Announcement of results for the first quarter ended March 31, 2018 and an update on West Ells progress
CALGARY/HONG KONG – Sunshine Oilsands Ltd. (the “Corporation” or “Sunshine”) (HKEX: 2012) today announced its financial results for the first quarter ended March 31, 2018. The Corporation’s condensed consolidated interim financial statements, notes to the condensed consolidated interim financial statements and management’s discussion and analysis have been filed on SEDAR (www.sedar.com) and with The Stock Exchange of Hong Kong Limited (the “Hong Kong Stock Exchange”) (www.hkexnews.hk) and are available on the Corporation’s website (www.sunshineoilsands.com). All figures used in this release are in Canadian dollars unless otherwise stated.
MESSAGE TO SHAREHOLDERS
For three months ended March 31, 2018, the Company’s average bitumen production was 2,036 bbls/day. Diluent was blended at an 18.2% volumetric rate with the bitumen as part of the production process to create the marketable “Dilbit” blend product, and the average dilbit sales volume was 2,660 bbls/day in the first quarter of 2018.
During the first quarter of 2018, the temporary widened differential between West Texas Intermediate (“WTI”) and Western Canadian Select (“WCS”) prices put significant downward pressure on realizable prices for dilbit. Production was therefore constrained in the first quarter in order to minimize operating losses while ensuring the facilities operated efficiently. Since the end of the first quarter, the differential has narrowed significantly.
Sunshine’s Capital Raising Activities during 1Q18
On January 16, 2018 the Company entered into a subscription agreement for a total of 80,882,500 class “A” common shares at a price of HKD $0.272 per share (approximately CAD $0.043 per common share), for gross proceeds of HKD $22.0 million (approximately CAD $3.5 million). On January 22, 2018 the Company completed the closing of this subscription agreement. In addition, a placing commission of HKD $0.7 million (approximately CAD $0.1 million), was incurred in relation to the closing.
On February 5, 2018 the Company entered into a subscription agreement for a total of 122,951,000 class “A” common shares at a price of HKD $0.244 per share (approximately CAD $0.039 per common share), for gross proceeds of HKD $30.0 million (approximately CAD $4.75 million). On February 13, 2018 the Company completed the closing of 116,803,500 class “A” common shares at a price of HKD $0.244 per share for gross proceeds of HKD $28.3 million (approximately CAD $4.6 million) of this subscription agreement. In addition, a placing commission of HKD $0.9 million (approximately CAD $0.14 million), was incurred in relation to the closing. The subscription agreement expired on February 13, 2018 and hence the time to close the remaining 6,147,500 class “A” common shares lapsed.
On February 28, 2018 the Company entered into a subscription agreement for a total of 102,436,500 class “A” common shares at a price of HKD $0.245 per share (approximately CAD $0.040 per common share), for gross proceeds of HKD $25.1 million (approximately CAD $4.1 million). A payment of CAD $455,005 cash is to be made. On March 14, 2018 the Company completed the closing of this subscription agreement and a payment of $227,502 was made with the remaining balance due within 45 days after signing the agreement. This subscription agreement was entered into for settlement of indebtedness with two independent third parties.
On March 2, 2018 the Company entered into a subscription agreement for a total of 20,393,059 class “A” common shares at a price of HKD $0.245 per share (approximately CAD $0.040 per common share), for gross proceeds of HKD $5.0 million (approximately CAD $0.8 million). On March 14, 2018 the Company completed the closing of this subscription agreement. This subscription agreement was entered into for settlement of indebtedness with independent third parties.
On August 24, 2017, November 16, 2017 and November 28, 2017, the Company signed loan agreements with Prime Union. The Loan interest rate was 6.0% per annum and required repayment in full within three months from the date of the receipt of the loan, the total loans amount were HKD $33.3 million (approximately CAD $5.4 million). As at March 31, 2018, all the loans and interests were paid in full.
Summary of Financial Figures
As at March 31, 2018 and December 31, 2017, the Corporation notes the following selected balance sheet figures.
2018 Outlook
Sunshine sees a brightening outlook as international oil prices stabilize and steadily increase and the heavy price differential narrows. The Company will continue to focus on cost controls and on carefully improving production performance as SAGD chambers mature, which will increase production at West Ells. Since the end of the first quarter, realizable dilbit prices have increased significantly. After the planned five day West Ells plant turnaround in May 2018, the Company intends to ramp up production in an environment that is expected to achieve increasingly positive operating dilbit netbacks.
| Kwok Ping Sun | Gloria Ho | |
| Executive Chairman | Chief Financial Officer |
ABOUT SUNSHINE OILSANDS LTD.
The Corporation is a Calgary based public corporation, listed on the Hong Kong Stock Exchange since March 1, 2012. The Corporation is focused on the development of its significant holdings of oil sands and heavy oil leases in the Athabasca oil sands region. The Corporation owns interests in oil sands and petroleum and natural gas leases in the Athabasca region of Alberta. The Corporation is currently focused on executing milestone undertakings in the West Ells project area. West Ells Phase 1 is operational and has an initial production target of 5,000 barrels per day.
For further enquiries, please contact:
Kwok Ping Sun
Executive Chairman
Tel: + 852-3188-9298
Gloria Ho
Chief Financial Officer
Tel: + 852-3188-9298
Email: [email protected]
FORWARD LOOKING INFORMATION
This announcement contains forward-looking information relating to, among other things, (a) the future financial performance and objectives of Sunshine; (b) the plans and expectations of the Corporation; and (c) the anticipated closings of the current private placements and the timing thereof. Such forward-looking information 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 words such as “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 announcement are not exhaustive and readers are not to place undue reliance on forward-looking statements as the Corporation’s 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 at 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 the Corporation’s material risk factors, see the Corporation’s annual information form for the year ended December 31, 2017 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 the Corporation’s website at www.sunshineoilsands.com.