CALGARY, Nov. 11, 2013 /CNW/ – LGX Oil + Gas Inc. (“LGX” or the “Company”) (TSXV:OIL) is pleased to announce it has filed on SEDAR its unaudited financial statements and related Management’s Discussion and Analysis (“MD&A”) for the three and nine months ended September 30, 2013. Selected financial and operational information is outlined below and should be read in conjunction with LGX’s unaudited financial statements and the related MD&A which are available for review at www.lgxoil.com or www.sedar.com.
FINANCIAL + OPERATIONAL HIGHLIGHTS (1)
| Three Months Ended | Nine Months Ended | |||||||||
| September 30 | September 30 | |||||||||
| Unaudited (Cdn $, except per share amounts) | 2013 | 2012 | % change | 2013 | 2012 | % change | ||||
| Financial | ||||||||||
| Petroleum and natural gas sales, net of royalties | 4,819,532 | 864,621 | 457 | 12,866,912 | 1,270,804 | 913 | ||||
| Funds generated by (used in) operations (2) | 581,632 | (345,347) | 268 | 3,306,515 | (138,445) | 2,488 | ||||
| Per share basic | 0.01 | (0.01) | 200 | 0.04 | (0.02) | 300 | ||||
| Per share diluted (3) | 0.01 | (0.01) | 200 | 0.04 | (0.02) | 300 | ||||
| Net income (loss) | (8,270,280) | 10,254,593 | (181) | (12,551,276) | 10,442,354 | (220) | ||||
| Per share basic | (0.09) | 0.38 | (124) | (0.14) | 1.16 | (112) | ||||
| Per share diluted (3) | (0.09) | 0.38 | (124) | (0.14) | 1.16 | (112) | ||||
| Capital expenditures (excluding acquisitions) | 1,696,828 | 1,410,996 | 20 | 2,538,904 | 2,556,717 | (1) | ||||
| Net acquisitions (cash consideration) | – | – | n/a | – | – | n/a | ||||
| Net debt and working capital surplus (deficit) (2) | (9,189,958) | (5,043,920) | 82 | (9,189,958) | (5,043,920) | 82 | ||||
| Operating | ||||||||||
| Production | ||||||||||
| Crude oil and natural gas liquids (Bbls per day) | 567 | 95 | 497 | 586 | 50 | 1,072 | ||||
| Natural gas (Mcf per day) | 1,677 | 1,939 | (14) | 1,736 | 651 | 167 | ||||
| Barrels of oil equivalent (Boe per day) (4) | 847 | 418 | 103 | 875 | 158 | 454 | ||||
| Average realized price | ||||||||||
| Crude oil and natural gas liquids ($ per Bbl) | 102.23 | 75.46 | 35 | 87.17 | 80.61 | 8 | ||||
| Natural gas ($ per Mcf) | 2.37 | 2.19 | 8 | 2.93 | 2.19 | 34 | ||||
| Barrels of oil equivalent ($ per Boe) (4) | 73.13 | 27.32 | 168 | 64.19 | 34.55 | 86 | ||||
| Netback ($ per Boe) (2) | ||||||||||
| Petroleum and natural gas sales | 73.13 | 27.32 | 168 | 64.19 | 34.55 | 86 | ||||
| Royalties | 11.28 | 4.84 | 133 | 10.32 | 5.19 | 99 | ||||
| Operating expenses | 43.46 | 12.06 | 260 | 28.32 | 14.76 | 92 | ||||
| Transportation expenses | 2.63 | 1.11 | 137 | 2.48 | 1.25 | 98 | ||||
| Operating Netback ($ per Boe) (2) | 15.76 | 9.31 | 69 | 23.07 | 13.35 | 73 | ||||
| Undeveloped land holdings (gross acres) |
129,724 | 217,334 | (40) | 129,724 | 217,334 | (40) | ||||
| (net acres) | 123,185 | 184,165 | (33) | 123,185 | 184,165 | (33) | ||||
| Common Shares (000’s) | ||||||||||
| Common shares outstanding, end of period | 88,658 | 30,279 | 193 | 88,658 | 30,279 | 193 | ||||
| Weighted average common shares (basic) | 88,658 | 26,887 | 230 | 88,658 | 9,028 | 882 | ||||
| Weighted average common shares (diluted) (3) | 88,658 | 26,887 | 230 | 88,658 | 9,028 | 882 | ||||
| (1) | The reader is cautioned that the Financial + Operational Highlights above present the historic financial position, results of operations and cash flows of Legacy Oil + Gas Inc.’s Southern Alberta Assets (“SA Assets”) for all prior periods up to and including July 5, 2012 and the results of operations from July 5, 2012 forward include both the SA Assets and LGX Oil + Gas Inc. (referred to collectively with its subsidiaries as “LGX” or the “Company”), unless otherwise indicated. Refer to the common-control transaction and reverse acquisition in the Management’s Discussion and Analysis “(MD&A”) of LGX Oil + Gas Inc. for the third quarter of 2013 and audited consolidated financial statements for the year ended December 31, 2012. For a comparison of the quarter to prior quarters of Bowood Energy Inc., refer to page 11 of the MD&A of LGX Oil + Gas Inc. for the third quarter of 2013. |
| (2) | Management uses funds generated by operations, net debt and working capital surplus (deficit) and operating netback to analyze operating performance and leverage. These terms, as presented, do not have a standardized meaning prescribed by International Financial Reporting Standards and therefore they may not be comparable with the calculation of similar measures for other entities. |
| (3) | In calculating the net income (loss) per share diluted, the Company excludes the effect of outstanding stock options and share warrants outstanding and uses the weighted average common shares (basic) where the Company has a net loss for the period. In calculating, funds generated by (used in) operations per share diluted, the Company includes the effect of outstanding stock options and share warrants using the treasury stock method. |
| (4) | 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. |
