CALGARY, May 12, 2015 /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 months ended March 31, 2015. 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.
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FINANCIAL + OPERATIONAL HIGHLIGHTS(1) |
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Three Months Ended March 31 |
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Unaudited (Cdn $, except per share amounts) |
2015 |
2014 |
% change |
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Financial |
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Petroleum and natural gas sales, net of royalties |
2,774,557 |
6,419,719 |
(57) |
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Funds generated by operations (2) |
117,808 |
3,067,758 |
(96) |
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Per share basic |
– |
0.03 |
(100) |
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Per share diluted (3) |
– |
0.03 |
(100) |
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Net income (loss) |
(2,445,766) |
179,661 |
(1,461) |
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Per share basic |
(0.03) |
– |
n/a |
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Per share diluted (3) |
(0.03) |
– |
n/a |
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Capital expenditures – Exploration and development(4) |
651,357 |
1,931,988 |
(66) |
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Net debt and working capital deficit(2) |
(30,864,791) |
(18,495,587) |
67 |
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Operating |
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Production |
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Crude oil and natural gas liquids (Bbls per day) |
609 |
734 |
(17) |
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Natural gas (Mcf per day) |
1,278 |
1,285 |
(1) |
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Barrels of oil equivalent (Boe per day) (5) |
822 |
948 |
(13) |
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Average realized price |
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Crude oil and natural gas liquids ($ per Bbl) |
49.78 |
97.12 |
(49) |
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Natural gas ($ per Mcf) |
2.55 |
5.82 |
(56) |
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Barrels of oil equivalent ($ per Boe) (5) |
40.84 |
83.09 |
(51) |
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Netback ($ per Boe)(2)(5) |
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Petroleum and natural gas sales |
40.84 |
83.09 |
(51) |
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Royalties |
3.33 |
7.84 |
(58) |
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Operating expenses |
24.90 |
24.42 |
2 |
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Transportation expenses |
3.04 |
4.93 |
(38) |
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Operating Netback ($ per Boe)(2)(5) |
9.57 |
45.90 |
(79) |
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Undeveloped land holdings (gross acres) |
110,331 |
118,979 |
(7) |
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(net acres) |
104,525 |
112,852 |
(7) |
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Common Shares (000’s) |
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Common shares outstanding, end of period |
88,658 |
88,658 |
– |
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Weighted average common shares (basic) |
88,658 |
88,658 |
– |
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Weighted average common shares (diluted) (3) |
88,658 |
88,658 |
– |
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(1) |
Consolidated financial and operating highlights for LGX Oil + Gas Inc. and all its subsidiaries (“LGX” or the “Company”). |
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(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. Refer to “Non IFRS Measures” in the Management Discussion and Analysis for the three months ended March 31, 2015. |
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(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 operations per share diluted, the Company includes the effect of outstanding stock options and share warrants using the treasury stock method. |
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(4) |
Refer to Capital Expenditures in the Management Discussion and Analysis for the three months ended March 31, 2015. |
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(5) |
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
As a result of the Company’s active cost cutting measures, LGX:
OUTLOOK
With cash flows impacted by oil prices at five year lows, LGX is working proactively to ensure it has the ability to meet its financial obligations under its credit facilities and satisfy the 2015 drilling commitments under its lease of lands on the Blood Reserve. The Company is currently evaluating all possible measures, including but not limited to: asset sales, accessing third party capital, joint ventures and drilling commitment extension.
LGX’s credit facilities are currently subject to their annual review by the lender. LGX was not in compliance with the existing financial covenants under the credit facilities as at March 31, 2015. The lender has not demanded repayment of the senior, demand portion of the credit facilities or accelerated repayment of the junior, term portion as a result of LGX not being in compliance with the covenants. LGX is in discussions with the lender with respect to the terms of a renewal or replacement of the senior portion of the facility and a relaxation or waiver of the financial covenants thereunder and under the junior portion of the facility. The results of such discussions, including any relaxation or waiver of financial covenants, are uncertain and there is no guarantee that LGX will be in compliance with the current or any revised financial covenants in the future or that the facilities will be maintained at their current levels.
LGX has proven the concept of an over-pressured, oil saturated, light oil resource play over a broad area on its lands in the Big Valley Formation. In addition, the potential for a second exciting light oil play in the shallower Banff Formation has been confirmed through the drilling of the Big Valley wells to-date. Capital cost reductions have been demonstrated through the course of the 2014 program and additional savings are anticipated in the current low commodity price environment. The Company has significant exposure to the upside of both plays and only a small portion of the potential has been recognized in the Company’s reserve report.
The management team at LGX continues to aggressively pursue opportunities that improve the upside potential, sustainability and autonomy of LGX.
ANNUAL GENERAL MEETING
LGX’s Annual General Meeting, is scheduled for 3:00 pm on May 27, 2015 at The Petroleum Club, McMurray Room, located at 319 – 5th Avenue SW, Calgary, AB.
To view LGX’s audited financial statements, the related MD&A and the AIF for the years ended December 31, 2014, December 31, 2013 and December 31, 2012 please visit our web site at www.lgxoil.com or www.sedar.com. To the extent investors do not have access to the internet, copies of the audited financials the related MD&A and the AIF can be obtained on request without charge by contacting LGX at 403.441.2300 or at 4400, 525-8th Avenue SW Calgary, Alberta, T2P 1G1.
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.
[expand title=”Advisories & Contact”]Neither the 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 prospectivity of LGX’s properties with respect to the Big Valley and Banff Formation and (ii) the anticipated future capital cost reductions.
The forward-looking statements contained in this press release are based on certain key expectations and assumptions made by LGX, including the assumptions specifically set out in this press release and expectations and assumptions concerning: (i) prevailing commodity prices; (ii) the availability and cost of capital, labour and services; (iii) the effectiveness of cost reduction initiatives; (iv) the performance of existing wells, (v) the availability and performance of facilities and pipelines, (vi) the geological characteristics of LGX’s properties, (vii) prevailing weather and break-up conditions, royalty regimes and exchange rates, (viii) the application of regulatory and licensing requirements, and (ix) 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) at LGX’s Manyberries property.
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, including but not limited to, fluctuations in prevailing commodity prices, risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses; and health, safety and environmental risks), uncertainty as to the availability and cost of capital, labour and services, exchange rate fluctuations, fluctuations in oil price differentials, unexpected adverse weather conditions and changes to existing laws and regulations. These and other risks are set out in more detail in the AIF.
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.
Caution Respecting Boe
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.