North American Energy Partners wins $127MM oil sands contract

Source: North American Energy Partners

North American Energy Partners Inc. (NAEP) (TSX: NOA) (NYSE: NOA) has been awarded a $127 million heavy civil construction contract with Fluor Canada Limited at Syncrude Canada Ltd's Base Mine and provided an update on the progress of discussions with Canadian Natural Resources Limited. 

The new contract at Syncrude is the first of several large construction contracts to be let relating to the mine train relocations at Syncrude's Base and Aurora Mines. NAEP completed the preliminary earthworks related to this project in the spring of 2011. This new contract represents a significant increase in the Company's work-scope on this site through to August 2012 and covers the construction of roads, grading and civil works for the shear key foundation at Syncrude's Base Mine. The foundation will provide the base for construction of the second phase of the project, a mechanically stabilized earth (MSE) wall and ore crushing facility, construction of which is expected to be undertaken in the summer of 2012 under a separate contract yet to be awarded. 

"We were very pleased to be the successful bidder on this initial phase of Syncrude's mine train relocation," said Rod Ruston, President and CEO of NAEP. "Not only does this add to an already strong backlog of winter work for our fiscal 2012 year but we believe that the opportunity to demonstrate our capabilities on this initial project, coupled with our reputation as the preeminent MSE wall constructor in the oil sands, strongly positions us to secure additional work on Syncrude's mine train relocation projects." 

Canadian Natural Contract Discussions 

The previously announced joint working committee, which was formed to collect and analyze market data relating to cost inflation in the Fort McMurray business environment, is expected to make recommendations to NAEP and Canadian Natural in early to mid September. At that time, NAEP and Canadian Natural will enter into discussions to agree upon any index adjustments to be made and to determine any additional contract amendments that the parties may deem to be beneficial to the ongoing operation of the contract. 

"Both parties are working to get this issue resolved as expeditiously as possible," said Mr. Ruston. "Our goal is to resolve the past issues and develop a sustainable solution that ensures a continued strong working relationship for the remaining four years of the contract. We are pleased with the progress to date and both parties are eager to get the resolution behind us so we can focus on the safe and efficient restart of operations at Canadian Natural's site in January."

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