UTS Energy Corp. [TSX:UTS], a Calgary company developing the Fort Hills oil sands project with partners Petro-Canada [TSX:PCA; NYSE:PCZ] and Teck-Cominco [TSX:TCK; NYSE:TCK-B], says recent drilling results back the company’s plans for a separate stand-alone oil sands mining project in the Athabasca area of northern Alberta.

”Early analysis of our 2007 drilling program, derived from well log interpretation, is extremely encouraging,” William Roach, president and chief executive, said after stock markets closed Monday.

The company said its Lease 14, 100% owned by UTS, consists of 2,858 hectares of oil sands prospects on the west side of the Athabasca River. The area is across from the northern boundary of the company’s Fort Hills joint venture oil sands project, which UTS is developing with Petro-Canada and Vancouver miner Teck-Cominco.

Teck Cominco has an option to acquire 50% of the Lease 14 area.

Another prospective oil sands area, Lease 311, consists of more than 4,600 hectares about 10 kilometres north of Lease 14 and is jointly held by UTS and Teck Cominco.

”We recognize that these results are preliminary in nature and that we will require an extensive drilling and delineation program over the next couple of years, but the initial indications are that we have discovered sufficient resources in the Lease 311 area to enable a second stand-alone project. If this is the case, then this will provide UTS with growth opportunities and flexibility going forward.”

The company foresees the second project producing 50,000 barrel a day.

UTS said oil sands were found in all 33 wells drilled on Lease 311, with 25 containing potentially mineable oil sands deposits.

As a result of the successes from this winter’s exploration program, UTS and Teck Cominco have begun plans for a program of up to 400 core holes next winter to get a better idea of the size of the oil sands deposits.

”This is an exciting time for UTS, with the preliminary results from our winter drilling program reflecting a successful and prudent strategy of exploration and land acquisition, which has been conducted jointly with our partner, Teck Cominco, over the last year,” said Roach.

”We anticipate that the continued development of these opportunities will demonstrate significant organic growth for UTS.”

UTS is currently developing Fort Hills, a mining project with a 4.7 billion barrels of tar-like oil. UTS owns a 30% working interest with partners, Petro-Canada, with 55%, and Teck Cominco, with a 15% working interest.

The company reported its drilling announcement after markets closed. Earlier, UTS shares rose three cents to C$4.09 in trading of more than four million shares.

© The Canadian Press 2007