CALGARY, Alberta, May 14 - UTS Energy Corp (UTS.TO), which fended off a hostile takeover attempt by France's Total SA (TOTF.PA) last month, said on Thursday it may now cost only C$8 billion ($6.8 billion) to build the delayed Fort Hills oil sands project.
Will Roach, chief executive of the oil sands developer, told shareholders at UTS's annual meeting that costs to build the 160,000 barrel per day project may have fallen more than 40 percent from the last official estimate of C$14 billion as the recession cuts the cost of labor and materials.
"Today's cost estimate reflects the new business environment and the reality we are currently in," Roach said.
UTS has a 20 percent stake in Fort Hills and has offered the most detailed new cost estimate for the project. Petro-Canada (PCA.TO), which has a 60 percent stake, said last month that Fort Hills would likely cost less than C$10 billion.
"It's UTS's view that (cost) could migrate down to C$8 billion," Roach said.
Petro-Canada deferred the project last year after it decided to look at ways to reduce the original C$14 billion tab.
Roach said the the costs of mining the oil sands' tar-like bitumen at the Fort Hills site in northeastern Alberta could be lowered further should Suncor Energy Inc (SU.TO) complete its planned acquisition of Petro-Canada, offering the project access to Suncor's existing infrastructure in the region.
Miner Teck Resources Ltd (TCKb.TO) owns the remaining 20 percent of the project.
Roach said UTS was continuing to look for ways to boost the value of its shares, a process that it began as it fought off Total's final C$1.70 per share bid.
However he offered few details on when that effort, which could involve selling all or part of the company, would be complete.
UTS shares were unchanged at C$1.50 on the Toronto Stock Exchange on Thursday.
($1=$1.17 Canadian)
Will Roach, chief executive of the oil sands developer, told shareholders at UTS's annual meeting that costs to build the 160,000 barrel per day project may have fallen more than 40 percent from the last official estimate of C$14 billion as the recession cuts the cost of labor and materials.
"Today's cost estimate reflects the new business environment and the reality we are currently in," Roach said.
UTS has a 20 percent stake in Fort Hills and has offered the most detailed new cost estimate for the project. Petro-Canada (PCA.TO), which has a 60 percent stake, said last month that Fort Hills would likely cost less than C$10 billion.
"It's UTS's view that (cost) could migrate down to C$8 billion," Roach said.
Petro-Canada deferred the project last year after it decided to look at ways to reduce the original C$14 billion tab.
Roach said the the costs of mining the oil sands' tar-like bitumen at the Fort Hills site in northeastern Alberta could be lowered further should Suncor Energy Inc (SU.TO) complete its planned acquisition of Petro-Canada, offering the project access to Suncor's existing infrastructure in the region.
Miner Teck Resources Ltd (TCKb.TO) owns the remaining 20 percent of the project.
Roach said UTS was continuing to look for ways to boost the value of its shares, a process that it began as it fought off Total's final C$1.70 per share bid.
However he offered few details on when that effort, which could involve selling all or part of the company, would be complete.
UTS shares were unchanged at C$1.50 on the Toronto Stock Exchange on Thursday.
($1=$1.17 Canadian)
