Open Range Energy Corp.
TSX : ONR

Open Range Energy Corp.

January 30, 2007 08:13 ET

Open Range Energy Corp. (TSX:ONR) Announces $10 Million Underwritten Private Placement of Flow-Through Common Shares and Provides Update to Operational Activities

CALGARY, ALBERTA--(CCNMatthews - Jan. 30, 2007) -

NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR FOR DISSEMINATION IN THE U.S.

Open Range Energy Corp. ("Open Range" or the "Company") (TSX:ONR) is pleased to announce that it has entered into an agreement with a syndicate of underwriters lead by Sprott Securities Inc. pursuant to which the underwriters have agreed to purchase, by way of an underwritten private placement, 2,500,000 common shares on a "flow-through" basis ("Flow-Through Common Shares") at a price of $4.00 each for gross proceeds to Open Range of $10 million.

Open Range has also granted the underwriters an underwriters' option (the "Underwriters' Option") to buy up to an additional 500,000 Flow-Through Common Shares for additional gross proceeds of $2,000,000.

The private placement financing is scheduled to close on February 22, 2007 and is subject to regulatory approval and completion of definitive documentation.

The proceeds of the offering will be used to fund Open Range's exploration program.

Open Range is also pleased to provide an update of its operating activities. The Company's strategy for 2007 remains exploration-based, with a focus on maintaining operational and drilling momentum at its core Ansell/Sundance property in the Deep Basin of west-central Alberta.

2007 Ansell/Sundance Program - The Company's 2007 10-well drilling program commenced on January 3, 2007 at the 12-35-053-20W5M location. This well was cased and completion operations are currently underway on four potential pay zones. The 12-35 well maintains the Company's 100 percent drilling success rate at Ansell/Sundance, with a cumulative total of 13 successful wells to date. This is the third and final earn-in well on the nine-section farm-in negotiated by Open Range in 2006. The Company has moved its contracted drilling rig to the 3-27-53-20W5M location and expects this well to spud January 30, 2007.

Commingling and Completion Progress - On October 31, 2006 the EUB approved a Designated Entity Commingling (DE2) area which applies to a significant portion of the Company's lands. This new designation allows Open Range to immediately commingle all Cretaceous pay zones encountered in each well bore, resulting in significant multi-zone completion cost savings. Since approval of the new commingling designation Open Range has completed two wells drilled in Q4 2006, each with four pay zones. Each zone was completed at a cost of approximately $400,000, a cost savings of approximately $300,000 per zone. The first four-zone well was placed on-stream on January 10, 2007 and is currently producing its flush production at a restricted rate of approximately 2.6 mmcf per day (130 boe per day net). The second four-zone well was placed on-stream on January 28, 2007 at a restricted flush production rate of approximately 2.5 mmcf per day (200 boe per day net). Initial production declines of these wells are expected to follow the typical profile for tight gas reservoirs.

New Facilities - As a result of its continued drilling success at Ansell/Sundance the Company is upgrading its infrastructure capacity with two new compression facilities. The first, at 06-03-54-19W5M (50 percent working interest), will have 3.0 mmcf per day of sour compression capacity. This facility is expected to be commissioned in late February and will process natural gas from the Company's two (50 percent working interest) Montney discoveries. The second compression facility, at 9-34-53-20W5 (33 percent working interest), is designed to accommodate 10.0 mmcf per day of sweet natural gas and is anticipated to be commissioned in early April 2007. Upon completion of these facilities, the Company will have compression capacity throughput from its three operated facilities totalling approximately 23 mmcf per day (9.0 mmcf per day net).

Production Growth - Open Range is pleased to report that it exited the year with peak production of 1,172 boe per day. Production was approximately 90 percent natural gas. The exit rate represents growth of approximately 190 percent from the Company's founding production base in November 2005. Open Range averaged approximately 1,050 boe per day in December 2006, increasing to approximately 1,100 boe per day in the last two weeks of 2006.

Multi-zone Drilling Success and Future Inventory - At Ansell/Sundance the Company now has 10 (4.1 net) producing wells with a total of 22 zones on-production. Since completion of our proprietary 3D seismic program in Q2 2006, five newly drilled wells have encountered an average of 3.4 commercial natural gas zones per well. This is a significant improvement over the pre-3D seismic average of 1.8 zones per well. The Company's exploration success to date has resulted in natural gas production from eight different horizons. Open Range's current development drilling inventory stands at 25 locations all identified on its proprietary 3D seismic.

Land - Open Range continues to be successful in acquiring land at Ansell/Sundance, with seven (4.0 net) sections acquired in December, to increase the Company's total land position to 42 sections with an average working interest of 47 percent.

Financial Flexibility - Open Range is financially positioned to execute its 2007 capital program. The aforementioned flow-through share financing will maintain Open Range's financial flexibility. In addition, the Company has entered into costless collar contracts for 3,750 Gj/d of its 2007 natural gas production. The contracts have a floor price of Cdn$7.00 per Gj and blended average ceiling prices of Cdn$10.10 per Gj for winter 2007 and Cdn$9.47 per Gj for summer 2007.

OPEN RANGE ENERGY CORP. IS A PUBLICLY TRADED CANADIAN ENERGY COMPANY INVOLVED IN THE EXPLORATION, DEVELOPMENT AND PRODUCTION OF NATURAL GAS AND CRUDE OIL IN WESTERN CANADA.

THE SECURITIES OFFERED HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES ABSENT REGISTRATION OR APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS. THIS PRESS RELEASE SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THE SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL.

Reader Advisory

This news release contains certain forward-looking statements, including management's assessment of future plans and operations, and capital expenditures and the timing thereof, that 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 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 so, what benefits, including the amount of proceeds, that Open Range will derive there from. 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
    Website: www.openrangeenergy.com