Orleans Energy Ltd.

Orleans Energy Ltd.

March 24, 2010 16:47 ET

Orleans Energy Announces 2009 Financial Results and New Banking Arrangement

CALGARY, ALBERTA--(Marketwire - March 24, 2010) - Orleans Energy Ltd. ("Orleans" or the "Company") (TSX:OEX) today announced financial and operating results for the year ended December 31, 2009. For the year, Orleans reported cash flow from operations of $15.2 million ($0.27 per fully-diluted share) on revenue of $44.0 million and average daily production of 3,924 barrels of oil equivalent. Corporate highlights are as follows:

Quarterly Summary
Three Month Period Ended,
Financial Highlights Dec. 31, Sep. 30, Jun. 30, Mar. 31,
(6:1 oil equivalent conversion) 2009 2009 2009 2009
(amounts in Cdn $ except
share data)
Petroleum and natural gas
revenue (4) 12,130,002 9,497,206 9,462,683 12,980,232
Per share - basic 0.19 0.15 0.18 0.27
- diluted 0.19 0.15 0.18 0.27
Cash flow from operations(1) 5,780,612 3,194,954 2,325,736 3,925,887
Per share - basic 0.09 0.05 0.04 0.08
- diluted 0.09 0.05 0.04 0.08
Operating netback (2) ($/boe) 20.55 12.66 10.97 13.31
Corporate netback (2) ($/boe) 16.43 9.02 6.64 10.43
Net loss (1,400,440) (5,940,671) (6,432,436) (4,242,384)
Per share - basic (0.02) (0.10) (0.12) (0.09)
- diluted (0.02) (0.10) (0.12) (0.09)
Net debt (3)- period end 24,435,914 47,730,426 47,421,934 55,242,097
Weighted average basic
shares 63,749,076 62,050,706 53,059,607 47,933,706
Weighted average diluted
shares 63,749,076 62,050,706 53,059,607 47,933,706
Issued and outstanding
shares(5) 65,175,706 62,050,706 62,050,706 52,959,706
Operating Highlights
Average daily production:
Natural gas (mcf/d) 18,755 19,254 18,881 20,056
Liquids (oil and NGLs)
(bbls/d) 699 639 701 838
Oil equivalent (boe/d) 3,824 3,848 3,848 4,181
Average sales price (net
Natural gas ($/mcf) 4.68 3.45 3.67 5.37
Liquids (oil & NGLs) ($/bbl) 63.22 57.61 49.37 43.54
Oil equivalent ($/boe) 34.48 26.83 27.03 34.50
E&D capital
expenditures ($) 11,754,438 3,006,004 11,117,989 18,235,272
Total net capital
expenditures ($) (8,063,547) 3,648,280 11,609,527 18,856,761
Operating expenses ($/boe) 9.67 10.55 11.42 12.32
Wells drilled gross (net) 3 (2.7) - - 2 (2.0)

Annual Summary
Financial Highlights Year Year
(6:1 oil equivalent conversion) 2009 2008
(amounts in Cdn $ except share data)
Petroleum and natural gas revenue (4) 44,070,123 85,127,075
Per share - basic 0.78 1.93
- diluted 0.78 1.93
Cash flow from operations (1) 15,227,189 41,998,855
Per share - basic 0.27 0.95
- diluted 0.27 0.95
Operating netback (2) ($/boe) 14.36 30.36
Corporate netback (2) ($/boe) 10.63 27.41
Net loss (18,015,931) (3,339,712)
Per share - basic (0.32) (0.08)
- diluted (0.32) (0.08)
Net debt (3)- period end 24,435,914 53,433,282
Weighted average basic shares 56,756,268 44,059,455
Weighted average diluted shares 56,756,268 44,059,455
Issued and outstanding shares (5) 65,175,706 45,779,706
Operating Highlights
Average daily production:
Natural gas (mcf/d) 19,233 20,199
Liquids (oil and NGLs) (bbls/d) 719 820
Oil equivalent (boe/d) 3,924 4,187
Average sales price (net hedging) (4):
Natural gas ($/mcf) 4.30 8.15
Liquids (oil & NGLs) ($/bbl) 52.94 82.88
Oil equivalent ($/boe) 30.77 55.55
E&D capital expenditures ($) 44,113,703 68,066,259
Total net capital expenditures ($) 26,051,021 69,621,894
Operating expenses ($/boe) 11.01 11.57
Wells drilled gross (net) 5 (4.7) 15 (12.8)


(1) Cash flow from operations or operating cash flow does not have any
standardized meaning prescribed by Canadian generally accepted
accounting principles ("GAAP"). Please refer to the Company's MD&A for
definition of cash flow from operations.
(2) Operating netback represents average sales price less royalties,
operating costs and transportation expenses. Corporate netback
represents operating netback less interest expense and general and
administrative costs (excluding non-cash stock-based compensation
expense). These netback measures are not recognized measures under
Canadian GAAP.
(3) Net debt refers to outstanding bank debt plus any working capital
deficit or minus any working capital surplus (excludes current
unrealized amounts pertaining to risk management contracts and current
future income taxes). Net debt is not a recognized measure under
Canadian GAAP. As of March 22, 2010, the Company had approximately $26
million drawn against its bank credit facility.
(4) Petroleum and natural gas revenue and pricing includes realized hedging
gains or losses from commodity contract settlements.
(5) As of March 23, 2010, common shares outstanding are 65,175,706.

