LONG LAKE (NEXEN/OPTI)

OPTI Canada announced the financial and operating results for the quarter ended June 30, 2009. For the three months ended June 30, 2009, earned revenue of $34 million. Operating expenses were $39 million for the three months ended June 30, 2009 and $67 million for the six months ended June 30, 2009. Bitumen production volumes for the second quarter averaged approximately 14,300 bbl/d (gross). Production volumes in the second quarter were impacted by downtime associated with improvements made to the HLS (Hot Lime Softener) units. Gross bitumen production rates reached a peak of approximately 18,000 bbl/d in June. At June 30, 2009, there were 41 of 81 well pairs on production operating with a Steam to Oil Ratio (SOR) that ranges between 4.0 and 5.0. Opti continues to anticipate a long-term SOR of 3.0. The ramp-up of the Long lake Project is progressing and the reservoir continues to perform as OPTI expected, given the amount of steam that has been injected. Steam volumes have been limited by the ability to treat water. With respect to the Upgrader, all major units are operational and synthesis gas has been used in SAGD operations, decreasing operating costs by reducing the requirement for purchased natural gas. Upgrader reliability is improving with an on-stream factor of 46% during the second quarter of 2009 compared to 33% in the first quarter of 2009. The PSC™ that has been marketed has, on average, been sold at pricing equal to or above pricing for other synthetic crude oils.

OPTI Canada Inc. announced that it has successfully repriced its previously announced public offering of common shares. Pursuant to the offering, OPTI will issue 85,720,000 common shares at a price of $1.75 per share, representing a premium of $0.05 per share or approximately 2.9% to OPTI’s previously announced price of $1.70 per share, for total gross proceeds of approximately $150 million.

OPTI reported that in the year ended 2008 first production of PSC™ from the Long Lake Project was achieved in January 2009. Preparation is underway to transition gasifier feed from vacuum residue to asphaltenes, the final step in Upgrader commissioning. Synthesis gas from the Upgrader has been used in SAGD operations, decreasing operating costs by reducing the requirement for purchased third-party natural gas. During the initial operating period, OPTI expected periods of downtime but anticipates that the stability of operations will continue to improve. The Upgrader is currently gasifying but not producing PSC™ due to issues with water supply and treating but is expected to resume production in the near future. Essentially all of the PSC™ produced to date has been used as diluent. During the final commissioning phase, prior to the operation of the solvent deasphalting and thermal cracking units, there is a high percentage of diluent that feeds the Upgrader and continues to the hydrocracker, forming part of the PSC™ stream. OPTI have produced over 20,000 bbl/d (gross) of on-spec PSC™, with between 10,000 and 12,000 bbl/d (gross) of this representing upgraded bitumen. The remainder represents diluent processed through the Upgrader. The percentage of diluent in the Upgrader feed will decrease as bitumen production increases. OPTI expected Upgrader capacity during ramp-up will be capable of processing all of the forecasted SAGD volumes and expected the Project to reach full capacity of approximately 58,500 bbl/d of PSC™ and other products in 12 to 18 months. The reservoir continues to perform as expected given the amount of steam we have injected. However, SAGD rampup has been affected by a variety of surface issues that have limited the amount of steam we have been able to inject into the reservoir over the past few months due to power disruptions, extreme cold weather, and water temperature and treating issues. Since steam injection rates directly impact bitumen production rates, and the ability to generate steam is currently limited, bitumen production is lower than previously expected.