Open Range Energy Corp.
TSX : ONR

Open Range Energy Corp.
Poseidon Concepts Corp.
TSX : PSN

Poseidon Concepts Corp.

November 01, 2011 02:42 ET

Open Range Energy Corp. Reorganization Overwhelmingly Approved by Shareholders

CALGARY, ALBERTA--(Marketwire - Nov. 1, 2011) -

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF U.S. SECURITIES LAW

Open Range Energy Corp. (TSX:ONR) ("Open Range") is pleased to announce that it has received shareholder and court approval for its previously announced plan of arrangement (the "Arrangement"), resulting in the reorganization of Open Range into a dividend-paying, publicly traded energy services company and a separate growth-oriented, publicly traded oil and natural gas exploration and production (E&P) company.

The Arrangement was approved by 99.98 percent of the votes cast at a special meeting of Open Range shareholders and received approval from the Court of Queen's Bench of Alberta on October 31, 2011. The Arrangement is expected to become effective on November 1, 2011.

The Arrangement results in the separation of Open Range's high-quality Deep Basin E&P assets from the rapidly growing and highly profitable Poseidon Concepts modular fracturing fluid tank rental business, which was previously operated through a wholly-owned subsidiary of Open Range.

Pursuant to the Arrangement, former shareholders of Open Range will receive one common share of the post-Arrangement Open Range ("New Open Range") and 0.8839 of a common share of Poseidon Concepts Corp. ("Poseidon") for each Open Range common share. The New Open Range common shares (TSX:ONR) and the Poseidon common shares (TSX:PSN) are expected to commence trading on the Toronto Stock Exchange on or about November 4, 2011. Until that time Open Range shares will continue trading as before, representing the combined assets of the two companies.

New Open Range

New Open Range consists of the entire E&P asset base and most of the senior management and technical personnel of Open Range, organized under a new legal entity operating as Open Range Energy Corp.

Business model highlights:

  • Well-capitalized, growth-oriented oil and natural gas company;
  • Strong balance sheet with opening debt of approximately $15 to $20 million;
  • Active second-half 2011 capital program of eight gross horizontal wells;
  • Top-decile operating costs and cash costs among Canadian junior E&P companies;
  • High-quality, multi-zone Deep Basin exploration and production assets at Ansell/Sundance, Rough and Waskahigan;
  • Control of strategic infrastructure, operatorship and high average working interests;
  • 2011 exit production targeted at 6,200 boe per day; and
  • Medium-term goal of 10,000 boe per day by year-end 2012.

Poseidon Concepts

Poseidon's growing revenue, solid margins and low operating costs will enable it to pay shareholders an attractive and sustainable monthly dividend, initially anticipated to be $0.09 per share ($1.08 per share annually). Holders of Poseidon common shares as of November 30, 2011 will be entitled to the first monthly dividend, payable on December 15, 2011.

Poseidon's business model is to be a sustainable, pure-play, dividend-paying and growth-oriented energy service and supply company. Following the strong success of Poseidon's introduction of its innovative modular fracturing fluid tanks to E&P companies in western Canada and the United States, Poseidon intends to continue using its first-mover advantage to increase market penetration to all major unconventional oil and natural gas plays across North America.

With 170 tanks deployed, Poseidon's 2011 EBITDA guidance from tank rental operations is $55 million, and its EBITDA guidance for 2012 is $130 million.

Poseidon will be led by a strong and carefully assembled management team and an experienced and diverse board of directors as described in the information circular relating to the Arrangement. Poseidon is pleased to announce the appointment of Matt MacKenzie as its Chief Financial Officer, effective immediately. Mr. MacKenzie brings with him a wealth of experience in capital markets including energy investment banking, institutional equity sales and oilfield services equity research.

Third Quarter Results

Consolidated financial and operating results for the three and nine months ended September 30, 2011 will be released on November 8, 2011 and will incorporate results from the Poseidon business and the E&P assets.

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 and operating activities and how they will be financed; (iv) funds from operations; (v) cash flow from operations and EBITDA; (vi) demand for Poseidon's tank systems; (vii) timing, amount and sustainability of dividend payments; and (viii) general oil and gas industry activity. The reader is cautioned that assumptions used in the preparation of such information may prove to be incorrect. 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, dependence on manufacturers of the Poseidon tank systems; operating risk liability; demand for Poseidon's tank systems; levels of competition in the fracturing fluid storage industry; the ability of Poseidon to attract and retain clientele; the ability of Poseidon to fund its ongoing capital requirements; Poseidon's limited operating history; 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, the United States and globally, 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.

Actual results, performance or achievements of Open Range and Poseidon 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 and Poseidon 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 Poseidon or persons acting on their behalf are expressly qualified in their entirety by these cautionary statements. Additional information on the foregoing risks and other factors that could affect the operations and financial results of Open Range and Poseidon are included in Open Range's annual information form, the information circular provided to Open Range shareholders in connection with the Arrangement 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 neither Open Range nor Poseidon undertakes 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.

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