Western Oil Sands
By fax and by courier
May 23, 2007
Ms. April Sifford, Branch Chief
United States Securities and Exchange Commission
1OO F Street, NE
Washington, D.C. 20549-7010
Dear Ms. Sifford:
RE: Form 40-F for Fiscal Year Ended December 31, 2006
(File No. 333-90736)
Reference is made to comments regarding the Form 40-F (the "FORM 40-F") of
Western Oil Sands Inc., a Canadian corporation (the "COMPANY"), for the fiscal
year ended December 31, 2006 received from the Staff (the "STAFF") of the
Securities and Exchange Commission (the "COMMISSION") in a letter from the
Division of Corporation Finance, dated May 3, 2007 (the "COMMENT LETTER").
Further to our telephone discussion with Shannon Buskirk on May 22, 2007 to
extend the response deadline to May 25, 2007, this letter is our response to
the Comment Letter. The discussion below is presented in the order of the
numbered comments in the Comment Letter and we have reproduced the comments for
ease of reference. Capitalized terms not defined in this letter are used as
defined in the Form 40-F.
The Company's responses to the Staff's comments are as follows:
FORM 40-F FOR THE FISCAL YEAR ENDED DECEMBER 31, 2006
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10 ASSET RETIREMENT OBLIGATION, PAGE 11
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1. WE NOTE YOU HAVE REVISED YOUR ASSET RETIREMENT OBLIGATION BY $10.3
MILLION DURING THE FISCAL YEAR ENDED DECEMBER 31, 2006. YOUR DISCLOSURE
STATES THIS REVISION IS DUE TO CHANGES IN THE ANTICIPATED TIMING OF
CERTAIN RECLAMATION ACTIVITIES AND AN INCREASE IN INFLATION RATES.
CONSIDERING THE MAGNITUDE OF THIS REVISION, PLEASE PROVIDE US WITH A
BREAKDOWN OF THE REVISED AMOUNTS RELATED TO AN INCREASE IN INFLATION AND
THOSE AMOUNTS RELATED TO A CHANGE IN TIMING OF RECLAMATION ACTIVITIES.
TELL US WHAT FACTORS OCCURRED DURING FISCAL YEAR 2006 WHICH CAUSED YOU TO
CONCLUDE A REVISION TO INFLATION RATE ESTIMATES WAS REQUIRED. IN
ADDITION, YOUR RESPONSE SHOULD IDENTIFY THE PREVIOUS ESTIMATED TIMING OF
RECLAMATION ACTIVITIES AS COMPARED TO THE NEW ESTIMATED TIMING AND WHAT
EVENT CAUSED THE DATES TO CHANGE. PLEASE IDENTIFY THE AREAS OF MINING OR
OIL AND GAS ACTIVITIES THAT RELATED TO THESE REVISED AMOUNTS. WE MAY HAVE
FURTHER COMMENT UPON REVIEW OF YOUR RESPONSE.
Response to Comment 1:
All asset retirement obligations as recorded in the December 31, 2006 financial
statements, including the revised amounts, relate to the Athabasca Oil Sands
Project ("AOSP"), which is primarily a mining activity. The Company's asset
retirement obligation revision during the fiscal year ended December 31, 2006
is broken down as follows:
1
Western Oil Sands Inc. o Suite 2400, Ernst & Young Tower,
440 Second Avenue S.W., Caigary, Alberta T2P 569
Tel: (403) 296-1624 Fax: (403) 234-9156
(C$'OOO)
Revision due to increase in inflation rate 6,272
Revision due to changes in timing of reclamation activities 3,983
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2006 Revision of Estimates 10,255
Inflation rates were increased as a result of high industry activity levels and
demand for many goods and services which created an environment of high
inflation and supply assurance concerns. Although widespread throughout the
industry in Alberta, this pressure was particularly evident in large capital
projects such as oil sands mining.
During the fiscal year ended December 31, 2006, a review of the mine plan was
completed by the AOSP engineers, re-evaluating the timing of reclamation costs
and the estimated cost of reclamation of the land disturbed. As a result of
this review, certain reclamation costs from future years were revised and are
anticipated to be completed earlier, which resulted in the increased discounted
costs. These reclamation costs include costs associated with the movement of
material from the stockpile to their final location, dozing slopes to final
long-term stable profile, excavation of drainage channels, and final
restoration and reseeding activities.
EXHIBIT 7
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2. PLEASE AMEND YOUR FORM 40-F TO CORRECT THE DATE OF THE FISCAL YEAR
IDENTIFIED IN THE 906 CERTIFICATION FILED AS EXHIBIT 7.
Response to Comment 2:
In response to the Commission's comment, the Company will file an amended Form
40-F with the Commission that includes the correct date of the fiscal year in
the 906 certification filed as Exhibit 7 as requested, once the Staff of the
Commission has confirmed that there are no other comments of the Staff that
need to be reflected in an amended Form 40-F.
The Company hereby acknowledges that:
o the Company is responsible for the adequacy and accuracy of the
disclosure in its filings, including the Form 40-F;
o Staff comments or changes to disclosure in response to Staff comments do
not foreclose the Commission from taking any action with respect to the
Company's filings, including the Form 40-F; and
o the Company may not assert Staff comments as a defense in any proceeding
initiated by the Commission or any person under the federal securities
laws of the United States.
If you have any questions concerning the above responses, please do not
hesitate to contact the undersigned at (403) 233-1707.
Yours truly,
WESTERN OIL SANDS INC.
/s/ David A. Dyck
David A. Dyck
Senior Vice President Finance and
Chief Financial Officer
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Western Oil Sands