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CALGARY,
ALBERTA--(Marketwire - March 22, 2011) - Open Range Energy Corp.
(TSX:ONR) ("Open Range" or "the Company") is
pleased to announce its financial and operating results for the year
ended December 31, 2010, highlights from its independent reserve
evaluation as at December 31, 2010 and highlights from its first-half
2011 capital program to date. The Company has filed its audited
financial statements, related management's discussion and analysis and
annual information form for the year ended December 31, 2010 on www.sedar.com and
on the Company's website at www.openrangeenergy.com.
FINANCIAL AND OPERATING HIGHLIGHTS Consolidated Highlights Three Three months months Year Year ended ended ended ended December December December December (in thousands except per share 31, 31, 31, 31, amounts) 2010 2009 2010 2009 ---------------------------------------------------------------------------- Revenue (1) $ 13,791 $ 9,254 $ 47,972 $ 28,203 Funds from operations 9,293 6,243 30,522 15,341 Per basic share 0.15 0.14 0.50 0.50 Per diluted share 0.15 0.14 0.50 0.50 Net earnings (loss) (515) (517) (3,529) (6,137) Per basic and diluted share (0.01) (0.01) (0.06) (0.20) Net debt 49,820 37,571 49,820 37,571 Capital expenditures, net $ (357) $ 65,950 $ 42,268 $ 85,778 Weighted average shares outstanding - basic and diluted 60,936 44,132 60,935 30,980 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- (1) Includes the realized gain or loss on commodity contracts. Exploration & Production Highlights Three Three months months Year Year ended ended ended ended December December December December 31, 31, 31, 31, 2010 2009 2010 2009 ---------------------------------------------------------------------------- Production Natural gas (mcf per day) 20,467 15,814 20,606 13,293 Oil and NGL (bbls per day) 386 282 349 241 ---------------------------------------------------------------------------- Total (@ 6:1) (boe per day) 3,797 2,918 3,783 2,457 Realized average sales prices Natural gas ($ per mcf)(2) 4.24 5.29 4.58 4.88 Oil and NGL ($ per bbl) 64.93 60.09 65.52 51.41 ---------------------------------------------------------------------------- Combined average ($ per boe) 29.43 34.47 30.99 31.45 Royalties ($ per boe) (1.71) (1.55) (2.78) (3.08) Operating costs ($ per boe) (4.48) (5.26) (4.73) (5.58) Transportation costs ($ per boe) (0.97) (0.75) (0.90) (0.96) ---------------------------------------------------------------------------- Operating netback ($ per boe) 22.27 26.91 22.58 21.83 G&A costs ($ per boe) (2.40) (1.92) (2.26) (3.09) Net interest expense ($ per boe) (1.45) (1.75) (1.38) (1.34) ---------------------------------------------------------------------------- Corporate netback ($ per boe) 18.42 23.24 18.94 17.40 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Poseidon Concepts Highlights Three Three months months Year Year ended ended ended ended December December December December 31, 31, 31, 31, (in thousands except percentages) 2010 2009 2010 2009 ---------------------------------------------------------------------------- Fracturing fluid handling tank rental revenue 3,657 - 5,320 - Operating costs (485) - (586) - G&A costs (172) - (225) - ---------------------------------------------------------------------------- Operating earnings (EBITDA) 3,000 - 4,509 - Operating margin 82% - 85% - ---------------------------------------------------------------------------- ----------------------------------------------------------------------------
HIGHLIGHTS
In the year ended December 31, 2010, Open Range:
- Grew average production to 3,783 boe per day, an increase of 54
percent over 2009 average volumes and net of non-core dispositions;
- Drilled 11 (7 net) wells, including four (3.6 net) gross horizontal
wells targeting the Wilrich, Notikewin and Bluesky formations at the
Company's core Ansell/Sundance Deep Basin property, as part of its $42
million net capital investment program;
- Grew annual funds from operations to $30.5 million ($0.50 per share),
an increase of 99 percent over 2009, and fourth quarter funds from
operations to $9.3 million ($0.15 per share), a period-over-period
