Open Range Energy Corp.
TSX : ONR

Open Range Energy Corp.

March 11, 2010 16:46 ET

Open Range Energy Corp. Announces Strong Reserves Growth in 2009

CALGARY, ALBERTA--(Marketwire - March 11, 2010) - Open Range Energy Corp. ("Open Range" or the "Company") (TSX:ONR) is pleased to announce a 6.8-million-boe or 68 percent year-over-year increase in its total proved plus probable reserves, according to the December 31, 2009 independent evaluation by GLJ Petroleum Consultants Ltd. (GLJ) prepared 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, 2009 on or about March 17, 2010, certain financial and operating estimates have been presented herein with respect to the Company's 2009 capital investment program.

In the fourth quarter of 2009 Open Range acquired the position of a working-interest partner at the Company-operated Ansell/Sundance property. The acquisition added proved plus probable reserves of approximately 5.2 million boe and production of approximately 1,150 boe per day in the heart of Alberta's Deep Basin. As a result of this strategic acquisition, continuing strong production performance from existing wells and over six months of production history from the Company's first multi-stage fractured horizontal well at Ansell/Sundance, Open Range:

- Increased total proved plus probable reserves to 16.9 million boe and total proved reserves to 10.0 million boe at year-end, representing year-over-year increases of 68 percent and 61 percent, respectively;

- Incurred proved plus probable finding, development and acquisition (FD&A) costs, excluding the change in future development capital (FDC), of $11.12 per boe of reserves added in 2009, and including the change in FDC, of $16.61 per boe of reserves added in 2009;

- Added 7.7 million boe of proved plus probable reserves and 4.7 million boe of proved reserves in 2009, representing production replacement ratios of 8.6 times and 5.2 times, respectively (calculated using the estimated average 2009 production rate of 2,457 boe per day);

- Increased the Company's reserve-life-index by 19 percent year-over-year to 13.6 years on a total proved plus probable reserve basis at year-end (based on the average December 2009 production rate of 3,401 boe per day);

- Achieved a net present value of estimated future net revenue from proved plus probable reserves, based on forecast prices and costs, discounted at 10 percent before tax, of $236.0 million at December 31, 2009, an increase of 35 percent over year-end 2008; and

- Had an estimated net asset value per share of $3.92 based on total proved plus probable reserves discounted at 10 percent at December 31, 2009.

"Open Range's continued success in growing its proved plus probable reserves at efficient FD&A costs speaks to the high quality of our multi-zone Deep Basin reservoirs at Ansell/Sundance," said Scott Dawson, Open Range's president and chief executive officer. "The Company's long reserve-life-index is indicative of our high-quality, long-life production as well as the large drilling inventory that can support accelerated activities and production growth over the coming years."

Refer to the tables below for details on Open Range's oil and natural gas reserves and related capital efficiency metrics.

ANSELL/SUNDANCE

In 2009 Open Range realized reserve additions of 8.2 million boe on a proved plus probable basis and 4.9 million boe on a proved basis at its core Ansell/Sundance property. The significant increase in reserves in 2009 was the combined result of the Company's strategic working-interest acquisition, continued strong well production performance from existing wells, recognition of strong horizontal well performance from Open Range's first Bluesky multi-stage fractured horizontal well and offsetting competitor horizontal wells, and the acquisition of highly prospective lands with future drilling potential. At December 31, 2009 the Company's total proved plus probable reserves attributed to its Ansell/Sundance property were 86.0 billion cubic feet (bcf) of natural gas and 1.5 million boe of natural gas liquids.

The 2009 drilling program included one (100 percent working interest) Bluesky horizontal well. Success from this first horizontal well established Open Range's first-half 2010 plan to drill three (2.6 net) further horizontal wells in two target formations. The first of these recently tested at rates up to 5.4 mmcf per day and was brought on-production at 2.1 mmcf per day, as discussed in the Company's press release of February 18, 2010.

To date Open Range has accumulated 64.5 sections of land at Ansell/Sundance through Crown land sales, farm-ins and property acquisitions. The Company is operator of the land and has an average working interest of 85 percent. Open Range's current drilling inventory is estimated at approximately 200 locations, including approximately 150 vertical locations and 50 horizontal locations. The Company has received approval to increase drilling density to six wells per section on 12 sections of land and four wells per section on 21 sections of land.

