UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 40-F
[_] Registration Statement pursuant to section 12 of the Securities
Exchange Act of 1934
[X] Annual report pursuant to section 13(a) or 15(d) of the Securities
Exchange Act of 1934
For the fiscal year ended December 31, 2004 Commission File Number:__________
WESTERN OIL SANDS INC.
(Exact name of Registrant as specified in its charter)
ALBERTA
(Province or other jurisdiction of incorporation or organization)
1311
(Primary Standard Industrial Classification Code Numbers)
NOT APPLICABLE
(I.R.S. Employer Identification Number (if
applicable))
2400 ERNST & YOUNG TOWER, 440-2ND AVENUE S.W.,
CALGARY, ALBERTA, CANADA, T2P 5E9
TELEPHONE: (403) 233-1700
(Address and telephone number of Registrant's principal executive offices)
CT CORPORATION SYSTEM, 111-8TH AVENUE, NEW YORK, NEW YORK 10011
(212) 894-8940
(Name, address (including zip code) and telephone
number (including area code) of agent for
service in the United States)
SECURITIES REGISTERED OR TO BE REGISTERED PURSUANT TO SECTION 12(B) OF THE
ACT: None
SECURITIES REGISTERED OR TO BE REGISTERED PURSUANT TO SECTION
12(G) OF THE ACT:
TITLE OF EACH CLASS: None
SECURITIES FOR WHICH THERE IS A REPORTING OBLIGATION PURSUANT TO SECTION 15(D)
OF THE ACT:
8 3/8% Senior Secured Notes due 2012
FOR ANNUAL REPORTS, INDICATE BY CHECK MARK THE INFORMATION FILED WITH THIS FORM:
[X] Annual information form [X] Audited annual financial statements
NUMBER OF OUTSTANDING SHARES OF EACH OF THE ISSUER'S CLASSES OF CAPITAL OR
COMMON STOCK AS OF THE CLOSE OF THE PERIOD COVERED BY THE ANNUAL REPORT.
53,278,762 Common Shares outstanding as of December 31, 2004
Indicate by check mark whether the Registrant is furnishing the information
contained in this Form to the Commission pursuant to Rule 12g3-2(b) under the
Securities Exchange Act of 1934 (the "Exchange Act"). If "Yes" is marked,
indicate the filing number assigned to the Registrant in connection with such
Rule.
Yes [_] No [X]
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12
months (or for such shorter period that the Registrant was required to file such
reports) and (2) has been subject to such filing requirements for the past 90
days.
Yes [X] No [_]
PRINCIPAL DOCUMENTS
The following documents have been filed as part of this Annual Report on Form
40-F:
A. ANNUAL INFORMATION FORM
For the Annual Information Form of Western Oil Sands Inc. ("Western Oil Sands")
for the year ended December 31, 2004, see Exhibit 1 of this Annual Report on
Form 40-F.
B. AUDITED ANNUAL FINANCIAL STATEMENTS
For Western Oil Sands' consolidated audited financial statements for the year
ended December 31, 2004 and 2003, including the auditor's report with respect
thereto, see Exhibit 2 of this Annual Report on Form 40-F. For a reconciliation
of important differences between Canadian and United States generally accepted
accounting principles, see Note 20 of the Notes to the Consolidated Financial
Statements.
C. MANAGEMENT'S DISCUSSION AND ANALYSIS
For Western Oil Sands' Management's Discussion and Analysis for the year ended
December 31, 2004, see Exhibit 3 of this Annual Report on Form 40-F.
CONTROLS AND PROCEDURES
Western Oil Sands maintains disclosure controls and procedures and internal
control over financial reporting designed to ensure that information required to
be disclosed in the reports filed under the Exchange Act, as amended, is
recorded, processed, summarized and reported within the time periods specified
in the Commission's rules and forms. Western Oil Sands' principal executive and
financial officers evaluated the effectiveness of Western Oil Sands' disclosure
controls and procedures as of the end of the period covered by this report and
concluded that such disclosure controls and procedures are to ensure that
information required to be disclosed by the Registrant in reports that it files
or submits under the Exchange Act is (i) recorded, processed, summarized and
reported within the time periods specified and communicated to the Registrant's
management, including its principal executive officer and principal financial
officer, to allow timely decisions regarding required disclosure.
