First steam injection of the Long Lake SAGD operations began in mid-April 2007. Start-up of the Upgrader and production of first Premium Sweet Crude (PSC™) was announced on January 22, 2009.

Bitumen production continues to grow as a result of consistent steam injection. During the second quarter, bitumen production averaged approximately 24,900 barrels per day (bbl/d) (8,700 bbl/d net to OPTI), up from the previous quarter average of approximately 18,700 bbl/d (6,500 bbl/d net to OPTI). June bitumen production averaged approximately 26,900 bbl/d (9,400 bbl/d net to OPTI) and recent production is approximately 28,500 bbl/d (10,000 bbl/d net to OPTI). Bitumen production was temporarily affected by annually scheduled cogeneration maintenance which occurred during the second quarter.

Our SAGD surface facilities continue to perform reliably and as per design. Steam injection rates rose during the second quarter to average approximately 137,000 bbl/d as compared to 114,000 bbl/d in the previous quarter. These rates continue to climb, with recent steam injection highs of approximately 150,000 bbl/d. We currently have 81 well pairs receiving steam, comprised of 68 on production and an additional 13 in circulation mode. We expect that these circulating wells will be converted to production mode over the next few months.

Our recent all-in steam-to-oil ratio (SOR) average is between 5 and 6, including steam to wells that are currently in steam circulation mode and wells early in the ramp-up cycle. The SOR of our mature producing wells is approximately 4 and improving. Mature producing wells are those that have received steam at a significant aggregate level and for a period of at least one year. As new production wells progress further along in the production cycle, we would expect bitumen production to increase and the corresponding SOR to decline.

To ensure that we maximize bitumen production from our resource base and surface facilities, we continue to develop SAGD well pads 12 and 13 at Long Lake. It is expected that this development will provide 18 new well pairs available for bitumen production in 2012. In addition, the joint venture partners have commenced an evaluation of the potential addition of two supplementary once-through steam generators. Taking advantage of existing surplus water treatment capacity, these boilers may increase our steam capacity 10 to 15 percent. The estimated capital cost for these boilers is approximately $150 million gross ($53 million net to OPTI). If we proceed with this activity, it represents a cost effective investment to ensure we have sufficient steam to maximize value from our existing surface facilities and our reservoir.

Upgrader units continue to perform consistently, processing virtually all of our bitumen production as well as approximately 8,600 bbl/d of externally-sourced bitumen. On-stream time averaged 97 percent in the second quarter as compared to 78 percent in the previous quarter. We continue to use produced syngas as a low cost fuel source in our SAGD operations. PSCTM yields averaged approximately 72 percent over the second quarter as compared to 63 percent in the previous quarter. Yields are expected to increase to the design rate of 80 percent once operations are optimized, with the Upgrader maintaining approximately 50 percent of its bitumen design capacity on a consistent basis.