OTHER PROPERTIES

All changes in the total proved plus probable reserves at the Company's Big Bend, Ferrier, Garrington and Rough properties were the result of well performance on existing producers as no new wells were brought on-production in 2009. At December 31, 2009 the Company had 1.0 million boe of proved plus probable reserves attributed to these properties.



SUMMARY OF RESERVES (FORECAST PRICES AND COSTS)

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December 31, 2009 2008
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Year-over-
year%
Reserve category (mboe) % of Total change (mboe) % of Total
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Proved
Developed producing 5,753 34% 58% 3,639 36%
Developed non-producing 139 1% (63)% 376 4%
Proved undeveloped 4,062 24% 88% 2,156 22%
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Total proved 9,954 59% 61% 6,171 62%
Probable 6,866 41% 79% 3,834 38%
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Total Company gross
working interest
reserves - proved
plus probable
reserves (1) 16,820 100% 68% 10,006 100%
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Proved plus probable
Company interests in
Royalties 36 24% 29
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Total Company interest
reserves - proved plus
probable reserves (2) 16,856 68% 10,035
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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 N.I. 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
------------------------------------------------
Gross Net Gross Net
At December 31, 2009 (mbbls) (mbbls) (mmcf) (mmcf)
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Proved
Developed producing 11 10 30,803 27,570
Developed non-producing - - 758 634
Proved undeveloped - - 22,187 20,333
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Total proved 11 10 53,748 48,537
Probable 4 4 37,296 32,943
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Total proved plus probable 16 14 91,043 81,480
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------------------------------------------------
NGL Total
------------------------------------------------
Gross Net Gross Net
At December 31, 2009 (mbbls) (mbbls) (mboe) (mboe)
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Proved
Developed producing 608 368 5,753 4,973
Developed non-producing 12 8 139 113
Proved undeveloped 364 257 4,062 3,646
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Total proved 985 633 9,954 8,733
Probable 646 406 6,866 5,901
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Total proved plus probable 1,630 1,039 16,820 14,634
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NOTE: Table may not add due to rounding.



NET PRESENT VALUE OF FUTURE NET REVENUE (FORECAST PRICES AND COSTS)

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($ millions) Net Present Value (NPV) of Future Net Revenue (FNR)
----------------------------------------------------
At December 31, 2009 Before Income Taxes - Discounted at (%/yr)
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Reserves category 0 5 10 15 20
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Proved
Developed producing 185.5 142.4 116.4 99.1 86.7
Developed non-producing 5.4 3.7 2.8 2.2 1.8
Proved undeveloped 86.3 51.3 30.7 17.8 9.2
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Total proved 277.2 197.5 150.0 119.1 97.8
Probable 267.3 138.8 86.0 59.8 44.8
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Total proved plus probable 544.5 336.3 236.0 178.9 142.6
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----------------------------------------------------
($ millions) Net Present Value (NPV) of Future Net Revenue (FNR)
----------------------------------------------------
At December 31, 2009 After Income Taxes - Discounted at (%/yr)
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Reserves category 0 5 10 15 20
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Proved
Developed producing 179.7 139.0 114.3 97.7 85.8
Developed non-producing 4.0 2.9 2.2 1.8 1.6
Proved undeveloped 64.9 37.2 20.9 10.6 3.8
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Total proved 248.6 179.1 137.4 110.1 91.2
Probable 201.2 104.0 64.1 44.4 33.1
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Total proved plus probable 449.8 283.1 201.5 154.5 124.3
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NOTE: Table may not add due to rounding.



PRICING AND INFLATION RATE ASSUMPTIONS (FORECAST PRICES AND COSTS)

