OPTI Canada must address balance sheet this year, CEO says

By Jennifer Lanning Drey

Savannah, Ga., April 27 - OPTI Canada Inc. has liquidity to last to the end of 2011 and must address its balance sheet this year by reaching a conclusion to its review of strategic alternatives, Chris Slubicki, OPTI's chief executive officer, said Wednesday during the company's first-quarter earnings conference call.

"OPTI has near-term financial issues and long-term asset value," Slubicki said.

As previously reported, OPTI has been reviewing its strategic alternatives since November 2009, when it hired Scotia Waterous Inc. and TD Securities Inc. On Feb. 1, Lazard Freres & Co. LLC came on board to assist in that review.

The company's remaining material obligations for 2011 total C$289 million. The obligations include $189 million of interest payments on its senior notes, excluding interest funded by its interest reserve account with respect to OPTI's $300 million first-lien notes. The company also needs to fund C$97 million of its total capital budget and C$9 million of general and administrative costs.

OPTI expects to fund the obligations with the C$287 million of cash it held at the end of the first quarter and its anticipated positive net field operating margin.

"Clearly OPTI has limited financial resources," Slubicki said.

In order to preserve and maintain its liquidity, OPTI has approved a conservative capital program for 2011, he said.

During the first quarter, OPTI borrowed $165 million under its $190 million revolving credit facility that matures in December 2011.

In addition, effective April 1, OPTI has exercised a deferred payment funding option to continue advancing its next development at Kinosis to the end of May.

Looking forward, OPTI is focused on its operational plans to increase production at its Long Lake joint venture project with Nexen Inc.

At the same time, the company is committed to pursuing multiple paths to completing its strategic review to remedy the balance sheet, Slubicki said.

For the first quarter, OPTI posted a C$27 million net loss, compared with a net loss of C$41 million in the first quarter of 2010. First-quarter revenue improved to C$63 million versus C$50 million in the same period of 2010.

OPTI is a Calgary, Alta.-based oilsands producer.

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