Open Range Energy Corp.
TSX : ONR

Open Range Energy Corp.

March 15, 2007 18:18 ET

Open Range Energy Corp. (TSX:ONR) Announces 2006 Financial, Operating and Reserve Evaluation Results

CALGARY, ALBERTA--(CCNMatthews - March 15, 2007) -

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES.

Open Range Energy Corp. ("Open Range" or the "Company") (TSX:ONR) is pleased to announce the financial and operating results for the year ended December 31, 2006, including the Company's independently evaluated year-end reserves. The Company has filed its audited financial statements and related management's discussion analysis for the year ended December 31, 2006 on www.sedar.com.

CORPORATE HIGHLIGHTS

During the year ended December 31, 2006, Open Range:

- Realized December 2006 average production of 1,090 boe/d, a 113% year-over-year increase, and 2006 average production of 806 boe/d;

- Increased proved plus probable reserves to 2,972 mboe, a 105% increase over last year and replaced 2006 production by 519%;

- Increased year-over-year production per share by 51% and reserves per share by 46%;

- Drilled 15 gross (5.4 net) wells at 100 percent success rate, of which eight gross (3.6 net) wells were at its core Ansell/Sundance property;

- Expanded its land position at Ansell/Sundance to 42 gross sections;

- Completed a 75-square-mile 3-D seismic program at Ansell/Sundance;

- Established a low-risk development drilling inventory of approximately 25 locations;

- Generated cash flow from operations of $6.1 million ($0.42 per share);

- Raised $21 million through two common equity financing agreements and one flow-through common equity financing agreement; and

- Increased bank lines to $18.2 million with the National Bank of Canada.

Subsequent to December 31, 2006, Open Range:

- Closed a flow-through common share financing agreement for gross proceeds of $12 million;

- Expanded the Company's natural gas hedging position for 2007 to an average of 4,975 mcf/d, representing 57 percent of anticipated average 2007 production of 1,450 boe/d, at an average floor price of $7.38 per mcf and an average ceiling price of $10.34 per mcf; and

- Announced an initial $30 million capital program for 2007.



FINANCIAL HIGHLIGHTS

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Period from
Three months November 30,
ended Year ended 2005 to
December 31, December 31, December 31,
2006 2006 2005
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Petroleum and natural gas
revenue 3,746,651 12,554,802 1,206,678

Funds from operations 1,930,915 6,139,697 616,958
Per basic and diluted share $ 0.12 $ 0.42 $ 0.06

Net income (loss) (159,899) (927,643) 128,158
Per basic and diluted share (0.01) (0.06) 0.01

Working capital (net debt) (3,281,305) (3,281,305) 4,997,007

Capital expenditures, net 6,985,268 34,603,166 6,415,855

Weighted average shares
outstanding - basic and
diluted 15,778,540 14,447,464 10,467,302

Production
Natural gas (mcf per day) 5,111 4,357 2,800
Oil and NGL (bbls per day) 81 80 45
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Total (@ 6:1) (boe per day) 933 806 512

Realized average sales
prices
Natural gas ($ per mcf) $ 7.19 $ 6.81 $ 12.98
Oil and NGL ($ per bbl) $ 49.41 59.61 57.02
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Combined average ($ per boe) $ 43.67 $ 42.69 $ 76.04
Royalties ($ per boe) (4.95) (6.22) (16.00)
Operating costs ($ per boe) (8.56) (8.72) (10.14)
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Operating netback ($ per boe) 30.16 27.75 49.90
General and administrative
costs ($ per boe) (7.17) (6.70) (11.02)

Net interest expense ($ per boe) (0.48) (0.18) -
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Corporate netback ($ per boe) $ 22.51 $ 20.87 $ 38.88
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RESERVES

Open Range increased its base of total proved plus probable reserves as at the year ended December 31, 2006 to 2,972,000 boe, an increase of 105 percent from December 31, 2005. At December 31, 2006, 65 percent of the total proved plus probable reserve base is total proved reserves and 71 percent of the total proved reserves were proved producing, which require no further capital to bring on production. Future capital expenditures of $7.3 million are required to bring future proved non-producing reserves on-production.

2006 production was replaced 3.6 times on a proved basis and 6.2 times on a proved plus probable basis.

