Orleans Energy Ltd.
TSX : OEX

Orleans Energy Ltd.

December 21, 2009 08:30 ET

Orleans Energy Announces Strategic Disposition of Non-Core Assets

CALGARY, ALBERTA--(Marketwire - Dec. 21, 2009) - Orleans Energy Ltd. ("Orleans" or the "Company") (TSX:OEX) is pleased to announce today that it closed the strategic disposition of its non-core Greater Halkirk and Leo properties for $18.19 million, adjusted for customary closing adjustments and estimated transaction costs (the "Halkirk Leo Disposition").

The Greater Halkirk and Leo assets, conventional in nature, are located within East Central Alberta, west of the fourth meridian, and encompass the following operational attributes:

- Approximately 440 barrels of oil equivalent ("boe") per day of production, weighted 51% gas and 49% oil and natural gas liquids.

- Estimated proved reserves of 939 thousand boe.

- Estimated proved plus probable reserves of 2.1 million boe.

- 7,176 net acres (11.2 net sections) of undeveloped acreage.

- Operating costs of approximately $21 per boe with 122 net well bores.

The Halkirk Leo Disposition provides Orleans with a number of strategic benefits, including the following:

- Consolidates its asset base to West Central Alberta (west of the fifth meridian) and the Peace River Arch, with a total of only 68 producing well bores at an average working interest of approximately 80% with greater than 90% Orleans' well operatorship.

- Concentrates the Company's asset base as primarily unconventional and "resource style" in nature, including, among others, Orleans' Kaybob Montney and Pine Creek Fahler/Wilrich development assets and its Montney exploration prospects in the Greater Waskahigan area.

- Fosters additional financial flexibility enabling Orleans to advance its continued Montney development at Kaybob and other identified "resource capture" initiatives.

- Reduces corporate bank indebtedness to approximately $18 million drawn against its bank credit facility (post-closing of Halkirk Leo Disposition). As a result of the disposition of proved reserves associated with the Halkirk Leo Disposition, the borrowing base associated with Orleans' bank facility will be decreased by $7 million to $53 million in total.

- Reduces corporate operating cost structure to less than $9.00 per boe (estimated).

Orleans Energy Ltd. is a Calgary, Alberta-based emerging 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.

Any references in this news release to initial and/or final raw test or production rates and/or "flush" production rates are useful in confirming the presence of hydrocarbons, however, such rates are not determinative of the rates at which such wells will commence production and decline thereafter. While encouraging, readers are cautioned not to place reliance on such rates in calculating the aggregate production for the Company.

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