It should be noted that while the Registrant's principal executive officer and
principal financial officer believe that the Registrant's disclosure controls
and procedures provide a reasonable level of assurance that they are effective,
they do not expect that the Registrant's disclosure controls and procedures or
internal control over financial reporting will prevent all errors and fraud. A
control system, no matter how well conceived or operated, can provide only
reasonable, not absolute, assurance that the objectives of the control system
are met.
During the fiscal year ended December 31, 2004, there were no changes in Western
Oil Sands' internal control over financial reporting that have materially
affected, or are reasonably likely to materially affect, Western Oil Sands'
internal control over financial reporting.
AUDIT COMMITTEE FINANCIAL EXPERT
The Registrant's Board of Directors has determined that Messrs. Robert Puchniak,
Randall Oliphant and Mac Van Wielingen are audit committee financial experts (as
defined in paragraph 8(b) of General Instruction B to Form 40-F) serving on its
audit committee. Mr. Oliphant recently joined the Board of Directors and Audit
Committee in February 2005 and is therefore not associated with the 2004
financial statements. Mr. Oliphant replaced Mr. Brian MacNeill. Mr. MacNeill
served on the Board and Audit Committee for the duration of fiscal 2004.
Pursuant to paragraph 8(a)(2) of General Instruction B to Form 40-F, the Board
has applied the definition of independence applicable to the audit committee
members of the New York Stock Exchange ("NYSE") listed companies. All above
mentioned members are corporate directors and meet the NYSE definition of
independence. For a description of the Audit Committee member's relevant
experience in financial matters with the exception of Mr. MacNeill, see the
section "Directors and Officers" in the Registrant's Annual Information Form for
the year ended December 31, 2004, which is included as Exhibit 1 to this Annual
Report on Form 40-F.
AUDIT COMMITTEE
Western Oil Sands has a separately designated standing audit committee
established in accordance with section 3(a)(58)(A) of the Exchange Act. The
members of the Audit Committee are Messrs. Robert G. Puchniak, Randall Oliphant
and Mac H. Van Wielingen. Mr. Puchniak chairs the Audit Committee.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
PricewaterhouseCoopers LLP ("PWC") have been the auditors of Western Oil Sands
since Western Oil Sands' incorporation. The aggregate amounts billed by PWC for
each of the last two fiscal years for audit fees, audit-related fees, tax fees
and all other fees, including expenses, are set forth below.
AUDIT FEES: The aggregate fees billed for each of the last two fiscal
years of Western Oil Sands ending December 31, 2004 and December 31, 2003, for
professional services rendered by PWC for the audit of its annual financial
statements, review of the Annual Information Form, Management Discussion and
Analysis, completion of limited reviews of quarterly financial information and
for services that are normally provided by PWC in connection with debt and
equity financings for those fiscal years were $131,980 and $66,900,
respectively.
AUDIT-RELATED FEES: There were no fees billed for each of the last two
fiscal years of Western Oil Sands, ending December 31, 2004 and December 31,
2003, for audit-related services by PWC.
TAX FEES: The aggregate fees billed for each of the last two fiscal
years of Western Oil Sands, ending December 31, 2004 and December 31, 2003, for
professional services rendered by PWC for tax-related services consisting of
advice and assistance with tax filings and tax audits were $24,960 and $5,720,
respectively. Western Oil Sands' Audit Committee approved all of the noted
services.
ALL OTHER FEES: There were no other fees billed for each of the last
two fiscal years of Western Oil Sands ending December 31, 2004 and December 31,
2003.
AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES:
The Registrant has not yet established set policies and procedures for
pre-approval of audit and non-audit related services conducted by the
Registrant's accountant. At the present time, all such services are approved by
the Chair of the Audit Committee before an engagement is executed.
OFF-BALANCE SHEET ARRANGEMENTS
Western Oil Sands has no off-balance sheet arrangements that require disclosure.
CONTRACTUAL OBLIGATIONS
Western Oil Sands has assumed various contractual obligations and commitments in
the normal course of its operations. Summarized below are significant financial
obligations that are known as of February 25, 2005, and which represent future
cash payments that Western Oil Sands will be required to make under existing
contractual agreements that it has entered into either directly, or as a partner
in the Joint Venture. The following information can also be found in Western's
Management Discussion and Analysis attached as Exhibit 3.
