Open Range Energy Corp.
TSX : ONR

Open Range Energy Corp.

January 27, 2011 17:25 ET

Open Range Energy Corp. Announces Wilrich-Focused First-Half 2011 Capital Program and Guidance

CALGARY, ALBERTA--(Marketwire - Jan. 27, 2011) - Open Range Energy Corp. ("Open Range" or the "Company") (TSX:ONR) is pleased to provide details on its first-half 2011 capital investment program and associated production and cash flow forecasts, which will include estimated consolidated cash flow of $21 million and average production of 4,200 boe per day for the six months ended June 30, 2011.

First-Half 2011 Capital Program and Production Guidance

Open Range's Board of Directors has approved a $25 million capital budget for the first half of 2011. The first-half program will focus on the Company's core Ansell/Sundance Deep Basin property, and will include the drilling of four (3.6 net) Wilrich horizontal wells. Three of these are currently in progress:

  • One 100 percent working interest Wilrich horizontal well has been drilled to a total measured depth of over 4,200 metres, including a 1,350-metre lateral leg, and is being completed using a packer system with 13 fracturing stages averaging 80 tonnes of sand each. Production flow tests are expected shortly;
  • One 100 percent working interest Wilrich horizontal well is currently drilling the lateral leg, with completion operations scheduled for mid-February; and
  • One 100 percent working interest Wilrich horizontal well was recently spud and is currently drilling, with completion operations planned for later in the first quarter.

The fourth (60 percent working interest) Wilrich well planned under the current program is expected to spud in mid-February. Combined drilling and royalty incentives earned for the four-well batch are estimated at a total of $11 million.

Open Range's first Wilrich horizontal well came on-stream October 15, 2010 at 7.0 mmcf per day plus NGL, having been completed with 10 fracturing stages over its 1,060-metre horizontal leg. The well is currently producing at approximately 3.4 mmcf per day plus 50 bbls of NGL per day. After three months on-production the well has delivered a cumulative 320 mmcf of sales gas plus 4,200 bbls of NGL.

In addition, Open Range has one Bluesky and two Notikewin horizontal wells on production at Ansell/Sundance, which to date have produced a combined cumulative 1.7 bcf of natural gas plus 22,100 barrels of NGL. The Company also has 46 producing multi-zone vertical wells at Ansell/Sundance.

Production from three of the four new Wilrich wells will be tied into the Open Range-operated Ansell/Sundance gas plant, which has NGL extraction capability and ships marketable products including propane, butane and stabilized condensate.

The first-half budget also includes the drilling of one (0.2 net) horizontal Glauconitic well at Ferrier, where the Company's existing one (0.2 net) Glauconitic well is currently producing at approximately 2 mmcf per day plus 265 bbls of NGL per day, having produced a cumulative 338 mmcf of sales gas plus 45,000 bbls of NGL to date.

Based on the approved capital investment program, Open Range is forecasting average first-half production of 4,200 boe per day.

Financial

The first-half 2011 budget reflects Open Range's continued practice of disciplined financial management. First-half consolidated cash flow from operations is forecast at $21.0 million or $0.34 per share (based on an average AECO spot price of $4.00 per mcf during the period). Consolidated cash flow includes forecast cash flow from the Poseidon Concepts business unit (for details please see Open Range's press release dated January 24, 2011).

Open Range anticipates continued improvement to its track record of low costs. Operating costs including transportation are estimated at $5.00 per boe for 2011, reflecting recent disposition of non-core, higher-cost producing assets and continued growth of the Company's high-netback liquids-rich production at Ansell/Sundance.

The Company's hedging program remains a focal point in maintaining operating netbacks in excess of $20.00 per boe in the current natural gas price environment. To date Open Range has 11.4 mmcf per day or nearly 50 percent of anticipated first-half 2011 production hedged at an average floor price of $4.28 per mcf, providing a base of cash flow to support the capital program.

Outlook

Open Range's second-half 2011 program will be determined as the Company gains more certainty on commodity prices and results from wells currently underway.

The second-half program is expected to continue focusing on Wilrich horizontal opportunities at Ansell/Sundance. The Company may also elect to drill its first horizontal Montney oil location at its four-section (100 percent working interest) Waskahigan property, which directly offsets strong competitor drilling success for Montney light oil and emerging Duvernay gas exploration.

Open Range is pleased to announce that Robert R. Verbuck has been appointed as the Company's Corporate Secretary, replacing Jarrod Isfeld who has resigned effective immediately. Mr. Verbuck is a partner with Burstall Winger LLP with over 10 years of experience advising oil and gas companies on various legal, corporate governance and securities related matters.

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".

Reader Advisory

This news release contains certain forward-looking statements, which include assumptions with respect to (i) results from drilling and completion operations; (ii) production; (iii) future capital expenditures; (iv) funds from operations; and (v) 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. Additional information on the foregoing risks and other factors that could affect Open Range's operations and financial results are included in the Company's annual information form and other reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com). 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.

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