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CALGARY, ALBERTA--(Marketwire
- April 7, 2011) - Open Range Energy Corp. ("Open Range" or
the "Company") (TSX:ONR) is pleased to provide an update on
the continuing success of its Wilrich-focused
winter drilling program and on the further expansion of its Poseidon
Concepts tank fleet to meet increasing demand. Guidance for first-half
2011 (H1) consolidated cash flow from operations is increased to $29
million ($0.45 per basic share) from $22 million previously.
Wilrich Update
Open Range has now drilled, completed and brought on-production three Wilrich horizontal wells (100 percent working
interest) of its planned four-well H1 capital program at the Company's
core Ansell/Sundance Deep Basin property. The fourth well is planned to
be fracture stimulated within the week.
As previously press-released, the first well of the H1 program came
on-stream in mid-February. The second and third wells, each drilled to
a total measured depth of over 4,000 metres,
recently underwent completion operations using a packer system. They
were placed on test in March to clean up fracture fluids, flowing up 4
1/2" casing at initial cleanup rates of up to 7.5 mmcf per day and 5.5 mmcf
per day, respectively. The wells were recently tied-in to Open Range's
gathering and processing facilities at initial production rates of 4.2 mmcf per day plus NGL and 3.0 mmcf
per day plus NGL, respectively. This early data continues to indicate
strong per-well reserves and attractive economics at prevailing
commodity prices, and demonstrates the repeatability of the Wilrich play over Open Range's lands.
Initial 30-day average productivity (IP30) among competitor wells in
the greater Ansell/Sundance area is averaging approximately 3.5 mmcf per day, ranging from 1.7 mmcf
per day to 6.6 mmcf per day. Open Range's
initial Wilrich horizontal well came on-stream October 2010 with an IP30 of 4.3 mmcf per day. The first well of the winter program
came on-stream mid-February with an IP30 of 3.9 mmcf
per day. These two wells have cumulative production to date of
approximately 450 mmcf and 230 mmcf (plus NGL), respectively. Open Range's four
wells to date are meeting the Company's expectations and reflect a
normal production distribution for the Wilrich
play.
Total Wilrich horizontal production in the
greater Ansell/Sundance area is now approximately 100 mmcf per day (plus NGL) from 39 producing wells,
including Open Range's four net wells. Within six months of tying in
its first Wilrich horizontal well, the
Company is contributing approximately 10 percent of the estimated area Wilrich horizontal production.
The fourth well (60 percent working interest) of the H1 program is
expected to be brought on-stream in late April, weather permitting,
which will give the Company a total of five (4.6 net) Wilrich horizontal wells on-production as it
commences its second-half 2011 (H2) program.
Poseidon Update
The oil and natural gas upstream sector continues to respond to the
performance and cost advantages of the innovative Poseidon Concepts
fracturing fluid handling system. The Poseidon tank fleet has been
expanded from 65 rental systems at the end of February to 80 as of
March 31, which includes 10 of the recently deployed 41,000-barrel
capacity Atlantis models.
Fleet expansion is ongoing to meet increasing demand, which now
includes minimum 12-month commitments commencing in the first and
second quarters of 2011 from 11 major U.S. and Canadian oil and natural
gas companies. These commitments will utilize approximately 30 percent
of the current tank rental fleet and are expected to generate combined
minimum revenue of approximately $30 million over the period from
February 2011 through March 2012.
The Company estimates Poseidon's H1 cash flow from operations and
EBITDA to be $16.5 million, based on the expanding activities observed
to date and continued strong operating margins of 80-85 percent.
Poseidon continues to expand its footprint in the United States, with
approximately one-third of the current fleet operating in the U.S. as
of early April. Poseidon has established a presence in four states and
expects to deploy multiple units in several other key operating regions
over the near term. Expansion is achieving customer and geographical
diversification, weighted to the expanding oil and liquids-rich natural
gas shale plays in North America. U.S. expansion is already helping to
offset the normal seasonal impact of slower industry activity during
spring break-up in western Canada.
Outlook
Given Open Range's ongoing capital efficiency efforts, the winter
program included executing various drilling and completion optimization
techniques including the Company's first micro-seismic program. The
data will be utilized to continue optimizing fracture design and well
spacing with the aim to maximize reserve capture without over-capitalizing
the asset base. The Company has a current inventory of 41 (35 net) Wilrich horizontal locations over 20 net sections.
Open Range's H1 consolidated cash flow from operations is expected to
be $29 million ($0.45 per basic share), compared to the Company's
previous guidance of $22 million. The significant increase is due to
growing demand for Poseidon Concepts tank rentals and slightly positive
revenue impact from the Company's conservative commodity price
forecasting. Current Company production is approximately 4,400 boe per day.
The Company is finalizing its H2 capital program along with associated
production and cash flow guidance for both its exploration and
production operations and the Poseidon Concepts business unit. Open
Range management expects the H2 program to accelerate horizontal
drilling opportunities including a continued focus on Wilrich development and continued expansion of
Poseidon Concepts' reach.
OPEN RANGE ENERGY CORP. IS A PUBLICLY TRADED CANADIAN ENERGY COMPANY
WITH FOCUSED OPERATIONS IN THE DEEP BASIN REGION OF ALBERTA AND AN
EXPANDING NORTH AMERICAN WELL COMPLETIONS EQUIPMENT AND SERVICE
BUSINESS.
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) results from drilling and
completion operations; (ii) production; (iii) future capital
expenditures; (iv) funds from operations; (v) cash flow from operations
and EBITDA; (vi) demand for Poseidon Concepts' tank systems and the
corresponding utilization rate and operating margins; (vii) future
capital expenditures and how they will be financed; and (viii) general
oil and gas industry activity. The reader is cautioned that assumptions
used in the preparation of such information may prove to be incorrect.
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.
Additional information on the foregoing risks and other factors that
could affect Open Range's operations and financial results are included
in the Company's annual information form and other reports on file with
Canadian securities regulatory authorities and may be accessed through
the SEDAR website (www.sedar.com).
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.
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