increase of 49 percent;
- In the fourth quarter generated proceeds of $12.6 million through
disposition of non-core properties, reducing higher-cost production by
just over 300 boe per day and abandonment liabilities by $2.2 million;
- Generated revenues of $5.3 million and EBITDA of $4.5 million in the
first seven months of operations of its Poseidon Concepts business
unit;
- Exited the year with $49.8 million in net debt, reducing its year-end
debt to annualized fourth quarter 2010 funds from operations ratio to
1.3:1;
- Increased proved plus probable reserves to 20.4 million boe and total
proved reserves to 12.7 million boe at year-end, representing
year-over-year increases of 21 percent and 27 percent, respectively;
- Achieved finding, development and acquisition (FD&A) costs,
excluding the change in future development capital (FDC), of $8.67 per
boe of reserves added in 2010, and including the change in FDC, of
$17.27 per boe of reserves added in 2010. This represents recycle
ratios of 2.6 times and 1.3 times for proved plus probable reserves
added, respectively; and
- Replaced 2010 production by 3.5 times and increased the Company's
reserve-life-index to 15.3 years.
Subsequent to the year ended December 31, 2010, Open Range:
- Initiated and to date conducted the majority of its first-half 2011
capital program, focused at Ansell/Sundance and consisting of four (3.6
net) horizontal wells targeting the Wilrich Formation. All four gross
wells have been drilled to date, the first coming on-stream in
mid-February and having produced at an initial production (IP) rate
over its first 30 days of 3.9 mmcf per day plus approximately 13 bbls
of NGL per mmcf, with two others currently on fracturing fluid cleanup
and about to come on-stream and one awaiting completion operations;
- Issued 7.0 million common shares at $2.85 per common share in a
bought-deal financing that raised gross proceeds of $20 million and
closed March 21;
- Announced revised first-half 2011 EBITDA guidance of $9.5 million for
the Poseidon Concepts business unit; and
- Remained on-track to meet guidance for first-half 2011 average daily
production of 4,200 boe per day, which will generate estimated
consolidated funds from operations of $22 million ($0.34 per share) in
the six-month period ended June 30, 2011.
2010 IN REVIEW
The past year has been the most successful and important for Open Range
since the Company's founding in late 2005. We are larger, financially
stronger and more diversified than at any time in our history. Over the
past year we were focused on de-risking our Deep Basin horizontal play
at Ansell/Sundance, maintaining and reducing our operating costs per
boe and launching our Poseidon Concepts business unit. Success in all
three areas has improved Open Range's competitive position as a natural
gas producer.
The Company's performance accelerated further in the fourth quarter,
with excellent initial results in the Wilrich horizontal program and the
emergence of the Poseidon business, generating combined funds from
operations of $9.3 million for the quarter. Open Range is on a path to
becoming an intermediate-sized producer by the end of 2012 through our:
- Base of low-cost Deep Basin production of approximately 4,000 boe per
day;
- Repeatable success in our Wilrich horizontal play at Ansell/Sundance
with an expanding inventory of horizontal locations;
- Focused operations in one of the highest-quality, liquids-rich
natural gas areas of the Western Canadian Sedimentary Basin; and
- Exposure to the strong operating environment for well fracturing
services and related equipment from the Poseidon Concepts business
unit.
The past year's results reflect the Company's technical focus on
continuing to test, assess and prove up its horizontal opportunities.
The rapid evolution of horizontal drilling with multi-stage fracturing
was changing the exploration and production model in western Canada,
offering a step-change in initial productivity, reserve recoveries and
well economics. Initial horizontal drilling at Ansell/Sundance in the
first half of 2010 added substantial volumes of liquids-rich
production.
