CALGARY (CP) -- UTS Energy Corp. [TSX:UTS] is on track to grow into a major energy producer within 15 years with the addition of the two oilsands projects near the Fort Hills project it is building with its partners, chief executive Will Roach said Wednesday.
The firm kicked off the formal regulatory process Tuesday for its Frontier and Equinox oilsands leases, which are situated just north of the Fort Hills project it is jointly developing with Petro-Canada [TSX:PCA; NYSE:PCZ] and Teck Cominco Ltd. [TSX:TCK.B; NYSE:TCK].
"Over the next 10 to 15 years we've got a major company to build out in stages," said Roach told an analyst conference call Wednesday.
"I fully expect our resource base to double by year end from what we had last year, which is a pretty substantial step forward in terms of organically growing value within the company."
In a public disclosure filing, UTS said it and partner Teck Cominco plan a first phase for Frontier that estimates production capacity of between 100,000 and 160,000 barrels per day of de-asphalted bitumen.
Early drilling results in the southern area of the Frontier mine were strong, but "overall those results weren't as good as we'd hoped in the northern part of that acreage," Roach said.
The company said the smaller Equinox asset will be developed in a single phase with estimated production of 50,000 barrels per day.
"Equinox now has got a number of different options," Roach said.
"Now Equinox can be looked at as a satellite to Fort Hills or a satellite to Frontier or perhaps integrated into the adjoining acreage around us operated by (Royal Dutch Shell PLC [NYSE:RDS-B; LSE:RDSB])."
Estimated costs for the projects were not disclosed.
Front-end engineering design work on the C$15.2-billion Fort Hills project is expected to wrap up by the middle of this year. Petro-Canada has a 60% interest, while UTS and Teck Cominco each have a 20% stake.
"I'd say we're about a month behind where we thought we would be, which is pretty good in today's environment," Roach said.
A number of other oilsands mega-projects have gone over budget, with the cost of labour and construction materials ballooning, but Roach said "we haven't had any major surprises so far on the cost estimate."
UTS expects to get an updated pricetag for Fort Hills sometime this summer and also anticipates it will get the regulatory go-ahead for its Sturgeon upgrader northeast of Edmonton soon.
The success of UTS's projects will depend on how the company deals with the environmental challenges they pose, Roach said.
"It's probably one of the most important issues alongside financing that we have to manage over the next little while."
UTS is taking part in an industry initiative that aims to pump huge amounts of carbon dioxide into underground saline aquifers and is looking into how much it would cost to make its mines carbon neutral.
On Tuesday UTS said it earned a 2007 profit of C$137.4 million, or 31 cents per diluted share, on C$191.6 million in revenue. That compared with a profit of C$6.5 million, or two cents per share, on C$3.8 million in revenue in 2006.
The 2007 results included a C$184.2-million gain on the sale of oilsands leases.
Shares in the company were down 74 cents at 5.36 on the Toronto Stock Exchange on Wednesday.
(c) The Canadian Press 2008