The significant reserve growth was realized entirely through the drill bit with the drilling of 15 gross (5.4 net) wells at a 100 percent success rate. Most of the gains were realized at the Company's core Ansell/Sundance property, where eight gross (3.6 net) wells were drilled encountering up to four productive pay zones per well. This success also resulted in total proved plus probable reserves at Ansell/Sundance of 1,703 mboe, a 301% increase year-over-year.

All of Open Range's reserves as at December 31, 2006 were independently evaluated by GLJ Petroleum Consultants Ltd. (GLJ), independent reservoir engineers, according to the requirements of National Instrument (N.I.) 51-101. The following summary presentation and discussion conforms in all material respects to the results of GLJ's evaluations.



Summary of Reserves by Category (forecast prices and costs)(1)

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2006 2005
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Year-
% of over-year % of
Reserve category (Mboe) Total % change (Mboe) Total
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Proved
Developed producing 1,348 46% 34% 1,007 72%
Developed non-producing 116 4% -19% 143 10%
Proved undeveloped 449 15% 100% 0 0%
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Total proved 1,912 65% 66% 1,150 82%
Probable 1,019 35% 297% 257 18%
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Total Company gross working
interest reserves - proved
plus probable reserves 2,931 100% 108% 1,407 100%

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Proved plus probable Company
interests in royalties 41 -2% 42
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Total Company interest
reserves - proved plus
probable reserves 2,972 105% 1,449
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(1) Based on GLJ's January 1, 2007 price forecast

Summary of Oil, Natural Gas and Natural Gas Liquids (NGL) Reserves (based on
forecast prices and costs)(1)

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Light & medium oil Natural gas NGL Total
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At December Gross Net Gross Net Gross Net Gross Net
31, 2006 (Mbbls) (Mbbls) (Mmcf) (Mmcf) (Mbbls) (Mbbls) (Mboe) (Mboe)
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Proved
Developed
producing 18 18 6,955 6,003 171 118 1,348 1,136
Developed-non
producing 0 0 634 435 11 7 116 79
Proved
undeveloped 0 0 2,487 2,197 34 27 449 393
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Total proved 18 18 10,076 8,635 215 151 1,912 1,608
Probable 8 7 5,495 4,402 95 65 1,019 806
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Total proved
plus probable 25 25 15,571 13,037 311 216 2,931 2,414
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(1) Based on GLJ's January 1, 2007 price forecast

Net Present Value of Future Net Revenue at December 31, 2006 (based on
forecast prices and costs) (1)

-----------------------------------------------------------
Net Present Value (NPV) of Future Net Revenue (FNR)
-----------------------------------------------------------
Before Income Taxes - After Income Taxes -
Discounted at Discounted at
($ millions) (%/yr) (%/yr)
-----------------------------------------------------------
Reserves category 0 5 10 15 20 0 5 10 15 20
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Proved
Developed
producing 32.5 27.5 24.1 21.5 19.5 32.5 27.6 24.1 21.5 19.5
Developed non-
producing 3.1 2.5 2.1 1.9 1.7 3.1 2.5 2.1 1.9 1.7
Proved
undeveloped 7.9 5.7 4.2 3.2 2.4 7.9 5.7 4.2 3.2 2.4
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Total proved 43.5 35.8 30.4 26.5 23.5 43.5 35.8 30.4 26.5 23.5
Probable 23.7 16.1 11.8 9.0 7.1 21.7 14.7 10.7 8.2 6.5
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Total proved
plus probable 67.2 51.9 42.1 35.5 30.6 65.2 50.4 41.1 34.7 30.0
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(1) Based on GLJ's January 1, 2007 price forecast

Reconciliation of Company Net Reserves by Principal Product Type (based on
forecast prices and costs) (1)

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Associated and
Light & medium oil non-associated natural gas
--------------------------------------------------------------
Proved Proved
Plus Plus
Proved Probable Probable Proved Probable Probable
Factors (Mbbls) (Mbbls) (Mbbls) (Mmcf) (Mmcf) (Mmcf)
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Dec. 31, 2005 30 10 40 5,218 1,137 6,355
Discoveries - - - 1,125 519 1,644
Extensions - - - 2,604 1,131 3,735
Infill drilling - - - 744 1,468 2,212
Improved
recovery - - - - - -
Acquisitions - - - - - -
Dispositions (3) - (3) - - -
Economic
factors - - - - - -
Production (5) - (5) (1,253) - (1,253)
Technical
revisions (4) (3) (7) 196 147 343
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Dec. 31, 2006 18 7 25 8,635 4,402 13,037
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NGL Total
---------------------------------------------------------------
Proved Proved
Plus Plus
Proved Probable Probable Proved Probable Probable
Factors (Mbbls) (Mbbls) (Mboe) (Mboe) (Mboe) (mboe)
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Dec. 31, 2005 70 15 85 970 214 1,184
Discoveries 10 5 15 198 92 289
Extensions 65 23 88 499 212 711
Infill drilling 9 18 28 133 263 396
Improved
recovery - - - - - -
Acquisitions - - - - - -
Dispositions - - - (3) - (3)
Economic
factors - - - - - -
Production (16) - (16) (230) - (230)
Technical
revisions 13 4 17 41 26 67
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Dec. 31, 2006 151 65 216 1,608 806 2,414
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(1) Based on GLJ's January 1, 2007 price forecast


