Orleans Energy Ltd.

Orleans Energy Ltd.

May 21, 2009 08:16 ET

Orleans Energy Announces Start-Up of Strategic Kaybob Pipeline

CALGARY, ALBERTA--(Marketwire - May 21, 2009) - Orleans Energy Ltd. ("Orleans" or the "Company") (TSX:OEX) is pleased to announce the recent commissioning of its new, wholly-owned Kaybob pipeline infrastructure, connecting its Kaybob 10-22-60-19W5M Compression Facility site to the Kaybob South #3 Gas Plant located at 3-15-59-18W5M ("K3 Gas Plant"). Orleans' new Kaybob pipeline project, approximately 19 kilometres in length, consists of a 10 inch diameter gas pipeline and a four inch diameter liquid hydrocarbons line (the "Kaybob K3 Pipeline Project") in order to optimize the flow of natural gas.

On May 17, 2009, the Kaybob K3 Pipeline Project became operational with Orleans' working interest throughput, net of shrinkage, at approximately 21 million cubic feet ("mmcf") per day of Montney production (approximately 4,000 barrels of oil equivalent per day including associated natural gas liquids). The Kaybob K3 Pipeline Project has a licensed capacity of 75 mmcf per day, thus facilitating strategic support for Orleans' exploration and development "resource capture" activities undertaken on its Montney asset base. The Company currently holds 28 sections (25.5 net) of Montney rights centred in the Kaybob Montney fairway, with approval to drill five wells per section on 25 (22.5 net) sections of land with no interwell distance restrictions, and has developed an inventory of in excess of 100 operated horizontal drilling locations.

The Kaybob K3 Pipeline Project enhances Orleans' security of delivery and operating conditions, through re-routing of its Montney gas production on a new pipeline system with lower operating pressures to the under-utilized K3 Gas Plant functioning at lower inlet pressures. The Company will also possess optionality to transport and process hydrocarbon volumes to either the Kaybob Amalgamated Gas Plant or the K3 Gas Plant, thereby minimizing downtime during plant turnarounds and unscheduled plant shutdowns. The Kaybob Amalgamated Gas Plant, offline since April 24, 2009 for its scheduled major plant turnaround, is anticipated to resume processing operations on or about May 23, 2009.

The Kaybob K3 Pipeline Project provides Orleans with operating cost savings since the processing fee structure at the K3 Gas Plant is lower than the current processing fees charged at the Kaybob Amalgamated Gas Plant. Additionally, the Company is no longer subject to a third-party operated pipeline fee. Overall, Orleans expects a reduction in Kaybob-area operating costs of approximately $0.45 per thousand cubic feet or $2.70 per barrel of oil equivalent. Moreover, the Company anticipates generating pipeline transportation revenue from partner working-interest owners and potential third-party utilization.

Orleans Energy Ltd. is a Calgary, Alberta-based emerging crude oil and natural gas company, with common shares trading on the Toronto Stock Exchange under the symbol "OEX". Orleans is a team of dedicated, experienced professionals focused on the creation of shareholder value via acquisition, exploration and development of crude oil and natural gas assets in Alberta, Canada.

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 "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.

Any references in this news release to initial test production rates and/or "flush" production rates are useful in confirming the presence of hydrocarbons, however, such rates are not determinative of the rates at which such wells will commence production and decline thereafter. While encouraging, readers are cautioned not to place reliance on such rates in calculating the aggregate production for the Company.

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.

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