Strong competitor successes offsetting our lands pointed to the Wilrich
as offering the best risk-reward profile. Proving to have highly
repeatable per-well productivity, the new Wilrich horizontal play was
driving volume growth and delivering great economics, with competitors
reporting 90 percent internal rates of return. Open Range had already
mapped an extensive Wilrich sand fairway utilizing well control from
many of our nearly 50 producing multi-zone vertical wells at
Ansell/Sundance.
The Company's first Wilrich horizontal well spud in August and was
drilled to a total measured depth of 4,040 metres, including a
1,060-metre horizontal leg. It was completed using a packer system with
10, 80-120-tonne fractures and came on-stream in mid-October. This
exciting result solidified an accelerated Wilrich program for winter
2010-2011.
WINTER 2010-2011 OPERATIONS UPDATE
Encouraged by our initial Wilrich success and continued strong results
by competitors offsetting Ansell/Sundance, our current winter program
centres on four (3.6 net) Wilrich wells, the first of which spud in
December. It was drilled to a total measured depth of 4,200 metres,
including a 1,300-metre horizontal leg, and was completed with a packer
system over 13, 80-tonne fractures. It replicated the initial well's
results, coming on-stream in mid-February at 7.0 mmcf per day plus
approximately 90 bbls per day of NGL. Its 30-day average IP was 3.9
mmcf per day plus NGL, and to date it has produced a cumulative 120
mmcf plus 1,550 bbls of NGL.
The second and third wells of the current program have been drilled and
completed and fracturing fluid flowback operations are ongoing on both
at this time. Initial flow test and production results for both wells
are expected shortly. Fracturing of the fourth well is planned for
April, and the well could be on-stream before spring breakup.
All four wells were drilled from existing pads with multi-zone vertical
producing wells, facilitating quick tie-in of new volumes. Production
from three of the wells will be processed at the Company-operated
Ansell/Sundance gas plant, with the remaining well to be tied into a
Company compressor and processed at a third-party facility. Plans to
expand the Company's gas handling capacity at Ansell/Sundance to meet
anticipated production growth from an accelerated Wilrich horizontal
program are currently underway.
We are pleased with the Wilrich play's results to date and are
confident that the Company has a low-risk resource play that can
steadily grow volumes for the next two to three years on the recently
expanded inventory of 37 net horizontal locations. This inventory is
based on well-spacing of no more than two wells per section. The
Wilrich may provide down-spacing opportunities to achieve full
reservoir drainage where warranted, but we will be disciplined in not
over-capitalizing this play.
FINANCIAL REVIEW
The Company's track record of reducing cash costs per unit of
production, its production growth - meeting the annual target for the
fifth year in a row - and its prudent hedging program drove improved
financial results in 2010. The $30.5 million or $0.50 per share in
annual funds from operations was nearly double the amount generated in
2009.
Open Range maintained netbacks above $22.00 per boe in 2010 thanks to
the low and declining costs of its liquids-rich production at
Ansell/Sundance. Operating costs (not including transportation)
declined from $5.58 per boe in 2009 to $4.73 per boe in 2010,
transportation costs also declined slightly, while overall cash costs
declined from $10.97 per boe to $9.27 per boe year-over-year.
Operating netback performance is enhanced by our core property's
liquids-rich production. The Ansell/Sundance gas plant enables us to
take full advantage, extracting the range of liquids including
condensate for separate marketing, and 60 percent of our produced
liquids are the premium-priced condensate. In 2010 the Company's NGL
represented approximately 10 percent of annual and fourth quarter
production but delivered approximately 20 percent of oil and natural
gas revenue. In addition, our low royalty structure, averaging 9
percent of revenue in 2010, contributed to our financial performance.
The Poseidon Concepts business unit, discussed below, became material
in the second half of 2010, with fracturing fluid system rentals
generating revenue of $5.3 million and EBITDA of $4.5 million.
Open Range today is a much stronger company financially. Traction in
the Wilrich program has added volumes at high capital efficiency and
strong rates of return. Our cost structure continues to improve.
