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March 11, 2008
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Open Range Energy Corp. (TSX:ONR) Announces 2007 Reserve Evaluation Results and
Emerging Exploration Area
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CALGARY, ALBERTA--(Marketwire - March 11, 2008) -
NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES.
Open Range Energy Corp. ("Open Range" or the "Company") (TSX:ONR) is pleased to announce its 2007 year-end reserves, as independently evaluated by GLJ Petroleum Consultants Ltd. (GLJ) in accordance with National Instrument (N.I.) 51-101. As Open Range plans to provide its audited financial and operating results for the year ended December 31, 2007 on March 18, 2008, certain financial estimates have been made herein with respect to the Company's 2007 capital investment program.
In executing its organic, exploration-based strategy for the year ended December 31, 2007, Open Range:
- Increased total proved plus probable reserves to 5,587 mboe and total proved reserves to 3,148 mboe, representing year-over-year increases of 88 percent and 62 percent, respectively;
- Achieved finding and development costs, including the change in future development capital, of $14.27 per proved plus probable boe of reserves added;
- Generated a recycle ratio of 2.4 times on a proved plus probable basis, derived from an estimated operating netback of $33.63 per boe for 2007;
- Increased proved plus probable reserves per share by 45 percent from December 31, 2006 to 256 boe per thousand shares;
- Added 3,146 mboe of proved plus probable reserves and 1,734 mboe of proved reserves, representing production replacement ratios of 5.9 times and 3.3 times, respectively;
- Realized a reserve life index of 9.0 years based on total proved plus probable reserves and an average December 2007 production rate of 1,709 boe per day; and
- Increased its net asset value per share to $4.20 based on total proved plus probable reserves discounted at 10 percent, an increase of 37 percent from December 31, 2006.
Refer to the tables below for details on Open Range's oil and natural gas reserves and related capital efficiency metrics.
ANSELL/SUNDANCE
In 2007, Open Range carried out its most successful exploration and development drilling program to date, resulting in total proved plus probable reserve additions of 3,146 mboe. Of those reserve additions, 2,304 mboe or 73 percent resulted from the significant drilling success at the Company's core Ansell/Sundance property.
Key factors leading to the increased reserve assignments at Ansell/Sundance include: an increase from 3.6 net wells drilled in 2006 to 6.2 net wells drilled in 2007; an increase in the average number of productive pay zones per well from 2.2 in 2006 to 3.9 in 2007; and improved reservoir quality being encountered in 2007, particularly in the Bluesky Formation with 50 percent of the wells drilled in 2007 encountering this zone as compared to 14 percent of the wells drilled in 2006. Average raw natural gas reserves booked per well drilled increased to 2.0 bcf in 2007 from 1.4 bcf in 2006, based on proved plus probable reserves assigned by GLJ.
In 2008 the Company plans to follow a balanced drilling strategy with approximately 70 percent of planned locations focused on development drilling and 30 percent on exploratory drilling. The exploratory locations will focus on augmenting the development drilling inventory within the Company's expanding Ansell/Sundance fairway. Drilling inventory currently consists of approximately 25 development locations and 25 exploratory locations. Holding approvals are currently in place to drill up to 4 wells per pool per section on 22 sections of land.
Open Range has accumulated 52.5 sections of land at Ansell/Sundance through Crown land sales and farm-in deals. The Company is operator of the land and has an average working interest of 54 percent.
BIG BEND, FERRIER, GARRINGTON
Total proved plus probable reserve additions at Big Bend, Ferrier and Garrington were approximately 21 mboe. Additions were mainly a result of positive technical revisions and low working interest drilling extensions at Big Bend.
EMERGING EXPLORATION AREA
Open Range drilled a 3,800-metre exploratory well in the fourth quarter of 2007. This farm-in well is located in the Rough area of the Alberta Foothills and added 4.7 bcf of natural gas and 36 mbbls of natural gas liquids or 821 mboe of probable reserves. Under the farm-in agreement the Company will earn a 70 percent working interest in three sections of prospective land following the completion operations of this initial earning well. The Rough well was cased as a potential natural gas well and Open Range has identified three potential pay zones. Based on drilling response and offset pools that exhibit similar characteristics, the zones are expected to be significantly over-pressured. The Company's probable reserve assignment booked at December 31, 2007 by GLJ includes reserves from one of the pay zones. Initial completion and testing operations are forecast to commence on the two deepest zones in June 2008. Several tie-in options to third-party facilities are currently being evaluated.
Open Range has assembled 35 sections of contiguous land at Rough through a series of Crown land acquisitions and farm-in deals. The Company is operator of the land and has an average working interest of 97 percent. In addition, 29 square miles of 3-D seismic and 34 miles of 2-D seismic have been acquired to date. Future drilling locations are currently being identified.
