Orleans Energy Announces Second Quarter 2010 Results

Orleans Energy Ltd. ("Orleans" or the "Company") (TSX:OEX) today announced
results for the second quarter ended June 30, 2010. For the quarter, Orleans
reported cash flow from operations of $5.8 million ($0.09 per fully-diluted
share) on revenue of approximately $11.2 million and average daily production of
3,956 barrels of oil equivalent. Corporate highlights are as follows:




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Financial Highlights                             Three Months Ended June 30,
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(all amounts in Cdn $ except share data)                                  %
(6:1 oil equivalent conversion)               2010           2009    Change
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Petroleum and Natural gas revenue (1)   11,185,919      9,462,683        18
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 Per share - basic and diluted                0.17           0.18        (6)
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Cash flow from operations (2)            5,762,793      2,325,736       148
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 Per share - basic and diluted                0.09           0.04       125
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Operating netback (3) ($/boe)                19.69          10.97        79
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Corporate netback (3) ($/boe)                16.01           6.64       141
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Net loss                                (3,616,135)    (6,432,436)      (44)
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 Per share - basic and diluted               (0.06)         (0.12)      (50)
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Net debt (4) - period end               43,641,068     47,421,934        (8)
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Weighted average basic shares           65,175,706     53,059,607        23
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Weighted average diluted shares         65,175,706     53,059,607        23
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Issued and outstanding shares (5)       65,175,706     62,050,706         5
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Operating Highlights
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Average daily production:
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 Natural gas (mcf/d)                        20,530         18,881         9
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 Liquids (Oil & NGLs) (bbls/d)                 534            701       (24)
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 Oil equivalent (boe/d)                      3,956          3,848         3
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Average sales price (net hedging) (1):
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 Natural gas ($/mcf)                          4.42           3.67        20
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 Liquids (Oil & NGLs) ($/bbl)                60.13          49.37        22
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 Oil equivalent ($/boe)                      31.07          27.03        15
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E&D capital expenditures ($)             9,953,929     11,117,989       (10)
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Total capital expenditures ($)          10,506,930     11,609,527        (9)
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Financial Highlights                               Six Months Ended June 30,
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(all amounts in Cdn $ except share data)                                  %
(6:1 oil equivalent conversion)               2010           2009    Change
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Petroleum and Natural gas revenue (1)   23,165,438     22,442,915         3
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 Per share - basic and diluted                0.36           0.44       (18)
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Cash flow from operations (2)           12,268,278      6,251,623        96
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 Per share - basic and diluted                0.19           0.12        58
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Operating netback (3) ($/boe)                21.14          12.18        74
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Corporate netback (3) ($/boe)                17.85           8.61       107
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Net loss                                (2,213,030)   (10,674,820)      (79)
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 Per share - basic and diluted               (0.03)         (0.21)      (86)
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Net debt (4) - period end               43,641,068     47,421,934        (8)
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Weighted average basic shares           65,175,706     50,510,816        29
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Weighted average diluted shares         65,175,706     50,510,816        29
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Issued and outstanding shares (5)       65,175,706     62,050,706         5
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Operating Highlights
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Average daily production:
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 Natural gas (mcf/d)                        19,658         19,465         1
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 Liquids (Oil & NGLs) (bbls/d)                 522            769       (32)
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 Oil equivalent (boe/d)                      3,798          4,013        (5)
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Average sales price (net hedging) (1):
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 Natural gas ($/mcf)                          4.87           4.54         7
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 Liquids (Oil & NGLs) ($/bbl)                61.79          46.22        34
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 Oil equivalent ($/boe)                      33.70          30.90         9
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E&D capital expenditures ($)            30,631,718     29,351,329         4
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Total capital expenditures ($)          31,955,093     30,466,288         5
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Notes: 
(1) Petroleum and natural gas revenue and pricing includes realized hedging
    gains or losses from commodity contract settlements.
(2) Cash flow from operations does not have any standardized meaning
    prescribed by Canadian generally accepted accounting principles
    ("GAAP"). Please refer to the Company's MD&A for definition of cash
    flow from operations.
(3) Operating netback represents average sales price (includes realized
    hedging gains or losses) less royalties, operating costs and
    transportation expenses. Corporate netback represents operating
    netback less interest expense and general and administrative costs
    (excluding non-cash stock-based compensation expense). These netback
    measures are not recognized measures under Canadian GAAP.
(4) 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 contracts and current
    future income taxes). Net debt is not a recognized measure under
    Canadian GAAP.
(5) As of August 12, 2010, common shares outstanding are 65,175,706.



Second Quarter 2010 Highlights

- Generated cash flow of approximately $5.8 million, representing an increase of
148% from the comparable second quarter 2009 amount of $2.3 million.


- Average production of 3,956 barrels of oil equivalent ("boe") per day,
representing an increase of 9% from the preceding first quarter 2010 production
level of 3,638 boe per day and a 3% increase from the comparable second quarter
2009 output of 3,848 boe per day.


- Waskahigan 4-36 horizontal oil well brought on-stream June 19, 2010. After
approximately two months of production, the 4-36 well is presently producing
approximately 180 barrels per day of light gravity (42 degree API) sweet crude
oil and 1.0 million cubic feet per day of associated sweet natural gas for an
oil equivalent rate of approximately 350 boe per day.


