Sunshine Oilsands vows to meet new targets to prove its potential

Sunshine Oilsands, whose share price has declined 89 per cent since its initial public offering three years ago, has vowed to meet its targets for first production after learning from past budget blowouts and deadline slippages.

The Calgary-based developer of projects to produce oil from oilsands, an expensive-to-extract form of unconventional energy, needed to show it was capable of bringing its first production line online before it could proceed to raise more funds to ramp up production, said Jiang Qi, new chief operating officer.

He said the Hong Kong- and Toronto-listed firm was confident of completing construction of its first 5,000-barrel-a-day production line and starting to inject steam underground by the end of next month. Commercial production would start by September 30.

"Despite current low oil prices, we are bringing production online to prove the potential of our projects," he said, adding that initial losses would be limited since its capacity would be small.

Jiang estimated its first production line needed the West Texas Intermediate (WTI) oil price to be more than US$60 a barrel to break even. When daily output rose to 30,000 barrels, the break-even point would fall to US$43 a barrel, he added. WTI March futures closed at US$50 on Tuesday.

Set up in 2007 by geologist Shen Songning and energy projects planner and financier Michael Hibbert, both former co-chairmen, Sunshine stopped construction of its first production line in August 2013 after it ran out of funds. It originally planned to pump its first barrel of oil by October 2013.