RESERVE-LIFE-INDEX

Using December 2006 average production and December 31, 2006 year-end proved plus probable reserves, Open Range has a reserve-life-index of 7.5 years. Future reserve additions from the Ansell/Sundance area are expected to extend the Company's reserve life.



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Production (December 2006 average) 1,090 boe/d
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Proved reserves (Mboe) 1,945
Proved reserve-life-index (years) 4.9
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Proved plus probable reserves (Mboe) 2,972
Proved plus probable reserve-life-index (years) 7.5
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FINDING AND DEVELOPMENT COSTS

Finding and development costs for 2006, including the change in future development capital, were $26.46 per boe proved plus probable. Excluding changes in future development capital, finding and development costs for 2006 were $19.04 per boe proved plus probable.

Open Range generated an operating netback of $27.75 per boe in 2006. The recycle ratio in 2006, excluding future development capital, was 1.46 times on a proved plus probable basis.



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Change in
future Total Finding &
Capital development capital Reserve development
($000s) costs costs costs additions costs ($/boe)
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Excluding future
development costs
Proved 34,603 - 34,603 1,053 32.86
Proved plus
probable 34,603 - 34,603 1,817 19.04
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Including future
development costs
Proved 34,603 6,626 41,229 1,053 39.15
Proved plus
probable 34,603 13,483 48,086 1,817 26.46
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2007 PLANS AND OUTLOOK

Open Range has an active, growth-oriented capital program already underway for 2007. The Company is well-positioned to add reserves and production at increasing capital efficiencies. The initial budget of $30 million will be focused on multi-zone drilling at Ansell/Sundance with a higher proportion allocated to drilling and completions.

Open Range's planned program of 10 gross (4.5 net) wells will be approximately two-thirds development wells that can add production and reserves at low risk and high capital efficiency, and about one-third medium-risk exploration wells intended to prove up additional development lands for the 2008 and 2009 drilling programs. The exploration wells are multi-zone locations on lands covered by 3-D seismic. The Company is continuously working towards expanding the play area through additional land capture possibilities and further farm-in opportunities.

As previously announced, Open Range expects to have average production of 1,450 boe per day in 2007 and to exit the year with production of 1,650 boe per day. We are basing plans on a price assumption of $5.71 per mcf at AECO, and a blended realized price (after hedging) of approximately $6.94 per mcf. Based on these parameters, the Company should generate cash flow of approximately $12 million in 2007.

As referred to above, Open Range's audited financial statements and related management's discussion analysis for the year ended December 31, 2006 can be found at www.sedar.com.

The Annual General Meeting for Open Range Energy Corp. is scheduled to take place on Tuesday, May 15th at 10:00 AM in the Strand/Tivoli Room of the Metropolitan Centre, located at 333 - 4th Avenue S.W., Calgary, AB.

OPEN RANGE ENERGY CORP. IS A PUBLICLY TRADED CANADIAN ENERGY COMPANY INVOLVED IN THE EXPLORATION, DEVELOPMENT AND PRODUCTION OF NATURAL GAS AND CRUDE OIL IN WESTERN CANADA.

Reader Advisory

This news release contains certain forward-looking statements, which include assumptions with respect to (i) production; (ii) future capital expenditures; (iii) funds from operations; (iv) cash flow; and (v) debt levels. 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 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 so, what benefits, including the amount of proceeds, that 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. 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.

The Toronto Stock Exchange has neither approved nor disapproved of the information contained herein.

Contact Information

  • Open Range Energy Corp.
    A. Scott Dawson, P.Eng.
    President and Chief Executive Officer
    (403) 205-3704
    Website: www.openrangeenergy.com