ACCOMPLISHMENTS
OPERATIONS OVERVIEW
Alberta Bakken
In the quarter, LGX spud two high potential exploration wells in the Southern Alberta Bakken area, targeting the Banff/Big Valley zones. These prospects were identified using the Company’s 95 square mile 3D seismic survey in the area. Both wells have successfully confirmed the Company’s geological and geophysical interpretation of the play. Intermediate casing has been set on the first well and the well is awaiting further evaluation after seeing oil and natural gas shows in the target formations. The second well is drilling horizontally in the target zone and immediately offsets recent successful industry activity.
Evaluation of these two wells could take several months and LGX will provide further information at the appropriate time.
These two wells satisfy the 2013 drilling commitments on the Blood Tribe First Nation lands.
Manyberries
The Company is continuing its low cost optimization projects, including oil well restarts and water injection re-configuration and workovers. The Company completed a significant number of these in the quarter, resulting in one-time higher than normal operating costs in the quarter, but will aid in the sustainability of the production. Oil decline rates have been reduced from 16 percent per year to 10 percent per year as a result of this work. Geophysical, geological and engineering work continues on high-grading Sunburst development drilling locations and further evaluating the horizontal drilling potential in the Swift Formation.
OUTLOOK
The Company has completed and continues to identify a number of low cost optimization initiatives at Manyberries for 2013 that include oil well restarts, workovers and water injection reconfiguration, which are anticipated to have a positive effect on both production and reserves. Work continues on high-grading Sunburst development drilling locations and further evaluating the horizontal drilling potential in the Swift Formation.
Positive results from the interpretation of the 95 square mile 3D seismic survey shot over LGX lands combined with recently announced strong production results from the Big Valley and Banff formations from wells immediately offsetting LGX lands have increased the confidence in the Banff and Big Valley as an emerging light oil resource play in southern Alberta. The Company spud two exploratory wells late in the third quarter of 2013 and is currently evaluating both. LGX is well positioned on this emerging play with more than 109,000 net undeveloped acres in the Alberta Bakken fairway.
The Company continues to be on track to meet its previously announced full year production guidance, however, with the increased one-time repair and ongoing optimization projects at Manyberries and an increased working interest on the two exploratory wells drilled in the Alberta Bakken Fairway, there will be an increase to previously announced operating and transportation cost per Boe and capital expenditure guidance to approximately $30.00 per Boe and $12.5 million, respectively.
The management team at LGX continues to aggressively pursue opportunities that improve the upside potential, sustainability and autonomy of LGX.
Forward-Looking Information – This press release contains forward-looking statements. More particularly, it contains forward-looking statements concerning: (i) LGX’s planned exploration and development activities, (ii) the anticipated positive impact of optimization activities at Manyberries on production and reserves, (iii) the Company being on track to meet full year production guidance, and (iv) revised anticipated 2013 operating and transportation costs and capital expenditures.
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 the success of future drilling, development and completion activities, the performance of existing wells, the performance of new wells, the availability and performance of facilities and pipelines, the geological characteristics of LGX’s properties, the successful application of drilling, completion and seismic technology, prevailing weather conditions, commodity prices, royalty regimes and exchange rates, the application of regulatory and licensing requirements and the availability 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 Legacy 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, 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, commodity price and exchange rate fluctuations, adverse weather conditions and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects, waterflood projects or capital expenditures. These and other risks are set out in more detail in LGX’s Annual Information Form for the year ended December 31, 2012 dated April 2, 2013.
The forward-looking statements contained in this press release are made as of the date hereof and LGX 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.
SOURCE LGX Oil + Gas Inc.
Trent J. Yanko, P.Eng.
President + CEO
Matt Janisch
Vice President, Finance + CFO
4400, 525 – 8th Avenue S.W.
Calgary, AB T2P 1G1
Telephone: 403.441.2300