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| January 13, 2009 |
| Open Range Energy Corp. Announces 2009 Guidance and Provides Operational Update |
CALGARY, ALBERTA--(Marketwire - Jan. 13, 2009) - Open Range Energy Corp. ("Open Range" or the "Company") (TSX:ONR) is pleased to provide details of its initial 2009 capital investment program and associated production guidance and an operational update on recent activities.
2009 CAPITAL INVESTMENT PROGRAM AND PRODUCTION GUIDANCE
Consistent with Open Range's track record of prudent financial management and capital discipline, the Company's Board of Directors has approved an $18 million capital investment program for 2009. The program will be weighted to the first half and will focus on the Company's core Ansell/Sundance property, including the drilling of one (100 percent working interest) horizontal well into the Bluesky Formation and one (0.3 net) vertical well, and the completion and tie-in of three (1.8 net) vertical wells drilled late in 2008. The 2009 program also includes drilling one (100 percent working interest) well at the Company's Big Bend property and the procurement of equipment to expand the Company's Ansell/Sundance natural gas plant by 20 mmcf per day. Construction of the plant expansion will be scheduled at the appropriate time, with consideration given to prevailing market conditions and the Company's natural gas processing capacity requirements. The initial capital program is expected to be funded entirely through cash flow from operations.
During this period of financial and commodity market instability, Open Range will continue to focus on its balance sheet and maintaining financial flexibility. As the Company gains more clarity on the near- to mid-term outlook for the financial and commodity markets, it may adjust its 2009 capital investment program accordingly. At the end of 2008 Open Range had net debt of approximately $28 million compared to recently reviewed bank lines of $54 million. With extensive unused borrowing capacity, Open Range remains well-positioned to accelerate drilling activity on its 100-well inventory at Ansell/Sundance and to delineate its Rough discovery well once prevailing market conditions again encourage such capital investments.
Based on the approved capital investment program, Open Range is forecasting average production of approximately 2,400 boe per day for 2009, which represents a year-over-year increase of 15 percent. Natural gas is forecast to comprise approximately 90 percent of 2009 production.
OPERATIONAL UPDATE
Open Range is pleased to report that it estimates the Company's 2008 production averaged 2,075 boe per day. This is a year-over-year increase of 43 percent from the 2007 average rate of 1,456 boe per day. Fourth quarter production is estimated at 2,475 boe per day, an increase of 24 percent from third quarter production of 1,992 boe per day. This established a new quarterly record for Open Range and was directly attributable to six (2.5) net wells being brought on-production at Ansell/Sundance. The Ansell/Sundance property contributed approximately 2,000 boe per day or 81 percent of the Company's total fourth quarter production from 35 gross producing wells totalling 138 commercial pay zones. The Company's 15-35 discovery well at Rough was down for the last two weeks of December 2008 due to extreme cold weather (approximately 125 boe per day net) and is now undergoing testing of the Notikewin zone in preparation for commingled production with the Glauconitic zone.
During the fourth quarter Open Range continued to focus on delineating its key Ansell/Sundance Deep Basin property, drilling five (2.5 net) wells. Activities were aimed at further expanding the play's resource potential by stepping out onto undeveloped lands to the south and north of central Ansell/Sundance. The wells drilled in the fourth quarter were all successful multi-zone wells which have potential to add a combined 25 productive zones.
Open Range is currently drilling its first horizontal well at Ansell/Sundance targeting the Bluesky Formation, with plans to utilize multiple-stage fracture stimulation to complete the well. The Company believes there is strong potential that this horizontal drilling and completion technology, if proven successful at Ansell/Sundance, could lead to enhanced production profiles, increased recovery factors of gas-in-place and further capital efficiencies.
Continued successful drilling and land acquisitions throughout 2008 have increased Open Range's inventory to over 100 seismically-defined locations at the start of January 2009. This inventory can support a multi-year low-risk production growth program anchored by the high-quality multi-zone characteristics of Ansell/Sundance.
CORPORATE UPDATE
In response to market conditions, including turbulent equity markets, Open Range on October 28, 2008 commenced a Normal Course Issuer Bid to purchase common shares of the Company for cancellation. To date the Company has purchased and cancelled 733,400 common shares, or 3 percent of the total shares outstanding, at an average price of $1.50 per common share. As a result of such share purchases and cancellations, the Company currently has 26,600,841 common shares outstanding.
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 26.6 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 and source of funds; (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 natural 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, 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, 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.
The Toronto Stock Exchange has neither approved nor disapproved of the information contained herein. | |
| 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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