Orion Announces 2011 Hedge Initiative
CALGARY, ALBERTA--(Marketwire - Aug. 9, 2010) - Orion Oil & Gas Corporation (TSX:OIP) ("Orion" or the "Company") announced today that it has entered into a crude oil price swap for the 2011 calendar year.
Orion will receive $87.35 Canadian dollars per barrel and will pay the benchmark West Texas Intermediate ("WTI") index denominated in Canadian dollars on a notional amount of 1,500 barrels of oil per day ("bopd"). The swap transaction was executed with a major Canadian financial institution whose deposits are rated "AA" by Dominion Bond Rating Service, "Aaa" by Moody's Investors Service, and "AA-" by Standard & Poors. The swap will settle monthly on a financial basis.
With this transaction, Orion has hedged approximately 50% of its expected crude oil and condensate production for 2011, and approximately 20% of its total expected 2011 production on a barrels of oil equivalent ("BOE") basis.
President and Chief Executive Officer, Gary Guidry observed: "We believe that reducing the volatility in our 2011 revenue stream will be highly constructive in supporting our investment plans both in Canada, but more particularly in South America. We will continue to evaluate market conditions and may execute additional hedges to further reduce volatility."
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 approximately 4,500 boe/d, which is comprised of approximately 51% light oil and natural gas liquids and 49% natural gas. At its Kaybob property, a natural gas condensate field, Orion has a 91% working interest in 25,600 gross acres. Orion N.A. has drilled 8 wells at Kaybob, with a 100% success rate. At its Redwater property, a light oil field, Orion operates and has an 86% average working interest in production from approximately 8,800 gross acres. At its Bigstone property, a natural gas field, Orion operates and has a 100% working interest in 1,900 acres. Orion is operator is 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. |
