As we approach the end of an eventful year for UTS, we are taking significant steps forward to position the Company for long-term success. On November 2, 2009, we announced a transaction which greatly increased our liquidity and the end of the value maximization process that we undertook in response to the unsolicited bid from Total E&P earlier in the year. With anticipated after-tax proceeds of approximately $200 million from the transaction added to our already strong cash position and remaining earn-in, we believe that UTS is now fully funded until at least the first quarter of 2014.

In summary, the aforementioned transaction is that Imperial Oil and ExxonMobil have agreed to purchase our 50 percent working interest in the Lease 421 Area, located east of the Firebag River in north-eastern Alberta for $250 million. We expect the transaction to close at the end of November, 2009. This disposition is an excellent illustration of UTS’ established and successful growth strategy in play. We acquire prospective oil sands leases, primarily but not exclusively in the mineable region of the Athabasca Oil Sands, and we conduct exploration and development activity to add value organically via exploration. We actively manage our portfolio of world-class assets, seizing opportunities like this one to monetize our ownership position, where appropriate, to fund our ongoing activities. Our overriding objective is always to deliver shareholder value.

As well as significantly increasing our cash position, the Lease 421 Area transaction implicitly demonstrates the market value of our portfolio of assets outside the Fort Hills Project, most notably the Frontier and Equinox Projects. The sale reinforces the reality that there is much more to UTS than Fort Hills.

With the conclusion of this transaction, we are moving forward on the next phase of delivering on the 1.7 billion barrels of UTS’ assessed contingent bitumen resources. The merger of Petro-Canada and Suncor was completed in the third quarter, making Suncor the new operator of the Fort Hills Project. As Suncor assesses its oil sands opportunities over the remainder of 2009, work at the Fort Hills site is directed to care and custody activities to keep the site in a condition in which construction and development activity could be easily restarted.

We anticipate that a new scope and schedule of development will be completed for the Fort Hills Project in 2010, as Suncor studies integration opportunities to best define the scope and timing of the Fort Hills Project. The Fort Hills Partnership is fully supportive of this strategy. We believe that significant synergies will be possible with Suncor’s existing operations that will further enhance the economics and attractiveness of the Fort Hills Project. The cash raised from the Lease 421 Area transaction puts UTS in a strong financial position – potentially fully funded for a single train case (80,000 bbl/d) in the first phase of the Fort Hills Project.

Meanwhile, we continue to develop our other opportunities in partnership with Teck. Preliminary mine planning and conceptual designs for the Frontier Mine and extraction facility were completed in 2009. We intend to move forward with a Design Basis Memorandum and the associated field program on the Frontier Project early in 2010, with the goal of preparing a regulatory application to be filed in early 2011. Our Fort McKay paraffinic froth treatment pilot testing program, operated jointly with Teck, continued to process ore from both the Frontier and Equinox Projects through the third quarter of 2009. The pilot project concluded slightly ahead of schedule in August 2009, with all milestones achieved. Teck and UTS have now jointly developed the capability to design and operate a high temperature paraffinic froth treatment process. Paraffinic froth treatment is an important component of the overall process to produce a saleable bitumen product that can be delivered through pipelines to a variety of markets.

Oil prices and heavy oil differentials strengthened considerably in the third quarter, reminding us again that oil sands development is a long-term business. Short-term commodity price fluctuations can be a distraction, but the business case for oil sands is based on the security of the world’s second-largest established reserves in a supply-constrained world. With a strong financial position and an unmatched portfolio of high quality mineable oil sands assets, we look forward to 2010 with great confidence.

 
William Roach  

President and Chief Executive Officer
Calgary, Alberta, Canada
November 13, 2009