SUMMARY OF RESERVES BY CATEGORY (FORECAST PRICES AND COSTS)
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December 31, 2007 2006
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Year-
% of over-year % of
Reserve category (Mboe) total % change (Mboe) total
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Proved
Developed producing 2,567 46% 90% 1,348 46%
Developed non-producing 208 4% 79% 116 4%
Proved undeveloped 351 6% -22% 449 15%
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Total proved 3,125 56% 63% 1,912 65%
Probable 2,432 44% 139% 1,019 35%
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Total Company gross
working interest
reserves - proved
plus probable reserves 5,557 100% 90% 2,931 100%
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Proved plus probable
Company interests in
royalties 30 -27% 41
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Total Company interest
reserves - proved plus
probable reserves 5,587 88% 2,972
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"Company interest" reserves refer to the sum of royalty interest
and working interest reserves before deduction of royalty burdens payable.
"Working interest" reserves equate to those reserves that are referred to as
"company gross" reserves by the Canadian Securities Administrators in N.I.
51-101.
SUMMARY OF OIL, NATURAL GAS AND NATURAL GAS LIQUIDS (NGL) RESERVES (FORECAST
PRICES AND COSTS)
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Light & medium oil Natural gas NGL Total
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At December Gross Net Gross Net Gross Net Gross Net
31, 2007 (Mbbls) (Mbbls) (Mmcf) (Mmcf) (Mbbls) (Mbbls) (Mboe) (Mboe)
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Proved
Developed
producing 19 17 13,458 10,762 305 208 2,567 2,019
Developed
non-producing - - 1,151 915 16 11 208 163
Proved
undeveloped - - 1,902 1,514 34 25 351 277
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Total proved 19 17 16,511 13,191 355 244 3,125 2,459
Probable 10 9 13,316 10,296 203 137 2,432 1,862
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Total proved
plus probable 28 26 29,827 23,487 558 381 5,557 4,321
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NET PRESENT VALUE OF FUTURE NET REVENUE AT DECEMBER 31, 2007 (FORECAST
PRICES AND COSTS)
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Net Present Value (NPV) of Future Net Revenue (FNR)
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Before Income Taxes - After Income Taxes -
Discounted at Discounted at
($ millions) (%/yr) (%/yr)
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Reserves
category 0 5 10 15 20 0 5 10 15 20
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Proved
Developed
producing 76.6 61.9 52.5 46.1 41.3 76.6 61.9 52.5 46.1 41.3
Developed
non-producing 4.6 3.0 2.1 1.5 1.0 4.6 3.0 2.1 1.5 1.0
Proved
undeveloped 5.0 3.6 2.6 1.9 1.4 4.0 3.0 2.3 1.7 1.2
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Total proved 86.2 68.5 57.2 49.4 43.7 85.1 67.9 56.9 49.2 43.6
Probable 79.3 47.3 33.4 25.9 21.3 59.6 35.7 25.5 20.1 16.7
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Total proved
plus probable 165.5 115.8 90.6 75.4 65.0 144.7 103.6 82.4 69.3 60.2
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Net present values have been calculated utilizing the existing Alberta
royalty legislation as the proposed New Royalty Framework has not yet been
enacted.
PRICING AND INFLATION RATE ASSUMPTIONS AT DECEMBER 31, 2007 (FORECAST PRICES
AND COSTS)
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Oil Natural Gas
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Edmonton
WTI Edmonton Pentanes
Cushing, Par Price Plus FOB
Year Oklahoma 40 degrees API AECO Price Field Gate
(US$/bbl) (Cdn$/bbl) (Cdn$/mmbtu) (Cdn$/bbl)
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2008 92.00 91.10 6.75 92.92
2009 88.00 87.10 7.55 88.84
2010 84.00 83.10 7.60 84.76
2011 82.00 81.10 7.60 82.72
2012 82.00 81.10 7.60 82.72
2013 82.00 81.10 7.60 82.72
2014 82.00 81.10 7.80 82.72
2015 82.00 81.10 7.97 82.72
2016 82.02 81.12 8.14 82.74
2017 83.66 82.76 8.31 84.42
2018 and +2.0%/yr +2.0%/yr +2.0%/yr +2.0%/yr
thereafter
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NGL Inflation
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Butanes Edmonton
FOB Propane Inflation Exchange
FOB
Year Field Gate Field Gate Rate Rate
(Cdn$/bbl) (Cdn$/bbl) (%/Yr) (US$/Cdn$)
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2008 72.88 58.30 2.0 1.0000
2009 69.68 55.74 2.0 1.0000
2010 66.48 53.18 2.0 1.0000
2011 64.88 51.90 2.0 1.0000
2012 64.88 51.90 2.0 1.0000
2013 64.88 51.90 2.0 1.0000
2014 64.88 51.90 2.0 1.0000
2015 64.88 51.90 2.0 1.0000
2016 64.89 51.91 2.0 1.0000
2017 66.21 52.97 2.0 1.0000
2018 and +2.0%/yr +2.0%/yr 2.0 1.0000
thereafter
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RECONCILIATION OF COMPANY NET RESERVES BY PRINCIPAL PRODUCT TYPE (FORECAST
PRICES AND COSTS)
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Associated and
Light & medium oil non-associated natural gas
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Proved Proved
Plus Plus
Proved Probable Probable Proved Probable Probable
Factors (Mbbls) (Mbbls) (Mbbls) (Mmcf) (Mmcf) (Mmcf)
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Dec. 31, 2006 18 8 25 10,076 5,495 15,571
Discoveries - - - 920 3,948 4,868
Extensions - - - 4,456 135 4,591
Infill drilling - - - 3,520 2,041 5,561
Technical
revisions 9 (1) 8 332 1,698 2,030
Economic factors - 3 3 - (1) (1)
Production (8) - (8) (2,793) - (2,793)
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Dec. 31, 2007 19 10 28 16,511 13,316 29,827
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NGL Total
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Proved Proved