PAYMENTS DUE BY PERIOD
<1 YEAR 1 - 3 YEARS 4 - 5 YEARS AFTER 5 YEARS TOTAL
US$450 Million Senior
Secured Notes .......... $ -- $ -- $ -- $ 541,620 $ 541,620
Senior Credit Facility ...... 95,000 -- -- -- 95,000
Revolving Credit Facility(1) -- -- -- 121,000 121,000
Obligations Under Capital
Lease .................. 1,340 2,680 2,680 44,909 51,609
Feedstocks .................. 79,437 220,368 168,520 62,117 530,442
Utilities ................... 31,807 65,690 69,513 590,377 757,387
Mobile Equipment Lease ...... 5,960 6,280 27,440 8,700 48,380
Total Contractual Obligations $ 213,544 $ 295,018 $ 268,153 $1,368,723 $2,145,438
(1) THE REVOLVING CREDIT FACILITY IS A 364-DAY EXTENDIBLE FACILITY THAT
INCORPORATES A TWO YEAR TERM-OUT. MANAGEMENT CONSIDERS THIS TO BE PART OF
OUR LONG-TERM CAPITAL STRUCTURE.
(2) IN ADDITION, WE HAVE AN OBLIGATION TO FUND WESTERN'S SHARE OF THE PROJECT'S
PENSION FUND AND HAVE MADE COMMITMENTS RELATED TO OUR RISK MANAGEMENT
PROGRAM: SEE NOTES 16 AND 17, RESPECTIVELY, OF THE CONSOLIDATED FINANCIAL
STATEMENTS.
CODE OF ETHICS
The Company does not have a code of ethics; it does not plan on enacting a code
of ethics until it has attained a much larger size. With so few employees and
officers (33 currently) and directors, it does not feel that developing and
adopting a code of ethics would impact or change its operations or its
employees, directors or officers. The Company feels that the few current
employees, officers and directors it now has know sufficiently all of the
actions of the Company such that unethical behavior would be discovered quickly.
UNDERTAKING
Western Oil Sands undertakes to make available, in person or by telephone,
representatives to respond to inquiries made by the Commission staff, and to
furnish promptly, when requested to do so by the Commission staff, information
relating to: the securities registered pursuant to Form 40-F; the securities in
relation to which the obligation to file an annual report on Form 40-F arises;
or transactions in said securities.
CONSENT TO SERVICE OF PROCESS
The Company has previously filed a Form F-X in connection with the class of
securities in relation to which the obligation to file this report arises.
Any change to the name or address of the agent for service of process of Western
Oil Sands shall be communicated promptly to the Commission by an amendment to
the Form F-X referencing the file number of the relevant registration statement.
SIGNATURES
Pursuant to the requirements of the Exchange Act, Western Oil Sands Inc.
certifies that it meets all of the requirements for filing on Form 40-F and has
duly caused this Annual Report to be signed on its behalf by the undersigned,
thereto duly authorized.
Dated this 30th day of March, 2005.
WESTERN OIL SANDS INC.
By: /s/ David A. Dyck
---------------------
Name: David A. Dyck
Title: Vice President, Finance,
and Chief Financial Officer
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
1. Annual Information Form for the fiscal year ended December 31,
2004.
2. Consolidated Financial Statements for the fiscal years ended
December 31, 2004 and 2003 including U.S. GAAP reconciliation
note, together with the auditors' report thereon.
3. Management's Discussion and Analysis for the fiscal year ended
December 31, 2004.
4. Certification of Chief Executive Officer pursuant to Rule
13a-14(a) or 15d-14 of the Securities Exchange Act of 1934.
5. Certification of Chief Financial Officer pursuant to Rule
13a-14(a) or 15d-14 of the Securities Exchange Act of 1934.
6. Certification of Chief Executive Officer pursuant to Rule
13(a)-14(b) and Section 1350 of Chapter 63 of Title 18 of the
United States Code (18 U.S.C. 1350).
7. Certification of Chief Financial Officer pursuant to Rule
13(a)-14(b) and Section 1350 of Chapter 63 of Title 18 of the
United States Code (18 U.S.C. 1350).
8. Consent of PricewaterhouseCoopers LLP, independent chartered
accountants.
9. Consent of Gilbert Laustsen Jung Associates Ltd., independent
petroleum engineering consultants.
10. Consent of Norwest Corporation, independent mining engineering
consultants.