CALGARY, Aug. 21, 2014 /CNW/ - LGX Oil + Gas Inc. ("LGX"
or the "Company") (TSXV:OIL) is pleased to announce that it has
spud the first horizontal well in its 2014 Alberta Bakken
development drilling program, revised its 2014 exit production
guidance to 1,500 Boe per day from the previously announced exit
production guidance of 1,400 Boe per day and replaced its previous
banking facility with a new $30
million banking facility.
LGX spud the first well (15-25-8-24W4) of a budgeted two well
horizontal drilling program on August 13,
2014, targeting the Big Valley Formation with first
production anticipated in the fourth quarter of 2014. This well
offsets LGX's highly successful 14-2 well drilled late in 2013. LGX
will now drill the 15-25 well at 100 percent working interest and
expects to also drill the second well at 100 percent working
interest. The Company now expects to spud the second well in
mid-September immediately following rig release of the first well
with first production anticipated late in the fourth quarter of
2014. These wells were delayed slightly from the original budget
due to the late arrival of the drilling rig.
As a result of the above developments, the Company now expects
average production of approximately 1,000 Boe per day for 2014 with
exit production of 1,500 Boe per day (exit production is
approximately 67 percent higher than 2013 exit production
guidance). To account for the increase in working interest as well
as additional scope in the completions of the wells, the Company
now expects capital spending in 2014 to be approximately
$18.5 million.
To fund this program, LGX has entered into a new banking
facility with the Alberta Treasury Branch consisting of a
$20 million revolving demand credit
facility and a $10 million
non-revolving term credit facility. The features of the term credit
facility include a two year committed term (subject to extension
upon mutual consent) available in two tranches with full payment of
the principle on maturity. The term credit facility is subject to
financial and reserve-based covenants. The new facility replaces
the previous $25 million facility.
The revolving portion of the new facility is a borrowing base
facility subject to annual review by the lender, with the next
review scheduled for no later than May 31,
2015. The new credit facility provides the Company with a
significant increase to its financial flexibility to conduct its
operations.
LGX is a uniquely positioned, technically driven, junior oil and
natural gas company with a proven management team committed to
aggressive, cost-effective growth of light oil reserves and
production combined with high impact exploration potential in
southern Alberta. LGX's common shares trade on the TSX
Venture Exchange under the symbol OIL.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in policies of the TSX Venture
Exchange) accepts responsibility for the adequacy or accuracy of
this release.
Forward-Looking Information - This press release contains
forward-looking statements. More particularly, it contains
forward-looking statements concerning: (i) the fact that LGX
anticipates securing a 100% working interest in the second well of
its 2014 drilling program, (ii) the anticipated timing of the
spudding of the second well of the 2014 drilling program, (iii) the
anticipated timing of first production from the wells drilled in
the 2014 drilling program, (iv) the anticipated 2014 average and
exit rates of production and (v) anticipated capital spending in
2014.
The forward-looking statements contained in this press
release are based on certain key expectations and assumptions made
by LGX, including expectations and assumptions concerning: (i)
whether LGX's partner in the second well of its 2014 drilling
program will elect to participate in the well, (ii) the timing of
the drilling and completion of the two wells in the 2014 drilling
program, (iii) the success and performance of the two wells to be
drilled in 2014, (iv) the performance of existing wells, (v) the
application of the previously announced emergency order for the
protection of the Greater Sage-Grouse (the "Emergency Order") and
the Species at Risk Act (Canada)
to the LGX's Manyberries property,
(vi) the availability and performance of facilities and pipelines,
(vii) the geological characteristics of LGX's properties, (viii)
the successful application of drilling, completion and seismic
technology, (ix) prevailing weather and break-up conditions,
commodity prices, royalty regimes and exchange rates, * the
application of regulatory and licensing requirements, and (xi) the
availability and cost of capital, labour and services.
Although LGX believes that the expectations and assumptions
on which the forward-looking statements are based are reasonable,
undue reliance should not be placed on the forward-looking
statements because LGX can give no assurance that they will prove
to be correct. Since forward-looking statements address future
events and conditions, by their very nature they involve inherent
risks and uncertainties. Actual results could differ materially
from those currently anticipated due to a number of factors and
risks. These include, but are not limited to, the risk that one or
both of the wells in the 2014 drilling program will not be
successfully drilled and completed or will not perform as expected,
risks associated with the oil and gas industry in general (e.g.,
operational risks in development, exploration and production; the
uncertainty of reserve estimates; the uncertainty of estimates and
projections relating to production, costs and expenses, and health,
safety and environmental risks), constraint in the availability of
services, constraint in the availability of capital, commodity
price and exchange rate fluctuations, adverse weather or break-up
conditions, uncertainties resulting from potential delays or
changes in plans with respect to exploration or development
projects or capital expenditures, uncertainties as to the
application and impact of the Emergency Order, and uncertainties as
to the outcome of efforts by LGX to quash or amend the Emergency
Order or to obtain compensation for losses related to the Emergency
Order. These and other risks are set out in more detail in LGX's
Annual Information Form for the year ended December 31, 2013 dated March 24, 2014.
The forward-looking statements contained in this press
release are made as of the date hereof and the Company undertakes
no obligation to update publicly or revise any forward-looking
statements or information, whether as a result of new information,
future events or otherwise, unless so required by applicable
securities laws.
Meaning of Boe - Boe means barrel of oil equivalent. All Boe
conversions in this report are derived by converting natural gas to
oil equivalent at a ratio of six thousand cubic feet of natural gas
to one barrel of oil equivalent. Boe may be misleading,
particularly if used in isolation. A Boe conversion rate of 1 Boe:
6 Mcf is based on an energy equivalency conversion method primarily
applicable at the burner tip and does not represent a value
equivalency at the wellhead. Given that the value ratio of oil
compared to natural gas based on currently prevailing prices is
significantly different than the energy equivalency ratio of 1 Boe
: 6 Mcf, utilizing a conversion ratio of 1 Boe : 6 Mcf may be
misleading as an indication of value.
SOURCE LGX Oil + Gas Inc.