Plus Plus
Proved Probable Probable Proved Probable Probable
Factors (Mbbls) (Mbbls) (Mbbls) (Mboe) (Mboe) (Mboe)
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Dec. 31, 2006 215 95 311 1,912 1,019 2,931
Discoveries 18 20 38 171 679 850
Extensions 78 4 82 821 26 847
Infill drilling 61 37 98 648 377 1,025
Technical
revisions 37 49 86 102 330 432
Economic factors (2) (2) (4) (2) 1 (1)
Production (53) - (53) (526) - (526)
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Dec. 31, 2007 355 203 558 3,125 2,432 5,557
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RESERVE-LIFE-INDEX AT DECEMBER 31, 2007
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Production (December 2007 average) 1,709 boe/d
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Proved reserves (Mboe) 3,148
Proved reserve-life-index (years) 5.1
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Proved plus probable reserves (Mboe) 5,587
Proved plus probable reserve-life-index (years) 9.0
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FINDING AND DEVELOPMENT COSTS (UNAUDITED)
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Change Finding &
in future Total development
Capital development capital Reserve costs
($000s except per boe) costs costs costs additions ($/boe)
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Excluding future
development costs
Proved 42,004 - 42,004 1,734 24.22
Proved plus probable 42,004 - 42,004 3,146 13.35
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Including future
development costs
Proved 42,004 4,427 46,431 1,734 26.78
Proved plus probable 42,004 2,882 44,886 3,146 14.27
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RESERVE REPLACEMENT
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Proved plus
Proved Probable
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Reserve replacement of 2007 production (531,371 boe) 3.3 times 5.9 times
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NET ASSET VALUE PER SHARE (UNAUDITED)
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As at December 31, 2007
Discounted Discounted
($000s except NAV per share) at 5% at 10%
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Present value of reserves (P+P) 115,772 90,647
Undeveloped acreage 13,789 13,789
Working capital deficiency (12,832) (12,832)
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Estimated value 116,729 91,604
Basic and fully diluted shares outstanding(1) 21,793 21,793
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Estimated NAV per share(1) $ 5.36 $ 4.20
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(1) Excludes the exercise of 1,926,500 stock options at their average
exercise price of $4.08 as they were anti-dilutive at December 31, 2007.OPEN RANGE ENERGY CORP. IS A PUBLICLY TRADED CANADIAN ENERGY COMPANY WITH FOCUSED OPERATIONS IN THE DEEP BASIN REGION OF ALBERTA.
OPEN RANGE HAS APPROXIMATELY 21.8 MILLION COMMON SHARES ISSUED AND OUTSTANDING, WHICH TRADE ON THE TSX UNDER THE SYMBOL ONR.
Reader Advisory
This news release contains certain forward-looking statements, which include assumptions with respect to (i) production; (ii) future capital expenditures; (iii) funds from operations; (iv) cash flow; and (v) debt levels. The reader is cautioned that assumptions used in the preparation of such information may prove to be incorrect. All such forward-looking statements involve substantial known and unknown risks and uncertainties, certain of which are beyond Open Range's control. Such risks and uncertainties include, without limitation, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers, inability to retain drilling rigs and other services, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources, the impact of general economic conditions in Canada and the United States, industry conditions, changes in laws and regulations (including the adoption of new environmental laws and regulations) and changes in how they are interpreted and enforced, changes in federal and provincial tax laws and legislation (including the adoption of new royalty regimes), increased competition, the lack of availability of qualified personnel or management, fluctuations in foreign exchange or interest rates, stock market volatility and market valuations of companies with respect to announced transactions and the final valuations thereof, and obtaining required approvals of regulatory authorities. Open Range's actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do, what benefits, including the amount of proceeds, that Open Range will derive therefrom. Readers are cautioned that the foregoing list of factors is not exhaustive. All subsequent forward-looking statements, whether written or oral, attributable to Open Range or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. Furthermore, the forward-looking statements contained in this news release are made as at the date of this news release and Open Range does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.
Disclosure provided herein in respect of barrel(s) of oil equivalent (boe) may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf:1 barrel is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
The Toronto Stock Exchange has neither approved nor disapproved of the information contained herein.
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CONTACT INFORMATION:
Open Range Energy Corp.
A. Scott Dawson, P.Eng.
President and Chief Executive Officer
(403) 205-3704
or
Open Range Energy Corp.
Lyle D. Michaluk, CA
Vice President, Finance and Chief Financial Officer
(403) 262-9280
Website: www.openrangeenergy.com
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INDUSTRY: Energy and Utilities - Oil and Gas
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