Property dispositions in December generated $12.6 million and removed
$2.2 million in abandonment liabilities and dozens of low-productivity,
higher-cost wellbores. The proceeds reduced long-term debt, freeing up
credit capacity sufficient for at least two additional Wilrich wells.
We exited the year with total net debt of $49.8 million on bank lines
of $80 million, with no borrowing capacity recognized for Poseidon, and
a ratio of net debt to annualized quarterly funds from operations of
1.3:1. We are confident in our current bank line, which is supported by
reserve additions offsetting the impact of the lower price deck, and
with the possibility of an increase due to Poseidon's growing EBITDA.
POSEIDON CONCEPTS
We have reported on the background and progress of our Poseidon
Concepts business unit in several press releases and our third-quarter
2010 report. This unique, Open Range-designed fluid handling system
stems from the Company's continual focus on technological and process
innovations that can improve capital or operating efficiencies.
The Poseidon system was conceived and designed in-house initially for
use in our multi-stage fracturing operations at Ansell/Sundance. The
proprietary Poseidon system is a modular, easily transportable and
insulated single tank with a very high capacity of 18,000 bbls or 2,900
m3 specifically designed for the larger fracturing jobs common at
today's unconventional oil and liquids-rich natural gas plays across
North America.
After proprietary testing, the first revenue-generating rental came in
June 2010, and the industry's acceptance has been dramatic. By year-end
tank rentals had generated $5.3 million in revenue and approximately 25
systems had been manufactured in southern Alberta and deployed in
western Canada.
By the end of February 2011 that figure had climbed to 65 systems in
western Canada and the United States, where we have a third-party
manufacturing facility building systems for that market. We recently
introduced an enlarged model, the "Atlantis", with 41,000
bbls (6,500 m3) of fluid storage capacity, more than double the
Poseidon model's capacity.
Poseidon Concepts has been structured in a tax-effective manner and is
wholly owned by Open Range. EBITDA guidance for the first half of 2011,
as recently reported, is $9.5 million. Our December 31, 2010 net asset
value does not reflect any value attributable to the Poseidon business,
and none of the Company's current borrowing capacity of $80 million is
based on value imputed to this business line.
We believe Poseidon has a bright future in the competitive North American
service and supply sector. Our plan for 2011 is to continue to execute
in Canada, exploiting first-mover advantages, maintaining a
high-quality product and service and expanding our market share, while
expanding in the United States. We are already active in three states
and are aggressively chasing new opportunities. Our immediate goal for
the U.S. business is to deploy our product in every major
unconventional basin.
RESERVES EVALUATION RESULTS
The Company's proved plus probable reserves growth was solid at 21
percent year-over-year to 20.4 million boe at December 31, 2010,
according to the independent reserve evaluation by GLJ Petroleum
Consultants Ltd. (GLJ). Our year-end net asset value of $226.3 million
or $3.62 per fully diluted share (proved plus probable, 10 percent
discount, before tax), illustrates the quality of Open Range's reserves
and the compelling value of the Ansell/Sundance asset.
FD&A costs were only $8.67 per proved plus probable boe added in
2010, not including the change in FDC, and $17.27 per proved plus
probable boe including the change in FDC. These competitive FD&A
costs, along with strong operating netbacks, generated recycle ratios
of 2.6 times and 1.3 times with and without FDC, respectively. Open
Range extended its record of replacing annual production by several
times over, and our reserve-life-index of 15.3 years reflects our
long-life, low-decline production.
