CALGARY, April 22, 2016 /CNW/ - LGX Oil + Gas Inc. ("LGX"
or the "Company") (TSXV:OIL) is pleased to announce it has filed on
SEDAR its audited financial statements and related Management's
Discussion and Analysis ("MD&A") for the year ended
December 31, 2015 as well as its
annual information form ("AIF") for the year ended December 31, 2015. Selected financial and
operational information is outlined below and should be read in
conjunction with LGX's audited financial statements, the related
MD&A and the AIF which are available for review at
www.lgxoil.com or www.sedar.com.
FINANCIAL +
OPERATIONAL HIGHLIGHTS (1)
|
|
|
Three Months
Ended
|
|
|
Year
Ended
|
|
|
|
|
December
31
|
|
|
December
31
|
|
(Cdn $, except per
share amounts)
|
2015
|
2014
|
%
change
|
2015
|
2014
|
%
change
|
Financial
|
|
|
|
|
|
|
Petroleum and natural
gas sales, net of royalties
|
1,802,969
|
3,854,256
|
(53)
|
10,420,067
|
20,096,137
|
(48)
|
Funds generated by
(used in) operations (2)
|
(467,647)
|
467,855
|
(200)
|
899,461
|
6,558,707
|
(86)
|
|
Per share
basic
|
(0.01)
|
0.01
|
(200)
|
0.01
|
0.07
|
(86)
|
|
Per share diluted
(3)
|
(0.01)
|
0.01
|
(200)
|
0.01
|
0.07
|
(86)
|
Net loss
|
(13,717,497)
|
(41,300,437)
|
(67)
|
(35,655,004)
|
(42,922,011)
|
(17)
|
Per share
basic
|
(0.15)
|
(0.47)
|
(68)
|
(0.40)
|
(0.48)
|
(17)
|
|
Per share diluted
(3)
|
(0.15)
|
(0.47)
|
(68)
|
(0.40)
|
(0.48)
|
(17)
|
Capital expenditures
– Exploration and development (4)
|
(161,604)
|
9,179,368
|
(102)
|
968,784
|
17,478,051
|
(94)
|
Capital expenditures
– Acquisitions and dispositions (4)
|
-
|
(220,000)
|
(100)
|
-
|
(220,000)
|
(100)
|
Net debt and working
capital surplus (deficit)(2)
|
(30,395,220)
|
(30,332,110)
|
-
|
(30,395,220)
|
(30,332,110)
|
-
|
Operating
|
|
|
|
|
|
|
Production
|
|
|
|
|
|
|
|
Crude oil and natural
gas liquids (Bbls per day)
|
374
|
628
|
(40)
|
516
|
636
|
(19)
|
|
Natural gas (Mcf per
day)
|
1,199
|
1,446
|
(17)
|
1,211
|
1,350
|
(10)
|
|
Barrels of oil
equivalent (Boe per day) (5)
|
574
|
869
|
(34)
|
718
|
861
|
(17)
|
Average realized
price
|
|
|
|
|
|
|
|
Crude oil and natural
gas liquids ($ per Bbl)
|
48.14
|
71.00
|
(32)
|
52.91
|
89.79
|
(41)
|
|
Natural gas ($ per
Mcf)
|
2.66
|
3.75
|
(29)
|
2.73
|
4.50
|
(39)
|
|
Barrels of oil
equivalent ($ per Boe) (5)
|
36.91
|
57.55
|
(36)
|
42.62
|
73.38
|
(42)
|
Netback ($ per
Boe)(2)
|
|
|
|
|
|
|
|
Petroleum and natural
gas sales
|
36.91
|
57.55
|
(36)
|
42.62
|
73.38
|
(42)
|
|
Royalties
|
2.77
|
9.34
|
(70)
|
2.86
|
9.44
|
(70)
|
|
Operating
expenses
|
18.16
|
29.32
|
(38)
|
21.78
|
27.97
|
(22)
|
|
Transportation
expenses
|
3.67
|
3.67
|
-
|
3.32
|
4.28
|
(22)
|
Operating Netback ($
per Boe)(2)
|
12.31
|
15.22
|
(19)
|
14.66
|
31.69
|
(54)
|
Undeveloped land
holdings (gross acres)
|
89,086
|
115,199
|
(23)
|
89,086
|
115,199
|
(23)
|
|
(net
acres)
|
56,915
|
109,392
|
(48)
|
56,915
|
109,392
|
(48)
|
Common Shares
(000's)
|
|
|
|
|
|
|
Common shares
outstanding, end of period
|
88,658
|
88,658
|
-
|
88,658
|
88,658
|
-
|
Weighted average
common shares (basic)
|
88,658
|
88,658
|
-
|
88,658
|
88,658
|
-
|
Weighted average
common shares (diluted) (3)
|
88,658
|
88,658
|
-
|
88,658
|
88,658
|
-
|
|
|
(1)
|
Consolidated
financial and operating highlights for LGX Oil + Gas Inc. and all
its subsidiaries ("LGX" or the "Company").