----------------------------------------------------------------
Oil Natural gas
----------------------------------------------------------------------------
Edmonton
WTI Edmonton Pentanes
Cushing, Par Price Plus FOB
Oklahoma 40 Degrees API AECO Price Field Gate
Year (US$/bbl) (Cdn$/bbl) (Cdn$/mmbtu) (Cdn$/bbl)
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2010 80.00 83.26 5.96 84.93
2011 83.00 86.42 6.79 88.15
2012 86.00 89.58 6.89 91.37
2013 89.00 92.74 6.95 94.59
2014 92.00 95.90 7.05 97.82
2015 93.84 97.84 7.16 99.79
2016 95.72 99.81 7.42 101.81
2017 97.64 101.83 7.95 103.86
2018 99.59 103.88 8.52 105.96
2019 101.58 105.98 8.69 108.10
2020+ +2.0%/yr +2.0%/yr +2.0%/yr +2.0%/yr
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----------------------------------------------------------------
NGL Inflation
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Edmonton
Butanes Edmonton
FOB Propane FOB Inflation Exchange
Field Gate Field Gate Rate Rate
Year (Cdn$/bbl) (Cdn$/bbl) (%/Yr) (US$/Cdn$)
----------------------------------------------------------------------------
2010 64.11 52.46 2.0 0.950
2011 66.54 54.45 2.0 0.950
2012 68.98 56.43 2.0 0.950
2013 71.41 58.42 2.0 0.950
2014 73.84 60.42 2.0 0.950
2015 75.33 61.64 2.0 0.950
2016 76.85 62.88 2.0 0.950
2017 78.41 64.15 2.0 0.950
2018 79.99 65.45 2.0 0.950
2019 81.60 66.77 2.0 0.950
2020+ +2.0%/yr +2.0%/yr 2.0 0.950
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RECONCILIATION OF COMPANY NET RESERVES BY PRINCIPAL PRODUCT TYPE (FORECAST
PRICES AND COSTS)

-------------------------------------------------------------
Associated and
Light & medium oil non-associated natural gas
-------------------------------------------------------------
Proved Proved
Plus Plus
Proved Probable Probable Proved Probable Probable
Factors (mbbls) (mbbls) (mbbls) (mmcf) (mmcf) (mmcf)
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Dec. 31, 2008 13 7 20 32,792 20,495 53,287
Extensions - - - 3,135 6,270 9,405
Infill drilling - - - 4,446 2,964 7,410
Technical revisions 6 (2) 4 2,205 (4,285) (2,080)
Acquisitions - - - 16,007 11,852 27,859
Production (8) - (8) (4,837) - (4,837)
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Dec. 31, 2009 11 5 16 53,748 37,296 91,043
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-------------------------------------------------------------
NGL Total
-------------------------------------------------------------
Proved Proved
Plus Plus
Proved Probable Probable Proved Probable Probable
Factors (mbbls) (mbbls) (mbbls) (mboe) (mboe) (mboe)
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Dec. 31, 2008 693 412 1,104 6,171 3,834 10,006
Extensions 52 103 154 574 1,148 1,722
Infill drilling 73 49 122 814 543 1,357
Technical
Revisions (109) (159) (268) 265 (877) (612)
Acquisitions 356 242 598 3,024 2,217 5,241
Production (80) - (80) (894) - (894)
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Dec. 31, 2009 985 646 1,630 9,954 6,866 16,820
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NOTE: Table may not add due to rounding.



RESERVE-LIFE-INDEX

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Production (December 2009 average) 3,401 boe/d
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Proved reserves (mboe) 9,981
Proved reserve-life-index (years) 8.0
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Proved plus probable reserves (mboe) 16,856
Proved plus probable reserve-life-index (years) 13.6
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FINDING, DEVELOPMENT AND ACQUISITION (FD&A) COSTS (UNAUDITED)

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Total
(thousands except Capital Change in future capital Reserve FD&A costs
per boe amounts) costs development costs costs additions (per boe)
----------------------------------------------------------------------------
Excluding future
development costs
Proved $ 85,777 - $ 85,777 4,683 $ 18.32
Proved plus
probable $ 85,777 - $ 85,777 7,717 $ 11.12
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Including future
development
costs(1)
Proved $ 85,777 $ 30,692 $116,469 4,683 $ 24.87
Proved plus
probable $ 85,777 $ 42,383 $128,160 7,717 $ 16.61
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(1)Net of drilling credits.



RESERVE REPLACEMENT

----------------------------------------------------------------------------
Proved plus
Proved Probable
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Reserve replacement of 2009 production (897 mboe) 5.2 times 8.6 times
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NET ASSET VALUE PER SHARE (UNAUDITED)

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As at December 31, 2009

(thousands except per share amounts) Discounted at 10% Discounted at 15%
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Present value of reserves (P+P) $ 235,972 $ 178,887
Undeveloped acreage(1) 40,586 40,586
Working capital deficiency (37,571) (37,571)
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Estimated value $ 238,987 $ 181,902
Basic and fully diluted shares outstanding(2) 60,934 60,934
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Estimated NAV per share $ 3.92 $ 2.99
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(1) Based on independent land evaluation as of December 31, 2009.

(2) Options to purchase 5.8 million common shares were not included in the
computation of fully diluted shares outstanding as they were
anti-dilutive at December 31, 2009.


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; and (iv) cash flow. 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. Estimates herein of future net revenue do not represent fair market value.

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