SUMMARY OF RESERVES (FORECAST PRICES AND COSTS) ---------------------------------------------------------------------------- December 31, 2010 2009 ---------------------------------------------------------------------------- Year-over- % of year % % of Reserve category (mboe) Total change (mboe) Total ---------------------------------------------------------------------------- Proved Developed producing 6,055 30% 5% 5,753 34% Developed non-producing 232 1% 67% 139 1% Proved undeveloped 6,377 31% 57% 4,062 24% ---------------------------------------------------------------------------- Total proved 12,664 62% 27% 9,954 59% Probable 7,675 38% 12% 6,866 41% ---------------------------------------------------------------------------- Total Company gross working interest reserves - proved plus probable reserves (1) 20,338 100% 21% 16,820 100% ---------------------------------------------------------------------------- Proved plus probable Company interests in royalties 15 (58)% 36 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Total Company interest reserves proved plus probable reserves (2) 20,353 21% 16,856 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- NOTE: Table may not add due to rounding. (1) "Working interest" reserves equate to those reserves that are referred to as "company gross" reserves by the Canadian Securities Administrators in National Instrument 51-101. (2) "Company interest" reserves and values refer to the sum of royalty interest and working interest reserves before deduction of royalty burdens payable. SUMMARY OF OIL, NATURAL GAS AND NATURAL GAS LIQUIDS (NGL) RESERVES (FORECAST PRICES AND COSTS) ----------------------------------------------------------------- Light & medium oil Natural gas NGL Total ----------------------------------------------------------------- At December Gross Net Gross Net Gross Net Gross Net 31, 2010 (mbbls) (mbbls) (mmcf) (mmcf) (mbbls) (mbbls) (mboe) (mboe) ---------------------------------------------------------------------------- Proved Developed producing - - 32,872 29,779 576 374 6,055 5,337 Developed non-producing - - 1,287 1,159 18 11 232 205 Proved undeveloped - - 35,149 32,511 519 395 6,377 5,813 ---------------------------------------------------------------------------- Total proved - - 69,309 63,449 1,112 780 12,664 11,355 Probable - - 42,316 38,536 622 425 7,675 6,848 ---------------------------------------------------------------------------- Total proved plus probable - - 111,625 101,985 1,734 1,205 20,338 18,203 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- NOTE: Table may not add due to rounding. NET PRESENT VALUE OF FUTURE NET REVENUE (FORECAST PRICES AND COSTS) ------------------------------------------------------------ ($ millions) Net Present Value (NPV) of Future Net Revenue (FNR) ------------------------------------------------------------ At December 31, Before Income Taxes - After Income Taxes - 2010 Discounted at (%/yr) Discounted at (%/yr) ---------------------------------------------------------------------------- Reserves category 0 5 10 15 20 0 5 10 15 20 ---------------------------------------------------------------------------- Proved Developed producing 173.6 130.5 105.2 88.6 77.0 172.4 130.0 105.0 88.5 76.9 Developed non-producing 5.5 3.4 2.3 1.6 1.2 4.1 2.7 1.9 1.4 1.1 Proved undeveloped 107.7 60.4 33.5 17.4 7.3 80.9 44.0 23.1 10.4 2.5 ---------------------------------------------------------------------------- Total proved 286.8 194.3 141.0 107.7 85.4 257.4 176.8 130.0 100.4 80.5 Probable 266.1 131.6 78.4 52.5 37.9 200.0 98.7 58.7 39.3 28.4 ---------------------------------------------------------------------------- Total proved plus probable 552.9 325.9 219.4 160.2 123.4 457.4 275.5 188.7 139.7 108.9 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- NOTE: Table may not add due to rounding. PRICING AND INFLATION RATE ASSUMPTIONS (FORECAST PRICES AND COSTS) ----------------------------------------------------------------------- Oil Natural gas NGL ---------------------------------------------------------------------------- Edmonton Edmonton Edmonton WTI Par Price Pentanes Butanes Cushing, 40 degrees Plus FOB FOB Oklahoma API AECO Price Field Gate Field Gate Year (US$/bbl) (Cdn$/bbl) (Cdn$/mmbtu) (Cdn$/bbl) (Cdn$/bbl) ---------------------------------------------------------------------------- 2011 88.00 86.22 4.16 90.54 67.26 2012 89.00 89.29 4.74 91.96 68.75 2013 90.00 90.92 5.31 92.74 70.01 2014 92.00 92.96 5.77 94.82 71.58 2015 95.17 96.19 6.22 98.12 74.07 2016 97.55 98.62 6.53 100.59 75.94 2017 100.26 101.39 6.76 103.42 78.07 2018 102.74 103.92 6.90 106.00 80.02 2019 105.45 106.68 7.06 108.82 82.15 2020 107.56 108.84 7.21 111.01 83.80 2021+ +2.0%/yr +2.0%/yr +2.0%/yr +2.0%/yr +2.0%/yr ---------------------------------------------------------------------------- ----------------------------------------------------------------------- Inflation ---------------------------------------------------------------------------- Edmonton Propane FOB Inflation Exchange Field Gate Rate Rate Year (Cdn$/bbl) (%/Yr) (US$/Cdn$) ---------------------------------------------------------------------------- 2011 54.32 2.0 0.980 2012 56.25 2.0 0.980 2013 57.28 2.0 0.980 2014 58.56 2.0 0.980 2015 60.60 2.0 0.980 2016 62.13 2.0 0.980 2017 63.87 2.0 0.980 2018 65.47 2.0 0.980 2019 67.21 2.0 0.980 2020 68.57 2.0 0.980 2021+ +2.0%/yr 2.0 0.980 ---------------------------------------------------------------------------- RECONCILIATION OF COMPANY NET RESERVES BY PRINCIPAL PRODUCT TYPE (FORECAST PRICES AND COSTS) ---------------------------------------------------------- Associated and Light & medium oil non-associated natural gas ---------------------------------------------------------- Proved Plus Proved Plus Proved Probable Probable Proved Probable Probable Factors (mbbls) (mbbls) (mbbls) (mmcf) (mmcf) (mmcf) ---------------------------------------------------------------------------- Dec. 31, 2009 11 5 16 53,748 37,296 91,043 Extensions 100 25 124 22,987 6,536 29,523 Technical - - - 1,846 (475) 1,371 Revisions Acquisitions - - - 505 148 653 Dispositions (103) (29) (132) (2,025) (891) (2,916) Economic - - - (302) (298) (600) Factors Production (9) - (9) (7,450) - (7,450) ---------------------------------------------------------------------------- Dec. 31, 2010 - - - 69,309 42,316 111,625 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------- NGL Total ---------------------------------------------------------- Proved Plus Proved Plus Proved Probable Probable Proved Probable Probable Factors (mbbls) (mbbls) (mbbls) (mboe) (mboe) (mboe) ---------------------------------------------------------------------------- Dec. 31, 2009 985 646 1,630 9,954 6,866 16,820 Extensions 404 115 518 4,335 1,228 5,563 Technical (99) (110) (209) 209 (189) 20 Revisions Acquisitions 7 2 9 91 27 118 Dispositions (58) (26) (85) (499) (204) (703) Economic (7) (4) (11) (57) (54) (111) Factors Production (119) - (119) (1,369) - (1,369) ---------------------------------------------------------------------------- Dec. 31, 2010 1,112 622 1,734 12,664 7,675 20,338 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- NOTE: Table may not add due to rounding. RESERVE-LIFE-INDEX ---------------------------------------------------------------------------- Production (December 2010 average) 3,643 boe/d ---------------------------------------------------------------------------- Proved reserves (mboe) 12,675 Proved reserve-life-index (years) 9.5 ---------------------------------------------------------------------------- Proved plus probable reserves (mboe) 20,353 Proved plus probable reserve-life-index (years) 15.3 ---------------------------------------------------------------------------- FINDING, DEVELOPMENT AND ACQUISITION (FD&A) COSTS ---------------------------------------------------------------------------- Change (thousands in future Total except per Capital development capital Reserve FD&A costs boe amounts) costs costs costs additions (per boe) ---------------------------------------------------------------------------- Excluding future development costs Proved $ 42,268 - $ 42,268 4,075 $ 10.37 Proved plus probable $ 42,268 - $ 42,268 4,878 $ 8.67 ---------------------------------------------------------------------------- Including future development costs(1) Proved $ 42,268 $ 37,044 $ 79,312 4,075 $ 19.46 Proved plus probable $ 42,268 $ 41,953 $ 84,221 4,878 $ 17.27 ---------------------------------------------------------------------------- (1)Net