CALGARY, ALBERTA–(Marketwired – Dec. 12, 2013) – Long Run Exploration Ltd. (TSX:LRE) (“Long Run” or the “Company”) is pleased to announce an increased borrowing base under the syndicated credit facility of $475 million. Long Run is also pleased to announce the closing of an acquisition that adds approximately 450 boe per day of strategic light oil Viking assets at Redwater for total consideration of approximately $45 million (the “Acquisition”).
INCREASED CREDIT FACILITY
Long Run’s syndicate of lenders has increased the borrowing base under the Company’s credit facility from $430 million to $475 million, as part of the Company’s semi-annual borrowing base review. The increased credit capacity recognizes increases in our reserve base resulting from operational success.
LIGHT OIL ACQUISITION
The Acquisition adds approximately 450 boe per day (92 percent light oil) of high netback production and, when combined with Long Run’s recent acquisitions in the Redwater area, further consolidates the Company’s interest in this core play which now encompasses approximately 45,000 gross acres of undeveloped Viking rights. The Acquisition was funded through Long Run’s credit facility.
As a result of the Acquisition, Long Run’s light oil Viking drilling inventory increased by more than 100 locations. Over the past six months, Long Run has increased drilling inventories across this core play, while adding strategic pipelines and facilities for solution gas handling. Through development work and strategic tuck-in acquisitions completed in 2013, Long Run’s Viking inventory has grown and is estimated to be in excess of 500 locations.
NOVEMBER PRODUCTION UPDATE
Estimated production for November 2013 was 27,300 boe per day (55 percent crude oil and liquids) comprised of 15,000 barrels per day of liquids (including 13,400 barrels per day of crude oil) and 73.5 million cubic feet of natural gas per day. This level of production excludes the Acquisition, which will have an insignificant impact on 2013 average daily production volumes. Despite December’s extremely cold weather, Long Run expects to average in excess of 25,000 boe per day in 2013, in-line with previously stated guidance.
In 2014 Long Run will initiate a dividend of $0.0335 per share per month ($0.402 per share per year). Long Run has built a sustainable dividend plus growth model that anticipates a 2014 capital program of $200 million. This capital program includes the drilling of approximately 80 net wells focused on Long Run’s core Peace River Montney and Redwater Viking plays. Long Run anticipates funds flow from operations of approximately $260 million in 2014 based on pricing assumptions of WTI US$95 per barrel and AECO $3.43 per million cubic feet, an increase from previous 2014 funds flow from operations guidance of $255 million. Forecast average daily production for 2014 has increased from 26,000 boe per day to approximately 26,300 boe per day, weighted approximately 57 percent to crude oil and liquids. Long Run anticipates a year-over-year funds flow from operations growth rate in excess of 10 percent per share.
Long Run has hedged additional volumes for 2014 as part of the Company’s ongoing risk mitigation strategy. Long Run has entered into additional January to June 2014 oil costless collar contracts for 1,000 barrels per day at WTI US$95 per barrel by WTI US$98 per barrel. Long Run has hedged total crude oil volumes for 2014 of 8,467 barrels per day, including 6,150 barrels per day on costless collars with an average floor price of WTI US$90.45 per barrel. An additional 12,322 million cubic feet per day of natural gas volumes have been hedged on January 2014 to March 2015 contracts. These additional contracts bring Long Run’s 2014 total natural gas hedged volumes to 39,810 million cubic feet per day, including 30,332 million cubic feet per day on costless collars with a floor price of AECO $3.69 per million cubic feet.
Long Run is pleased to announce the promotion of Dale Orton to the position of Senior Vice President, Operations and Engineering. Mr. Orton is a Professional Engineer with more than 20 years of exploitation, production, operations, business development, and acquisition experience. Mr. Orton holds a Bachelor of Engineering degree from the University of Victoria and is a Registered Professional Engineer in Alberta and Saskatchewan.
Long Run is a Calgary-based intermediate oil company focused on light-oil development and exploration in western Canada. For further information about Long Run, visit the Company’s website at www.longrunexploration.com.
Certain information in this news release including management’s assessment of future plans and operations, expectation that the Company will meet previously-stated production guidance, Viking drilling inventory, plans to implement payment of a dividend and the amount thereof, 2014 capital expenditure budget and nature of expenditures, anticipated 2014 funds flow from operations and anticipated year-over-year growth thereof and forecast 2014 average daily production and the commodity mix thereof are forward-looking statements. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties including, without limitation, risks related to closing of the disposition, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers, inability to retain drilling rigs and other services, capital expenditure costs, including drilling, completionand