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Sunshine Oilsands signs MOU with CPECC regarding West Ells Phase II project expansion

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Oilfield Technology,

CPECC have signed a Memorandum of Understanding (MOU) in relation to the West Ells Phase II project expansion.

West Ells Phase I is currently in production with positive reservoir performance and the production volume is continuously increasing. The designed production capacity of Phase I is 5000 bpd.

West Ells Phase II is an expansion of the Phase I project with an additional production capacity of 5000 bpd. As at the date of this announcement, all 8 wells have already been drilled. Additional works required for the project expansion include reviewing and refining of some of the designs, completion works for the wells, and surface facility construction. The total capital required for completion of the Phase II is expected to be approximately US$50 million as it will share most of the surface facilities with Phase I. Upon completion of Phase II, the total production capacity of West Ells will be 10 000 bpd.

The average production costs per barrel is expected to be significantly reduced after the Phase II expansion as fixed costs account for a significant portion of the production cost and can now be shared with the Phase II project.

CPECC and the corporation will further explore and discuss the work of this expansion project. CPECC intends to work as the contractor and undertakes the engineering, procurement, construction and operation maintenance work.

The corporation will provide further updates when the formal agreement is signed.

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