of drilling credits. RESERVES REPLACEMENT ---------------------------------------------------------------------------- Proved plus Proved Probable ---------------------------------------------------------------------------- Reserves replacement of 2010 production (1,381 mboe) 3.0 times 3.5 times ---------------------------------------------------------------------------- NET ASSET VALUE PER SHARE ---------------------------------------------------------------------------- As at December 31, 2010 Discounted Discounted (thousands except per share amounts) at 10% at 15% ---------------------------------------------------------------------------- Present value of reserves (P+P) $ 219,419 $ 160,192 Stock option proceeds, in-the-money amount 2,684 2,684 Undeveloped acreage(1) 54,100 54,100 Working capital deficiency (49,820) (49,820) ---------------------------------------------------------------------------- Estimated value $ 226,383 $ 167,156 Fully diluted shares outstanding(2) 62,467 62,467 ---------------------------------------------------------------------------- Estimated NAV per diluted share $ 3.62 $ 2.68 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- (1)Based on independent land evaluation as of December 31, 2010. (2)Options to purchase 1.5 million common shares were included in the computation of fully diluted shares outstanding as they were dilutive at December 31, 2010.
OUTLOOK
The Company's first-half 2011 capital program is substantially complete
with the drilling of the four (3.6 net) Wilrich horizontal wells. The
program also included participation in a Hoadley Glauconitic Deep Basin
horizontal well. We remain on-track to average 4,200 boe per day in the
first half of 2011, and we have hedged approximately one-third of our
2011 natural gas volumes at a minimum floor price of $3.80 per mcf.
This month we conducted our first equity issue in nearly 18 months. The
bought-deal financing closed yesterday and raised gross proceeds of $20
million ($19 million net). This complements our expanded cash flow base
and available credit to provide the resources for a strong second-half
drilling program.
With greater funds from operations, including EBITDA from the Poseidon
business unit, available debt capacity and the recent equity proceeds,
Open Range has the financial resources for accelerated second-half
activity. It will continue to be tightly focused on the Wilrich, which
continues to unfold around Ansell/Sundance as an exciting and
profitable liquids-rich play. The Wilrich play is continuing to show
low variance in initial productivity, predictable initial decline
curves and fast payout thanks to the strong potential to recover 1 bcf
or more in the first year.
Over the years we have had a good track record of efficient and timely
drilling and completions operations, thanks to our experienced
technical team and relationships with key suppliers. We continue
working to sustain our access to high-quality and timely services and
equipment as we expand our Wilrich horizontal activities.
Our medium-term goal continues to be to grow Open Range organically to
10,000 boe per day within two years. The Company expects to announce details
of its second-half capital program plus full-year guidance prior to its
2011 annual general meeting. The meeting will be held at 9 a.m. MDT,
June 2, 2011, in the Strand/Tivoli Room of The Metropolitan Centre,
333-4th Avenue S.W., Calgary, Alberta.
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 68.0 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; (v) debt
levels; and (vi) the results of operations of the Poseidon Concepts
business unit. 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,
dependence on manufacturers of the Poseidon Concepts tank systems;
operating risk liability; demand for Poseidon Concepts' tank systems;
levels of competition in the fracturing fluid storage industry; the
ability of Poseidon Concepts to attract and retain clientele; the
ability of Poseidon Concepts to fund its ongoing capital requirements;
Poseidon Concepts' limited operating history; 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.
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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