AUGUST 3, 2010

The Fort Hills Project comprises oil sands Leases 008, 932 and 933 (the “Fort Hills Project Leases”) which cover a contiguous area of approximately 46,711 acres and are located in north-eastern Alberta, approximately 90 kilometres north of Fort McMurray and 500 kilometres north-east of Edmonton. UTS
holds a 20 percent interest in the Fort Hills Project Leases (9,342 acres).

Under the terms of the Fort Hills Lease Substitution Agreement, the Fort Hills Partnership is required to develop the Fort Hills Project by July 31, 2019. The Agreement also includes a commitment to upgrade bitumen production within Alberta from Phase II, defined as the bitumen production subsequent to the 160,000 bbl/d from Phase I of the Fort Hills Project. In the event that the Fort Hills Project does not meet the terms of the Fort Hills Lease Substitution Agreement, the Fort Hills Partnership will pay the Government of Alberta damages for lost provincial revenue that could total $500 million.

FORT HILLS PROJECT - Contingent Bitumen Resources*

An independent opinion established a contingent resource best estimate of 3.390 billion barrels; to view UTS’ contingent bitumen resources effective December 31, 2009, please refer to “Oil Sands Resource Estimates” in UTS’ AIF dated March 23, 2010 available on SEDAR at www.sedar.com.

FORT HILLS PROJECT – Project Activities
Suncor, through the wholly owned operating entity PCOSI is re-assessing the project design and potential
capital cost efficiencies and integration opportunities. The near term project focus will be on reconfiguring the Fort Hills Project to take advantage of the synergies with the existing Suncor facilities and cost reduction opportunities that the recent decline in activity in the Athabasca region present.

Current activities at the Fort Hills site are directed towards care and maintenance of infrastructure, civil works and buildings completed during the initial construction phase. Environmental baseline activities, including those associated with the McClelland Lake Wetland complex, also continue. The status of the Sturgeon upgrader is unchanged in that a development decision has been deferred indefinitely and site activities have ceased.

PCOSI has provided a forecast project spending estimate of $33 million for 2010 (vs. 2009 actual spend of approximately$284 million), of which UTS’ share is expected to be $2 million, assuming the Fort Hills Project remains in care and custody during 2010 and some regulatory work is carried forward.

Suncor is expected to complete a re-assessment of its oil sands assets before the end of 2010, and has publicly stated that it will provide more information on the scope and timing of the Fort Hills Project by that time. UTS expects that significant synergies will be found with Suncor’s existing operations that will enhance the economics and attractiveness of the Fort Hills Project for all the Fort Hills Partners and that new cost estimates will subsequently be prepared. UTS is expecting Suncor to provide further guidance on the scope, timing, and cost of the Fort Hills Project in the fourth quarter of 2010.

The timing of a final investment decision on the Fort Hills Project remains uncertain, pending completion of PCOSI’s reassessment of its development options and agreement by the Fort Hills Partnership for a revised project scope, development costs and associated economics.

FORT HILLS PROJECT – Regularly Activities

The major permits and approvals to develop a mine and bitumen production facility with capacity of up to 190,000 bbl/d of partially de-asphalted bitumen were granted by the Government of Alberta in December 2002.

On July 27, 2007, PCOSI filed an application with the ERCB and AENV to amend the existing mine approval to be consistent with the Front End Engineering Design (“FEED”) design basis and extend the life of the mine. On April 1, 2009, the Government of Alberta issued conditional approval for most aspects of the proposed mine amendment. Expansion of the mine plan and an increase in the total recoverable resource is conditional on submission and approval of a revised mine plan, coupled with an assessment of the environmental effects, both to be submitted prior to December 31, 2010.

Amended operating approvals under the Environmental Protection and Enhancement Act and the Water Act for the Fort Hills mine were issued by AENV on May 15, 2009.

ERCB’s Directive 074 entitled “Tailings Performance Criteria and Requirements for Oil Sands Mining Schemes” was issued by the ERCB in February of 2009. In September of 2009, PCOSI, on behalf of the Fort Hills Partnership, submitted an annual tailings management plan to the ERCB. This plan provides details of how the Operator intends to comply with the requirements of ERCB Directive 074. The management plan has been reviewed by the ERCB and conditional approval was granted on April 23, 2010. An operation application for pilot testing of the tailings technology must be submitted six months prior to start up of the operation and there must be no mature fine tailings left over at the end of the mine life.

FORT HILLS PROJECT – Funding

UTS, Teck and Suncor are respectively committed to pay $0.350 billion, $2.225 billion and $4.925 billion of the first $7.500 billion to fully earn their share of the Fort Hills Project. UTS’ current cash and cash equivalents, including sales proceeds released from escrow in 2010, when combined with the remaining earn-in, leaves UTS well positioned to respond to the funding requirements of both the Fort Hills Project and its portfolio of other development opportunities.

Included in the cumulative spending of $2.8 billion to June 30, 2010, the Fort Hills Partners on UTS’ behalf spent $0.696 billion, with $0.323 billion and $0.373 billion contributed by Suncor and Teck respectively. The earn-in for the first $2.5 billion of Fort Hills Project expenditures that the Fort Hills Partners committed to fund has been completed. Suncor and Teck are committed to spend a further $0.704 billion on behalf of UTS to fulfill their remaining commitment to earn-in II on the next $5.0 billion of expenditures.

In compliance with generally accepted accounting principles (“GAAP”) none of the $1.4 billion of earn-ins I and II are reflected on UTS’ Balance Sheet as an asset. However, UTS will receive 20 percent of the cash flows upon commencing operations for its 20 percent working interest even though the Company will contribute less than 20 percent of the Fort Hills Project’s expenditures as determined by the final cost of Phase I of the Fort Hills Project.

FORT HILLS PARTNERSHIP LEASES
(Leases 437, 438 and 634)

In addition to the leases that make up the Fort Hills Project, the Fort Hills Partnership holds Leases 437, 438 and 634 to the north-east of the Fort Hills Project Leases with a total area of 14,400 acres. UTS’ working interest is 20 percent. During the 2005/2006 and 2006/2007 winter drilling seasons, a total of 96 core holes were drilled to assess the resource potential of these leases.

The results of this program suggest that the resource potential of these leases is limited. As such, these leases are expected to provide additional planning flexibility for the development of the Fort Hills Project Leases. Several options are being considered by the Fort Hills Partnership.

For further details please see UTS’ Q2 Interim Report (as at August 3, 2010)