Open Range Energy Corp.

Open Range Energy Corp.

January 24, 2011 17:59 ET

Open Range Energy Corp. Provides Poseidon Concepts Business Update and Announces U.S. Expansion

CALGARY, ALBERTA--(Marketwire - Jan. 24, 2011) - Open Range Energy Corp. (TSX:ONR) ("Open Range" or the "Company") is pleased to provide an update on its wholly-owned business unit, Poseidon Concepts, which generated EBITDA and cash flow from operations estimated at $4.9 million in the seven months ended December 31, 2010.

Poseidon Concepts designs, manufactures and operates an innovative fracturing fluid handling system using a patent-pending modular, insulated tank system that offers significant cost and operating advantages. The system has met with enthusiastic response from exploration and production companies in western Canada and is currently being deployed in the United States.

Levering Technology Innovation

The Poseidon Concepts system was conceived, designed, tested and rolled out by Open Range personnel as part of the Company's continuous efforts to reduce the costs of exploration, development and operations at its core Ansell/Sundance Deep Basin property.

Following successful application of the experimental system on several of the Company's Deep Basin liquids-rich natural gas wells in early 2010, Open Range in Q2 2010 formed the Poseidon Concepts business unit under the operating direction of Cliff Wiebe. Mr. Wiebe has over 25 years of industry experience primarily focused on completion operations and related energy services, and has been Open Range's completions superintendent for the past three years.

The insulated and modular tank system's advantages include greatly increased storage capacity to accommodate larger fracturing operations, improved portability, more efficient fluid heating process and reduced environmental footprint, all of which deliver cost savings versus the traditional approach of using multiple smaller standing tanks or lined pits.

Western Canada Operations

Poseidon Concepts provides systems on a rental basis to oil and natural gas producers across western Canada. The first revenue-generating job was performed in June and initial rentals focused on Alberta's Deep Basin. Industry acceptance has generated progressive increase in demand.

Fabrication of tank systems for western Canadian operations is continuing through an Alberta-based third-party manufacturer and was scaled up in Q4 2010 to meet increasing industry demand.

Poseidon Concepts' sales and marketing are being led by Brad Wanchulak, who has extensive business development experience in western Canada's energy sector.

Expansion into the United States

In late Q4 2010, Poseidon Concepts expanded into North Dakota as its initial step towards servicing the multiple oil and natural gas basins in the United States. Intensive and growing industry activity in North Dakota made this the logical entry point, gaining exposure to multiple intermediate to senior U.S. producers while remaining in relative proximity to Poseidon Concepts' western Canada base.

Fabrication of tank systems for the U.S. operations is now underway using a large third-party manufacturer based in the U.S. The first U.S.-built system was recently field-deployed in North Dakota.

Poseidon Concepts' U.S. operations recently received a one-year minimum commitment for the provision of multiple fluid handling systems to a major U.S. oil and natural gas company operating in North Dakota.


Open Range is expecting the Poseidon Concepts business unit to generate cash flow from operations and EBITDA of approximately $3.3 million for the fourth quarter of 2010, compared to $1.3 million in the third quarter of 2010, representing a more than 150 percent quarter-over-quarter increase.

Cash flow from operations and EBITDA in the seven months ended December 31, 2010, representing Poseidon Concepts' operations since inception, are expected to be $4.9 million. Revenue per job averaged approximately $86,000 during this period.


With demand for fracturing services and related equipment in Canada and the U.S. remaining strong, particularly for unconventional oil and liquids-rich natural gas reservoirs being developed with horizontal wells and larger fracturing operations, Open Range anticipates continued growth of the Poseidon Concepts tank fleet.

Poseidon Concepts currently has 45 fluid handling systems in the field, with approximately 20 percent of the expanding fleet expected to be servicing U.S. operations by mid-February. The majority of the fleet is deployed at unconventional oil and liquids-rich natural gas plays. The strong operating environment is driving a high utilization rate and solid operating margins.

Open Range forecasts business unit cash flow from operations and EBITDA of $8.5 million for the first half of 2011. Poseidon Concepts' capital expansion requirements are expected to be fully financed using a portion of the business unit's cash flow from operations, with the balance of the business unit's cash flow contributing to Open Range's continuing exploration and development program.

Reader Advisory

This news release contains certain forward-looking statements, which include assumptions with respect to (i) demand for Poseidon Concepts' tank systems and the corresponding utilization rate and operating margins; (ii) future capital expenditures and how they will be financed; (iii) cash flow from operations and EBITDA; and (iv) general oil and gas industry activity. 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 the manufacture and supply of fracturing fluid handling systems, marketing and transportation, loss of markets, volatility of commodity prices, currency and interest rate fluctuations, environmental risks, competition from other fluid handling system suppliers, 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, as well as stock market volatility and market valuations of companies with respect to announced transactions and the final valuations thereof. 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 ( 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.


Contact Information

  • Open Range Energy Corp.
    A. Scott Dawson, P. Eng.
    President and Chief Executive Officer
    Open Range Energy Corp.
    Lyle D. Michaluk, CA
    Vice President, Finance and Chief Financial Officer