Highlights and Accomplishments

- Significantly Improved Financial Flexibility

Exited 2009 with net debt of $24.44 million as compared to December 31, 2008 net debt of $53.43 million, resulting in a net debt-to-trailing operating cash flow ratio of 1.60 times.

- Enhanced Liquidity

The Company recently executed a letter agreement banking proposal encompassing a new, increased $60.0 million committed, extendible revolving credit facility underwritten by a two-bank lending syndicate including the National Bank of Canada, acting as agent bank, and Alberta Treasury Branches (the "New Credit Facility"). The New Credit Facility is anticipated to be effective April 6, 2010. As of March 22, 2010, the Company had approximately $26 million of bank debt drawn.

- Operating Cost Reduction

Significantly reduced operating costs to $9.67 per boe in the fourth quarter of 2009 from the recorded fourth quarter 2008 cost of $13.86 per boe. The Company's operating cost profile in the fourth quarter of 2009 marks the lowest per-unit production cost since the second quarter of 2006.

- Asset Base Concentration with Resource Focus

Executed the disposition of non-core East Central Alberta properties for aggregate net proceeds of $20.37 million, providing Orleans with a number of strategic benefits including a consolidated asset base to West Central Alberta and the Peace River Arch with an enhanced focus on unconventional and "resource style" opportunities, including among others, Orleans' Kaybob Montney, Pine Creek Fahler/Wilrich development assets and its Montney exploration prospects in the Greater Waskahigan area.

- Facility Enhancement and Control at Kaybob

Installed a strategic pipeline system at Kaybob, with substantial compression and dehydration infrastructure, enabling the Company to directly control and manage the flow of its liquids-rich Montney gas from well head to plant inlet in a much more cost-effective manner.

- Strong Reserves Growth

As previously reported, notwithstanding the disposition of approximately 2.4 million barrels of oil equivalent ("boe") associated with the 2009 asset dispositions, Orleans increased its proved plus probable oil and gas reserves base by 11% over year-end 2008 to approximately 20 million boe and increased its reserve life index to 13 years, resulting in a production replacement ratio of 2.3 times.

The Company's audited financial statements and associated Management's Discussion and Analysis ("MD&A") for the year ended December 31, 2009 will be available on Orleans' website at www.orleansenergy.com located within "Investor Relations" under "Financial Reports". Additionally, these documents will be filed, in due course, on the System for Electronic Document Analysis and Retrieval ("SEDAR"). These documents can be retrieved electronically from the SEDAR system by accessing Orleans' public filings under "Search for Public Company Documents" within the "Search Database" module at www.sedar.com.

Orleans Energy Ltd. is a Calgary, Alberta-based crude oil and natural gas company, with common shares trading on the Toronto Stock Exchange under the symbol "OEX". Orleans is a team of dedicated, experienced professionals focused on the creation of shareholder value via acquisition, exploration and development of crude oil and natural gas assets in Alberta, Canada.

The information in this news release contains certain forward-looking statements. These statements relate to future events or our future performance. All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "seek", "anticipate", "plan", "continue", "estimate", "approximate", "expect", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe", "would" and similar expressions. These statements involve substantial known and unknown risks and uncertainties, certain of which are beyond the Company's control, including: the impact of general economic conditions; 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; fluctuations in commodity prices and foreign exchange and interest rates; stock market volatility and market valuations; volatility in market prices for oil and natural gas; liabilities inherent in oil and natural gas operations; uncertainties associated with estimating oil and natural gas reserves; competition for, among other things, capital, acquisitions, of reserves, undeveloped lands and skilled personnel; incorrect assessments of the value of acquisitions; changes in income tax laws or changes in tax laws and incentive programs relating to the oil and gas industry ; geological, technical, drilling and processing problems and other difficulties in producing petroleum reserves; and obtaining required approvals of regulatory authorities. The Company's actual results, performance or achievement could differ materially from those expressed in, or implied by, such 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 that the Company will derive from them. These statements are subject to certain risks and uncertainties and may be based on assumptions that could cause actual results to differ materially from those anticipated or implied in the forward-looking statements. The Company's forward-looking statements are expressly qualified in their entirety by this cautionary statement. Except as required by law, the Company undertakes no obligation to publicly update or revise any forward-looking statements.

In this news release, reserves and production data are commonly stated in barrels of oil equivalent ("boe") using a six to one conversion ratio when converting thousands of cubic feet of natural gas ("mcf") to barrels of oil ("bbl") and a one to one conversion ratio for natural gas liquids ("NGLs" or "ngls"). Such conversion may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf: 1 bbl is based on energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

As an indicator of the Company's performance, the term cash flow from operations or operating cash flow contained within this news release should not be considered as an alternative to, or more meaningful than, cash flow from operating, financing or investing activities, as determined in accordance with Canadian generally accepted accounting principles ("GAAP"). This term does not have a standardized meaning, nor is it a financial measure, under GAAP. Cash flow from operations is widely accepted as a financial indicator of an exploration and production company's ability to generate cash which is used to internally fund exploration and development activities and to service debt. This measure is widely used by shareholders and investors in the valuation, comparison and investment recommendations of companies within the natural gas and crude oil exploration and production industry. Cash flow from operations, as disclosed within this news release, represents cash flow from operating activities before any asset retirement obligation cash expenditures and before changes in non-cash operating activities working capital. The Company presents cash flow from operations per share whereby per share amounts are calculated consistent with the calculation of earnings per share. Additionally, net debt refers to outstanding bank debt plus working capital deficit (excludes current unrealized amounts pertaining to risk management commodity contracts) plus long-term accounts receivables. Net debt is not a recognized measure under Canadian GAAP.

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