Thermal Oil Division

World Class Thermal Oil Assets

Athabasca continued the development of its thermal oil assets, proceeding on many parallel fronts –– exploration, development, road construction, Thermal Assisted Gravity Drainage (“TAGD”) production testing, environmental impact assessments, engineering procurement and modularization.

Athabasca has accumulated greater than 1.5 million (net) acres of oil sands leases in the Athabasca area of northern Alberta. The leases are wholly-owned, with the exception of the Grosmont Carbonate Project and the Dover Joint Venture where the Company holds a 50-percent and a 40-percent interest, respectively.

Oil sands development targets include bitumen in the stacked Wabiskaw and McMurray formations as well as bitumen in the carbonates of the Leduc and Grosmont formations. The Company expects to produce bitumen using in situ production technologies including Steam Assisted Gravity Drainage (“SAGD”) and TAGD, its innovative downhole electrical resistance technology.

The Thermal Oil Division’s contingent bitumen resources (best estimate) increased, year-over-year, by approximately eight percent to 10.6 billion bbl. At year-end, Athabasca had 342 million bbl of proved plus probable bitumen reserves.

Regulatory approvals of the Hangingstone Project 1 – combined with project sanctioning by the Board of Directors – precipitated the reclassification of 51 million bbl of probable reserves to the proved reserve category, effective December 31, 2012.

The acquisition of the drilling, core and seismic data, acquired during the winter of 2011-2012, has enhanced the Company’s geological and geophysical understanding of the complex subsurface depositional environments, further delineating Athabasca’s abundant bitumen resources. Data obtained during the winter drilling and seismic programs were analyzed by independent engineers, increasing Athabasca’s year-over-year bitumen reserves and contingent resources.

Development work continued, during 2012, to unlock the vast bitumen potential of Athabasca’s carbonate plays. The Company conducted two “proof of concept” TAGD field tests at Dover West, effectively heating the carbonate reservoir and mobilizing bitumen to a production well. Near Strathmore, Alberta, Athabasca commenced the construction of the Heater Assembly Facility where the TAGD downhole heater prototype was tested.