Orion Oil & Gas Corporation
TSX : OIP

September 30, 2010 10:26 ET

Orion Oil & Gas Corporation Provides Production and Operational Update

CALGARY, ALBERTA--(Marketwire - Sept. 30, 2010) - Orion Oil & Gas Corporation ("Orion" or the "Company") (TSX:OIP) is pleased to announce that it has reached a production rate of 5,000 barrels of oil equivalent per day ("boe/d") and, despite challenging weather conditions in Western Canada, remains fully on track to achieve its 2010 guidance levels of average annual production of 4,050 - 4,900 boe/d and exit production of 6,000 - 7,000 boe/d.

Chief Executive Officer, Gary S. Guidry, commented: "The performance of our operating team and our contractors has been exceptional in the context of some extremely adverse weather conditions. I am very pleased with our progress. As has been our plan from the outset, we are looking forward to substantial free cash flows in 2011 from our existing asset base and putting this free cash flow to work on accretive acquisitions. Our business development team is actively pursuing a number of target opportunities in a variety of different areas, including South America."

Kaybob

At the Company's Beaverhill Lake Unit 1 core area ("BHL1"), the Company has drilled five wells during the third quarter and has a further three scheduled for this October and November. This will complete the drilling program press released at the end of the second quarter.

One of the wells is currently on production at a rate of approximately 300 boe/d net to Orion. Two of the other wells are currently being completed and tied-in and should be on production by mid-October, 2010 at which point the Company expects to see a further increase in its overall production levels. The Company expects the entire eight-well program to be on production by early December, 2010.

With the high liquids content of the new BHL1 wells, the Company is now producing approximately 50% crude oil, condensate, and natural gas liquids as a corporation on a boe basis.

Redwater

At its Redwater property, the Company has drilled four vertical and two horizontal oil wells during the third quarter. All of the verticals and one of the two horizontals are currently on production. Combined initial production from these new wells is approximately 430 boe/d. In addition, the Company has successfully completed its first multi-stage "frac" horizontal well in the Viking formation and expects initial production by mid-October, 2010.

We plan to drill a further three vertical wells at Redwater during the first half of October, 2010. This will complete the drilling program for this property announced at the end of the second quarter. 

Summary Information Relating to Orion

Orion is engaged in the exploration for, and development of, oil and natural gas interests located primarily in the Kaybob, Redwater and Bigstone areas of Alberta. Orion's current production is 5,000 boe/d, which is comprised of approximately 50% light oil and natural gas liquids and 50% natural gas. Orion is the operator at its Kaybob, Redwater and Bigstone properties and has sufficient capital to fully fund the development of its properties.

MEANING OF BOE: When used in this press release, boe means a barrel of oil equivalent on the basis of 1 boe to 6 thousand cubic feet of natural gas. Boe/d means a barrel of oil equivalent per day. Boe's may be misleading, particularly if used in isolation. A boe conversion ratio of 1 boe for 6 thousand cubic feet of natural gas is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Cautionary Statements

This press release contains forward looking statements. More particularly, this press release contains statements concerning Orion's projected 2010 exit and average rates of production and projected dates of tie-in of certain wells. Although Orion believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because Orion can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserves estimates; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks), commodity price and exchange rate fluctuations and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. Certain of these risks are set out in more detail in Orion's Annual Information Form which has been filed on SEDAR and can be accessed at www.sedar.com.

The forward-looking statements contained in this document are made as of the date hereof and Orion undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

Contact Information

  • Orion Oil & Gas Corporation
    Gary Guidry
    President and Chief Executive Officer
    (403) 297-1430
    (403) 237-9791 (FAX)
    or
    Orion Oil & Gas Corporation
    Douglas Allen
    Chief Financial Officer
    (403) 297-1430
    (403) 237-9791 (FAX)
    or
    Orion Oil & Gas Corporation
    Trevor Peters
    Vice President, Business Development and Corporate Planning
    (403) 297-1430
    (403) 237-9791 (FAX)
    www.orionoilandgas.ca