Orleans Energy Ltd.

Orleans Energy Ltd.

December 01, 2010 08:35 ET

Orleans Energy Announces North Pine Creek Disposition and Farmout

CALGARY, ALBERTA--(Marketwire - Dec. 1, 2010) - Orleans Energy Ltd. ("Orleans" or the "Company") (TSX:OEX) is pleased to announce that it has entered into agreements involving a minor disposition of certain producing assets and a strategic farmout of certain mineral rights located in its Pine Creek area of West Central Alberta in the Alberta Deep Basin. 

Property Disposition

Orleans has entered into a purchase and sale agreement providing for the minor disposition of a portion of its producing assets in its Pine Creek area for $5.5 million, to be adjusted for customary closing adjustments (the "North Pine Creek Disposition"). Closing of the North Pine Creek Disposition is scheduled for on or about December 9, 2010. The disposed Pine Creek assets encompass approximately 60% of the Company's production generated from the Greater Pine Creek area.

The North Pine Creek Disposition provides Orleans with financial flexibility with regards to its 2011 capital expenditures program, specifically additional funding for the Company's drilling and delineation program of its Waskahigan oil play in early 2011. At closing, net proceeds from the North Pine Creek Disposition will initially be applied against outstanding bank debt. 

Additionally, the North Pine Creek Disposition does not result in a decrease to the existing $60 million borrowing base associated with Orleans' bank credit facility, thus facilitating additional funding flexibility. As of November 29, 2010, the Company had approximately $43.3 million drawn on the credit facility. 

Farmout Agreement

In conjunction with the North Pine Creek Disposition, Orleans has also entered into a strategic farmout arrangement with an independent producer involving the Company's tight gas resource play located in the North Pine Creek area of the Alberta Deep Basin. 

This strategic Farmout Arrangement enables Orleans to participate, with manageable capital investment exposure relative to its capitalization size, in the potential upside and advanced development of its resource gas play at North Pine Creek.

Orleans Energy Ltd. is a Calgary, Alberta-based crude oil and natural gas company, with common shares trading on the Toronto Stock Exchange under the symbol "OEX". Orleans commenced active oil and gas operations in January 2005 and is committed to maximizing value for its shareholders through successful drilling of internally-generated prospects supplemented with strategic and focused property and/or corporate acquisitions. Orleans has several operated, high working interest, light oil and liquids-rich natural gas "resource plays" in West Central Alberta, specifically the Montney and Duvernay in Kaybob, Waskahigan and Ante Creek, along with the Wilrich in Pine Creek. 

The information in this news release contains certain forward-looking statements. These statements relate to future events or our future performance. All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "appear", "seek", "anticipate", "plan", "continue", "estimate", "approximate", "expect", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe", "would" and similar expressions. These statements involve substantial known and unknown risks and uncertainties, certain of which are beyond the Company's control, including: the impact of general economic conditions; 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; fluctuations in commodity prices and foreign exchange and interest rates; stock market volatility and market valuations; volatility in market prices for oil and natural gas; liabilities inherent in oil and natural gas operations; uncertainties associated with estimating oil and natural gas reserves; competition for, among other things, capital, acquisitions, of reserves, undeveloped lands and skilled personnel; incorrect assessments of the value of acquisitions; changes in income tax laws or changes in tax laws and incentive programs relating to the oil and gas industry ; geological, technical, drilling and processing problems and other difficulties in producing petroleum reserves; and obtaining required approvals of regulatory authorities. The Company's actual results, performance or achievement could differ materially from those expressed in, or implied by, such 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 that the Company will derive from them. These statements are subject to certain risks and uncertainties and may be based on assumptions that could cause actual results to differ materially from those anticipated or implied in the forward-looking statements. The Company's forward-looking statements are expressly qualified in their entirety by this cautionary statement. Except as required by law, the Company undertakes no obligation to publicly update or revise any forward-looking statements.

In this news release, reserves and production data are commonly stated in barrels of oil equivalent ("boe") using a six to one conversion ratio when converting thousands of cubic feet of natural gas ("mcf") to barrels of oil ("bbl") and a one to one conversion ratio for natural gas liquids ("NGLs" or "ngls"). Such conversion may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf: 1 bbl is based on energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Contact Information