Orleans Energy Ltd.

Orleans Energy Ltd.

December 08, 2010 13:31 ET

Orleans Energy Announces Offer to Dispose of Waskahigan Deep Mineral Rights

CALGARY, ALBERTA--(Marketwire - Dec. 8, 2010) - Orleans Energy Ltd. ("Orleans" or the "Company") (TSX:OEX) is pleased to announce that it has accepted an offer to dispose of its deep mineral rights at Waskahigan in West Central Alberta to an arm's-length party, subject to certain customary conditions (the "Deep Rights Disposition"). The Deep Rights Disposition involves the disposition of the Company's undeveloped, deep mineral rights on 33 net sections (21,120 net acres) of acreage located in the Waskahigan area of West Central Alberta for a total transaction cash value of $35.0 million. Upon satisfying certain conditions, closing of the Deep Rights Disposition is scheduled for December 10, 2010.

The Deep Rights Disposition encompasses only the deep mineral rights Below Base Triassic at Waskahigan; it does not include Orleans' 100% working interest in the Montney rights. Orleans will continue to hold 35 net sections (22,400 net acres) of Montney mineral rights at Waskahigan. Additionally, Orleans still holds 17 net sections (10,880 net acres) of deep mineral rights acreage at Kaybob and five net sections (3,200 net acres) at Ante Creek in West Central Alberta.

The strategic disposition of Orleans' undeveloped, non-producing deep mineral rights at Waskahigan provides the Company with financial liquidity and flexibility to significantly strengthen its balance sheet and assists with the funding of Orleans' 2011 capital expenditures program. Industry exploration of new, deeper formations in West Central Alberta is very early-stage with a significant amount of exploration drilling and capital investment required to "test" these play concepts for productivity and economic commerciality. It requires levels of capital deployment beyond Orleans' current funding and capitalization capabilities.

Proceeds from the Deep Rights Disposition will be applied against outstanding bank debt. The Deep Rights Disposition will not result in a decrease to the existing $60 million borrowing base associated with Orleans' bank credit facility. At year-end 2010, as a result of the anticipated closing of the Deep Rights Disposition and the previously-announced North Pine Creek Disposition, Orleans' net debt is projected to be between $9 million to $10 million.

Orleans' is presently in the process of planning and preparing its 2011 capital investment activities and corresponding market guidance. The Company anticipates providing details on its 2011 Capital Budget and associated business plan in mid-January 2011, subsequent to the approval of such by Orleans' Board of Directors.

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 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.

Net debt refers to outstanding bank debt plus any working capital deficit or minus any working capital surplus (excludes current unrealized amounts pertaining to risk management commodity contracts). Net debt is not a recognized measure under Canadian GAAP.

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