US Oil Sands (TSX-V:USO) gave up 20% on Thursday on nine times its usual trading volumes despite the lack of fresh news from the company.
By late afternoon the explorer and developer was trading down 20% at $0.12, off its worst levels for the day.
The $34 million company is showing heavy losses for 2012 – it is down 40% year to date and is worth 56% less on the Toronto venture market than this time last year.
The Calgary-based company has a 100% interest in bitumen leases covering 32,005 acres of land in Utah’s Uinta basin.
In May the company increased the size of its private placing to $11 million at a price per share of $0.18, which US Oil Sands said will be used to initiate construction at its PR Spring project, the first commercial oil sands extraction project in the US.
The PR Spring project is on-target for completion and start-up in the final quarter of next year. The company uses a modular construction method allowing for rapid construction in 2,000 barrel per day phases.
The initial 2,000 barrels per day facility is expected to cost $30 million to construct, while subsequent phases could be added at a cost of $25 million, US Oil Sands said, adding that it is looking for partners on the project.
Comments
Oilsandsman
These Utah oil sands are not the same as the oil sands in Canada. The size of the deposits are much smaller. The entire Asphalt Ridge deposit has about 0.5 billion barrels of reserves while some individual leases in the Athabasca are several billion barrels on their own. The thickness of the deposits are much less than Athabasca with seams of metres not 10’s of meters like in Alberta. The biggest differences between the two deposits is that the Canadian oil sands are located in unindurated sand that can be excavated without blasting while the Utah oil sands are contained in sandstone that requires blasting and crushing before processing. In addition, the oil sands in Canada are ‘”water wet” meaning the bitumen is not attached directly to the sand and can be separated from the sand with processes using only water. The Utah oil sands are oil wet requiring high temperature retorting to separate the oil from the sand. Both the excavating and oil extraction costs are much higher for the Utah deposits.
The end result is that the economics of oil production from Utah oil sands is far from what it is from Canadian oil sands. That is why there is no major oil companies attempting to develop this deposit. Many of them experimented with exploitation of these deposits in the 1970’s and 1980’s but finally left.