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, 2005 Commission File Number:333-90736
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:
The Registrant is a "voluntary filer" and files annual reports on Form 40-F,
amendments to such reports and furnishes information on Form 6-K to the
Securities and Exchange Commission, pursuant to its obligations under its
indenture dated April 23, 2002 relating to its 8 3/8% Senior Secured Notes due
May 1, 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.
160,518,041 Common Shares outstanding as of December 31, 2005
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, 2005, 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, 2005 and 2004, 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 21 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, 2005, 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
effective 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 (ii) accumulated and communicated to the Registrant's management,
including its principal executive officer and principal financial officer, to
allow timely decisions regarding required disclosure. However, as recommended
by the Commission in its adopting release, the Registrant will continue to
periodically evaluate its disclosure controls and procedures to ensure that
information is recorded, processed, summarized and reported within the time
periods specified in the Commission's rules and forms.
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, 2005, there were no changes in
Western Oil Sands' internal controls 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. 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, see the section
"Directors and Officers" in the Registrant's Annual Information Form for the
year ended December 31, 2005, 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' inception. 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, 2005 and December 31, 2004, 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 $146,396 and $131,980,
respectively.
AUDIT-RELATED FEES: There were no fees billed for each of the last
two fiscal years of Western Oil Sands, ending December 31, 2005 and December
31, 2004, 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, 2005 and December 31, 2004,
for professional services rendered by PWC for tax-related services consisting
of advice and assistance with tax filings and tax audits were $133,108 and
$24,960, 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, 2005 and December
31, 2004.
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 16, 2006, 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 $ - $ - $ - $ 524,655 $ 524,655
Revolving Credit Facility (1) - - - 41,000 41,000
Obligations Under Capital Lease 1,340 2,680 2,680 43,566 50,266
Option Premium Liability - 95,642 - - 95,642
Feedstocks 106,423 128,758 18,242 64,138 317,561
Pipelines and Utilities 39,715 68,337 69,890 556,036 733,978
Mobile Equipment Lease 3,647 11,941 26,740 - 42,328
- --------------------------------------------------------------------------------------------------------------------
Total Contractual Obligations $ 151,125 $ 307,358 $ 117,552 $ 1,229,395 $ 1,805,430
- --------------------------------------------------------------------------------------------------------------------
(1) THE REVOLVING CREDIT FACILITY IS A 3-YEAR BANK FACILITY MATURING
INITIALLY ON OCTOBER 31, 2008, EXTENDIBLE ANNUALLY AT THE LENDERS'
DISCRETION. 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 17 AND 18, RESPECTIVELY, OF THE
CONSOLIDATED FINANCIAL STATEMENTS.
CODE OF ETHICS
The Company has adopted a Code of Conduct and Conflict of Interest Policy
which applies to directors, officers, employees, contractors and consultants.
This Code deals with such matters as compliance with applicable laws, rules
and regulations, compliance with Western's policy addressing treatment of
confidential information in addition to several other pertinent areas of
focus. The complete Policy is available on the Company's website.
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 28th day of March, 2006.
WESTERN OIL SANDS INC.
By: /s/ David A. Dyck
------------------------------------------
Name: David A. Dyck
Title: Senior Vice President, Finance, and
Chief Financial Officer
Documents filed as part of this report:
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
1. Annual Information Form for the fiscal year ended December 31,
2005.
2. Consolidated Financial Statements for the fiscal years ended
December 31, 2005 and 2004 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, 2005.
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 GLJ Petroleum Consultants Ltd., independent petroleum
engineering consultants.
10. Consent of Norwest Corporation, independent mining engineering
consultants.