Orion Oil & Gas Corporation

February 17, 2010 23:41 ET

Orion Announces Filing of Audited Financial Statements for the Period Ended December 31, 2009

CALGARY, ALBERTA--(Marketwire - Feb. 17, 2010) - Orion Oil & Gas Corporation (TSX:OIP) ("Orion" or the "Company") announces that it has filed its audited financial statements for the fourteen month period ended December 31, 2009 and its interim unaudited financial statements for the twelve month period ended October 31, 2009 on SEDAR at www.SEDAR.com. On January 8, 2010, Orion Oil & Gas Ltd. amalgamated with a subsidiary of Wintraysan Capital Corp. and Wintraysan Capital Corp. was renamed Orion Oil & Gas Corporation.

Orion has also filed the audited financial statements of Orion Oil & Gas Ltd. for the period ended December 31, 2009 on SEDAR as "Other."

Gary Guidry, President and CEO of Orion, provided the following highlights for the Company. The origins of Orion date back to 2006 when Natural Gas Partners of Dallas, a well-recognized institutional investor in private energy companies, provided the initial funding for Calgary-based Auriga Energy Inc. ("Auriga"). Auriga successfully acquired a portfolio of assets in Alberta, with the most significant being the liquids rich Beaverhill Lake natural gas field in the Kaybob area of Alberta.

On October 20, 2009, Sprott Resource Corp. ("SRC"), a Toronto-based institutional investor with a strong value bias, along with a new management team, acquired a controlling interest in Auriga, and renamed the Company Orion. Over the next three months, SRC and our management team re-positioned the Company for significant growth:

  1. We re-capitalized the Company with a $65 million rights offering, of which SRC funded approximately $57.3 million, and $7.7 million subscribed by existing shareholders, new management and associates.
  2. We eliminated the Company's debt, which was constraining our ability to move forward.
  3. We established a revolving term credit facility with a major Canadian chartered bank for $50 million.
  4. We initiated a development program to ramp production and free cash flow to an optimum plateau, at a level more than double the production when the Company was re-capitalized.
  5. We announced an $85 million capital budget for 2010 which we expect to fund with internally generated cash flow, and the newly established line of credit.
  6. We executed a hedge program to protect the 2010 capital program.
  7. We established a highly respected board of directors with a track record of value creation.
  8. We listed the Company on the Toronto Stock Exchange under the trading symbol "OIP", and again renamed it to Orion Oil and Gas Corporation.

Our assets, dominated by our 91% working interest at Kaybob (Beaverhill Lake), are characterized by low development and operating costs and no exploration risk. Our development costs are less than $10.00 per barrel of oil equivalent ("BOE") and our operating costs are less than $15.00 per BOE, among the best in the Western Canada Sedimentary Basin.

With everything in place, we kicked off the winter development drilling program in November 2009, only weeks after our re-capitalization of the Company. We had a high degree of confidence in our timing because:

  • There is mature infrastructure with capacity sufficient to accommodate our growth plans.
  • We have an equity ownership in the processing plant, which gives us direct access to our sales point, lower overall processing fees and all the same rights of other equity owners.
  • We have mature technology supporting the program in the form of 3D seismic, petro-physical well control, and extensive production history.
  • We have a proven execution team. 

The early results of our winter program have been highly encouraging, with wells being drilled on schedule, on budget and with initial productivities exceeding our expectations. 

Subsequent to year-end, we disclosed that our independent engineers have estimated our reserves as 12.4 million BOE Proved, 18.6 million BOE Proved plus Probable and 28.3 million BOE Proved plus Probable plus Possible (published in our NI 51-101 F1 filing on SEDAR). Using forecasted prices, we look forward to having significant free cash flow available to invest in new projects over the next five to seven years.

We also initiated business development activities during the fourth quarter of 2009 with a focus on South America. Our highest priorities include Colombia, Argentina and Peru. With the Company's significant capability to generate cash flow over the next five years, and confidence in our ability to raise additional capital should we need it, we are seeking out significant development and enhanced oil recovery projects in South America, with a secondary focus on low risk exploration opportunities.

We are excited about the future of our Company. We have established a strong foundation based upon assets which will provide a sustainable level of investable cash flow with "best in class" operating and capital costs and a strong balance sheet. From this platform, we will leverage our board of directors, management team and high quality staff to build an international business which we are confident will deliver exceptional results for our shareholders.

Summary Information Relating to Orion

Orion through its wholly-owned subsidiary Orion Oil & Gas (North America) Ltd. ("Orion N.A")., is engaged in the exploration for and development of oil and natural gas interests located primarily in the Kaybob, Redwater and Bigstone areas of Alberta. Orion N.A.'s current production is 3,499 boe/d, which is comprised of approximately 45% light oil and natural gas liquids and 55% natural gas. At its Kaybob property, a natural gas condensate field, Orion N.A. has a 91% working interest in 25,600 gross acres. Orion N.A. has drilled 8 wells at Kaybob, with a 100% success rate. At its Redwater property, a light oil field, Orion N.A. has mainly 100% working interest in 8,786 gross acres. Orion N.A. has drilled 14 wells at Redwater, with a 100% success rate. At its Bigstone property, a natural gas field, Orion N.A. has 100% working interest in 1,920 acres. Orion N.A. is operator at its Kaybob, Redwater and Bigstone properties. Orion N.A. has sufficient capital to fully fund the development of its properties.

Note: boe's may be misleading, particularly if used in isolation. In accordance with NI 51-101, 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. 

Contact Information

  • Orion Oil & Gas Corporation
    Gary Guidry
    President and Chief Executive Officer
    (403) 297-1430
    (403) 237-9791 (FAX)
    Orion Oil & Gas Corporation
    Douglas Allen
    Chief Financial Officer
    (403) 297-1430
    (403) 237-9791 (FAX)
    Orion Oil & Gas Corporation
    Trevor Peters
    Vice President, Business Development & Corporate Planning
    (403) 297-1430
    (403) 237-9791 (FAX)