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| February 18, 2010 |
| Open Range Energy Corp. Announces Test Results of First Notikewin Horizontal Well, Provides Operational Update and Reports on Cardium Oil Drilling Plans |
CALGARY, ALBERTA--(Marketwire - Feb. 18, 2010) - Open Range Energy Corp. (TSX:ONR) ("Open Range" or the "Company") is pleased to announce initial results of its current horizontal drilling activity in the Company's Deep Basin play at its core Ansell/Sundance property, which include three (2.6 net) wells underway or imminent, the first of which recently tested at rates up to 5.4 million cubic feet (mmcf) per day. Drilling operations are ongoing at Ansell/Sundance and will continue until spring break-up, while a second rig is drilling a horizontal well (0.4 net) in the Cardium oil play at Pembina.
NOTIKEWIN HORIZONTAL WELL RESULTS
Open Range spudded the first well of its 2010 capital program in late December. The 100 percent working interest horizontal Notikewin well was drilled to a total measured depth of 4,100 metres, including a 1,250-metre horizontal leg, and was cased by mid-January.
In early February Open Range executed successful completion operations, fracturing 12 horizontal intervals in the Notikewin formation. The well was tested up 4 1/2" casing, flowing at initial cleanup production rates of up to 5.4 mmcf per day after 60 hours. Flow rates over the last 12 hours of this initial test period averaged 3.0 mmcf per day at a flowing pressure of 505 psi. The encouraging results from this initial flow test provide the Company with further technical confidence in its program of deep horizontal drilling at its Ansell/Sundance property. The well is expected to be brought on stream in late February.
The cost to drill, case and complete the Company's first horizontal Notikewin well is an estimated $5.9 million, with the well qualifying for $3.8 million in drilling royalty credits. In addition the first 0.5 bcf of production is subject to a maximum royalty rate of 5 percent under Alberta's new well incentive program.
Open Range has mapped a large potential resource in the Notikewin formation throughout its 65 section (85 percent working interest) land base at Ansell/Sundance. To date 23 of Open Range's 39 Ansell/Sundance multi-zone vertical wells include production from the Notikewin and the Company has developed a current Notikewin horizontal inventory of 20 locations, spaced at one horizontal well per section.
OPERATIONS UPDATE
Open Range has also completed drilling of its second Bluesky horizontal well (60 percent working interest) at Ansell/Sundance. The well spudded in late December 2009, was drilled to a total measured depth of 4,100 metres with a 900-metre horizontal leg and was cased in early February. The well is currently awaiting completion operations which are to commence later this month and include a planned 12 fracturing intervals.
The Company's first Bluesky horizontal well (100 percent working interest) at Ansell/Sundance has been on production for more than six months, averaging approximately 1.8 mmcf per day over that period. Cumulative production is approximately 335 mmcf plus natural gas liquids. The well's performance to date strongly supports the Company's future drilling inventory of 10 Bluesky horizontal locations offsetting current vertical producers, spaced at one horizontal well per section. As expected, Open Range has refined its completions model for subsequent wells to include high-density fracturing stages with larger proppant volumes to seek more extensive fractures and expose greater reservoir area to the wellbore.
In addition the Company is:
- Awaiting completion operations on a 100 percent working interest multi-zone vertical well recently drilled at Ansell/Sundance;
- Currently drilling its second Notikewin horizontal well (100 percent working interest) which spudded in early February;
- Currently drilling a horizontal well (0.4 net) in the Cardium oil play at Pembina which spudded in mid-February;
- Expanding its Ansell/Sundance natural gas plant (61 percent working interest), with construction commencing in early January. Gross plant capacity will increase from 20 mmcf per day to 40 mmcf per day. Equipment costs were largely incurred in 2009, with approximately $1 million net remaining to be funded in 2010 to complete the expansion, which is expected by mid-March.
CARDIUM OIL DRILLING PLANS
Open Range is pleased to report on its participation in the emerging horizontal Cardium light oil play in west central Alberta. Open Range recently reached a pooling agreement with an industry partner in the Pembina area, providing exposure to three gross sections.
The partners are currently drilling their first joint horizontal Cardium oil well (37.5 percent working interest) at an estimated gross cost of approximately $1.2 million not including completion costs. Drilling success could lead to a potential four future gross drilling locations per section. Follow-up locations are being evaluated.
Open Range's management team is excited at this new opportunity. More than 50 horizontal multi-stage fractured Cardium wells drilled by competitors since this play emerged in the last 18 months have achieved initial production rates averaging over 200 bbls per day of premium-priced, high-quality light oil.
FIRST HALF OUTLOOK
Open Range's first-half 2010 capital program continues to be budgeted at $30 million and is on-track to drill the originally planned three (2.6 net) horizontal and two (2.0 net) multi-zone vertical Deep Basin wells at Ansell/Sundance as well as one (0.4 net) horizontal Cardium oil well at Pembina.
Open Range has current production of approximately 3,300 boe per day (90 percent natural gas), of which 2,900 boe per day is at Ansell/Sundance. The Company's average first-half 2010 production forecast remains unchanged at 3,600 boe per day but will be revisited upon further new well results.
Open Range has hedged an average of 9.9 mmcf per day of natural gas production through year-end 2010 at an average floor price of $4.56 per mcf.
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 60.9 MILLION COMMON SHARES ISSUED AND OUTSTANDING, WHICH TRADE ON THE TSX UNDER THE SYMBOL "ONR".
For further information, please refer to the Company's website at www.openrangeenergy.com.
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 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.
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. | |
| 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
www.openrangeenergy.com
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| INDUSTRY: Energy and Utilities - Oil and Gas | |
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