and all financial figures are in Canadian dollars.

The 2010 budget includes the following key assumptions and highlights:

Key Assumptions (millions of Canadian dollars, except volume and per barrel

Syncrude production (MMbbls) 115
Canadian Oil Sands Sales (MMbbls) 42.3
Revenues, net of crude oil purchases and transportation 2,986
Operating costs 1,479
Operating costs per barrel 35.01
Crown royalties 272
Capital expenditures 541
Cash from operating activities 969

Business environment assumptions
West Texas Intermediate (US$/bbl) 70.00
Premium (Discount) to average C$ WTI prices (C$/bbl) (3.00)
Foreign exchange rate (US$/Cdn$) 0.95
AECO natural gas (Cdn$/GJ) 6.00

- Canadian Oil Sands is budgeting Syncrude production of 115 million barrels with a 110 to 120 million barrel production range. The 115 million barrel Syncrude production estimate includes one planned coker turnaround in the second half of 2010 and an allowance for unplanned maintenance work.

- Revenues, net of crude oil purchases and transportation, are estimated at $3 billion, reflecting our single point production estimate and a $71 per barrel sales price.

- Per barrel operating costs in 2010 are anticipated to be $35 per barrel. Total budgeted 2010 operating costs of $1.5 billion reflect a $6 per gigajoule ("GJ") natural gas price assumption, consumption of one GJ per barrel, and continued use of contractors to supplement mining activities.

- Capital expenditures in 2010, which primarily relate to sustaining existing operations, are comprised of $408 million for maintenance of business and $133 million for the Syncrude Emissions Reduction (SER) project. This environmental project is designed to reduce sulphur compound emissions by approximately 60 per cent from current approved levels once the project is fully operational. The expected completion date is 2011.

- Cash from operating activities is estimated at $1 billion, or $2 per Trust Unit.

The 2010 budget can be impacted by a variety of factors. Some of the more significant variables include, without limitation:

- Crude oil prices: Canadian Oil Sands' 2010 production is currently unhedged. Accordingly, the Trust's cash from operating activities is highly sensitive to changes in crude oil prices and foreign exchange rates. Every US$1.00 per barrel change in the annual WTI crude oil price impacts cash from operating activities by about $33 million or $0.07 per Trust unit. Other key sensitivities are provided in our 2010 Guidance Document.

- Syncrude operational reliability and production: Timing of unit turnarounds and maintenance cannot be precisely scheduled and unplanned outages may occur. In addition to the impact on production, maintenance and turnaround activities affect operating costs because the costs associated with these activities are expensed in the period incurred. The effect on per barrel operating costs is amplified as the facility is generally producing at reduced rates when maintenance work is occurring. The reverse is also true, meaning per barrel operating costs decline with better operational reliability.

"We expect steadier operations in 2010 with production averaging 315,000 barrels per day, or about 90 per cent of Syncrude's current design capacity," said Marcel Coutu, Canadian Oil Sands' President and Chief Executive Officer. "Syncrude's focus remains on improving operational reliability. The majority of Imperial Oil/ExxonMobil's systems have been introduced at Syncrude through the Management Services Agreement and the effort now is directed at fully integrating them into the operations as we drive to achieve Syncrude's design capacity of 350,000 barrels per day."

Mr. Coutu added: "2010 also marks our last year as an income trust. We do not expect our transition to a corporate structure to change our approach to the business. We intend to continue to use the cash generated in our business to sustain operations and help fund growth, with a disciplined approach to distributing excess cash through dividends. We thus expect our dividends will be variable, similar to the distributions we have paid as a trust, reflecting changes in crude oil prices and economic conditions, and Syncrude operating performance and capital commitments. We have the advantage of a long-life crude oil resource and the ability to expand production to support both asset growth and dividends."

More information on the Trust's 2010 Budget, including the sensitivity analysis, is provided in our 2010 Guidance Document, which is available on the Trust's web site at under "investor". Canadian Oil Sands intends to continue providing quarterly updates to its guidance.

Located near Fort McMurray, Alberta, Syncrude Canada operates large oil-sands mines and an upgrading facility that produces a light, sweet crude oil on behalf of its joint venture owners, which include Canadian Oil Sands Limited, ConocoPhillips Oilsands Partnership II, Imperial Oil Resources, Mocal Energy Limited, Murphy Oil Company Ltd., Nexen Oil Sands Partnership, and Petro-Canada Oil and Gas (Suncor).

Canadian Oil Sands provides a pure investment opportunity in the Syncrude Project through its 36.74 per cent working interest. The Trust is an open-ended investment trust managed by Canadian Oil Sands Limited and has approximately 484.4 million units outstanding, trading on the Toronto Stock Exchange under the symbol COS.UN.

Advisory: in the interest of providing Canadian Oil Sands Trust ("Canadian Oil Sands" or the "Trust") unitholders and potential investors with information regarding the Trust, including management's assessment of the Trust's future plans and operations, certain statements throughout this release contain "forward-looking statements" under applicable securities law. Forward-looking statements in this release include, but are not limited to, statements with respect to: the expected production and Canadian Oil Sands sales in 2010; the expected operating costs for 2010; the amount of cash from operating activities in 2010; the capital forecast for 2010; the type of maintenance that will be required in 2010; energy costs, WTI prices, the premium (discount) to WTI, and foreign exchange rates in 2010; estimates of Crown royalties for 2010; plans to reach design capacity by the end of 2010; plans relating to distributions/dividends as a corporation; expected cost and reduction in sulphur emissions relating to the SER project; plans with respect to the conversion from a trust to a corporate structure; the average per barrel production for 2010; and the ability to expand production to support asset growth and dividends. You are cautioned not to place undue reliance on forward-looking statements, as there can be no assurance that the plans, intentions or expectations upon which they are based will occur. By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and other forward-looking statements will not occur.
Although the Trust 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. Some of the risks and other factors which could cause results to differ materially from those expressed in the forward-looking statements contained in this release include, but are not limited to: general operational issues relating to a complex, integrated mining and upgrading facility; operating constraints due to weather, especially as it relates to bitumen production; the regulatory changes that impact oil and gas operations; the nature of the regulations imposed by the federal government on income trusts; general economic, business and market conditions, especially in the current credit market environment; commodity prices; and such other risks and uncertainties described from time to time in the reports and filings made with securities regulatory authorities by the Trust. You are cautioned that the foregoing list of important factors is not exhaustive. The 2010 Budget reflects various assumptions, which are outlined in the guidance document dated October 28, 2009. Furthermore, the forward-looking statements contained in this release are made as of the date of this release, and the Trust does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this release are expressly qualified by this cautionary statement. The information was approved by management on October 28, 2009 and circumstances after this date may change the outcomes or results achieved.

Canadian Oil Sands Limited

Marcel Coutu

President & Chief Executive Officer

Units Listed - Symbol: COS.UN

Toronto Stock Exchange

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