- Expanded its land position at Waskahigan by an additional eight (8.0 net)
sections. Orleans now holds a total of 31 contiguous sections at Waskahigan, all
at 100% working interest.


- Corporately, across its Ante Creek, Waskahigan and Kaybob acreage position,
Orleans holds the rights to the Duvernay Shale formation on 56 sections (56.0
net).


- Entered into a new $60 million extendible revolving credit facility, effective
April 6, 2010. As of August 11, 2010, the Company had approximately $44 million
of bank debt drawn.


Operations Update

In the second quarter of 2010, as expected during "spring break-up" surface
conditions, Orleans undertook limited drilling and completion capital
activities. At Kaybob, activity was limited to the completion and tie-in of a
first quarter drilled Montney horizontal gas well (0.72 net) and the drilling,
completion and tie-in of a second quarter Montney horizontal gas well (0.64
net). The Company's second quarter exploration and development capital
expenditure program was approximately $10 million, consisting of $3.1 million of
drilling and completion activities, $5 million in land acquisitions and $1.8
million in field facilities and well equipment.


At Waskahigan, Orleans is at the early stage of establishing an oil resource
play to complement its established Kaybob Montney and Pine Creek Wilrich natural
gas drilling inventory. On June 19, 2010, Orleans brought on-stream its
previously-announced 4-36 Montney oil discovery horizontal well (1.0 net). The
4-36 well is presently producing approximately 180 barrels per day of light
gravity (42 degree API) sweet crude oil and 1.0 million cubic feet per day of
associated sweet natural gas for an oil equivalent rate of approximately 350 boe
per day. Effective August 1, 2010, the 4-36 well was granted Good Production
Practice ("GPP") by the Energy Resources Conservation Board, thus enabling the
Company to produce the 4-36 well at levels not subject to regulatory-imposed
rate limitations.


Additionally, at the end of the second quarter, Orleans commenced drilling its
third Waskahigan horizontal well (1.0 net). This well was drilled to a total
measured depth of 3,510 meters with a horizontal section of 1,183 meters in the
Montney formation. Completion operations commenced early-August, encompassing a
thirteen stage, 243 tonne fracture stimulation. Orleans is currently conducting
well testing and down hole pressure evaluations on the well and expects to
provide a further update in early-September upon conclusion of testing and
evaluating.


During the second quarter, the Company increased its Waskahigan land base by
eight (8.0 net) sections to a total of 31 sections, all at 100% working
interest. In addition to Montney rights, Orleans holds the rights to the
Duvernay Shale formation on 30 of its total Waskahigan sections. Regionally,
Orleans' Kaybob, Waskahigan and Ante Creek land base, all located in West
Central Alberta, is situated within the heart of the newly developing Duvernay
Shale gas play. The Company holds 56 sections of Crown lands, all at 100%
working interest, within the fairway that includes rights in both the Montney
and Duvernay Shale horizons. This area has witnessed a significant amount of
Crown land sale activity in the past eight months as is evidenced by the
December 16, 2009 and July 7, 2010 land sales wherein industry participants
spent approximately $672 million. In the July 7, 2010 Crown land sale,
immediately offsetting Orleans' Kaybob and Waskahigan lands, approximately 230
sections (58,880 hectares) of land were acquired for approximately $339 million,
for an average bonus of $5,752 per hectare or $1.47 million per section of land.
Early stage drilling operations targeting the Duvernay Shale are ongoing by
industry competitors with results anticipated in the third quarter of 2010.


The Company's interim financial statements and associated Management's
Discussion and Analysis ("MD&A") for the three and six month periods ended June
30, 2010 will be available on Orleans' website at www.orleansenergy.com located
within "Investor Relations" under "Financial Reports". Additional, these
documents will be filed, in due course, on the System for Electronic Document
Analysis and Retrieval ("SEDAR"). These documents can be retrieved
electronically from the SEDAR system by accessing Orleans' public filings under
"Search for Public Company Documents" within the "Search Database" module at
www.sedar.com.


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.


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.


As an indicator of the Company's performance, the term cash flow from operations
or operating cash flow contained within this news release should not be
considered as an alternative to, or more meaningful than, cash flow from
operating, financing or investing activities, as determined in accordance with
Canadian generally accepted accounting principles ("GAAP"). This term does not
have a standardized meaning, nor is it a financial measure, under GAAP. Cash
flow from operations is widely accepted as a financial indicator of an
exploration and production company's ability to generate cash which is used to
internally fund exploration and development activities and to service debt. This
measure is widely used by shareholders and investors in the valuation,
comparison and investment recommendations of companies within the natural gas
and crude oil exploration and production industry. Cash flow from operations, as
disclosed within this news release, represents cash flow from operating
activities before any asset retirement obligation cash expenditures and before
changes in non-cash operating activities working capital. The Company presents
cash flow from operations per share whereby per share amounts are calculated
consistent with the calculation of earnings per share. Additionally, net debt
refers to outstanding bank debt plus working capital deficit (excludes current
unrealized amounts pertaining to risk management commodity contracts) plus
long-term accounts receivables. Net debt is not a recognized measure under
Canadian GAAP.


Any references in this news release to initial and/or final raw test or
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.
Additionally, such rates may also include recovered "load oil" fluids used in
well completion stimulation. While encouraging, readers are cautioned not to
place reliance on such rates in calculating the aggregate production for the
Company.