|
(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 and twelve months ended December 31,
2015.
|
(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.
|
(4)
|
Refer to Capital
Expenditures in the Management Discussion and Analysis for the
three and twelve months ended December 31, 2015.
|
(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.
|
2015 OPERATIONS REVIEW
During the year the Big Valley
(Three Forks) Formation production from the horizontal well at
6-36-8-24 W4M was isolated and the Banff Formation was completed
with a 6 m perforated interval in the build section of the
intermediate casing and stimulated with a small volume acid
job. The well demonstrated high deliverability, with a 30 day
initial rate of 350 Bbl oil per day and has produced in excess of
30 MBbl from this zone.
The Company and its working interest partners brought a claim
against the Attorney General of Canada seeking compensation in the amount of
$60 million for the de facto
expropriation and injurious affection of their working interests in
the oil and gas assets in the Manyberries oilfields that are affected by the
Emergency Order, SOR/2013-202 published in Part II of the Canada
Gazette on December 4, 2013.
LGX received notice from Kainai Energy Limited Partnership by
its general partner Kainai Energy Corp. ("Kainai") that the Blood
Tribe Chief & Council and Indian Oil and Gas Canada had both
agreed to amend Petroleum and Natural Gas Lease # OL-6360 ("Blood
Lease") to provide for a payment, waiver, or other forbearance to
be made in lieu of the obligation to commence drilling two wells on
the Blood Lease on or before September 30,
2015. LGX received confirmation that Kainai has satisfied
the revised terms of the Blood Lease. Accordingly, on August 15, 2015 LGX assigned Kainai an additional
30 percent working interest in an undeveloped portion of the Blood
Lease excluding thereout all production and reserves in exchange
for the successful amendment to the Blood Lease. LGX will retain a
100 percent working interest (80 percent after a 200 percent
payout) in the production and reserves, retain an 80 percent
working interest in the 16.75 sections of land surrounding the
Company's drilling activity and a 50 percent working interest
in the remaining 78 sections of the Blood Lease.
On September 30, 2015 approval was
granted for continuation of the contiguous 94.75 section Blood
Lease beyond the end of its primary term for a further five year
term.
Due to the continued decline in commodity prices, the estimated
future cash flows of certain assets dropped below the carrying
value of those assets. As a result, LGX recorded a $19.68 million aggregate impairment charge on the
exploration and evaluation assets and the property, plant and
equipment assets of the Company for the year ended December 31, 2015.
RESERVES
In this press release, all references to reserves are to gross
company reserves, meaning LGX's working interest reserves before
deductions of royalties and before consideration of LGX's royalty
interests. The reserves were evaluated by GLJ Petroleum
Consultants Ltd. ("GLJ") in accordance with National Instrument
51-101 - Standards of Disclosure for Oil and Gas Activities ("NI
51-101") effective December 31,
2015. LGX's annual information form for the year ended
December 31, 2015 (the "AIF")
contains LGX's reserves data and other oil and natural gas
information as mandated by NI 51-101. A copy of the AIF will be
available under LGX's profile at www.sedar.com or at
www.lgxoil.com. The summary information provided below should be
read in conjunction with the detailed information in the AIF.
The following table is a summary, as at December 31, 2015, of LGX's petroleum and natural
gas reserves as evaluated by GLJ. It is important to note
that the recovery and reserves estimates provided herein are
estimates only. Actual reserves may be greater or less then
the estimates provided herein. Reserves information may not add due
to rounding.
Summary of Oil and Gas Reserves – Forecast Prices and
Costs
|
Gross
Reserves(1)
|
|
Light and
|
|
Natural
|
Conventional
|
|
|
|
Medium
|
Tight
|
Gas
|
Natural
|
Shale
|
Total Oil
|
|
Crude Oil
|
Oil
|
Liquids
|
Gas
|
Gas
|
Equivalent
|
|
MBbls
|
MBbls
|
MBbls
|
MMcf
|
MMcf
|
MBOE
|
Proved
|
|
|
|
|
|
|
|
Developed
Producing
|
384
|
182
|
6
|
886
|
70
|
732
|
|
Developed
Non-Producing
|
563
|
20
|
2
|
247
|
12
|
628
|
|
Undeveloped
|
214
|
232
|
4
|
485
|
138
|
555
|
Total
Proved
|
1,161
|
434
|
12
|
1,618
|
220
|
1,915
|
Probable
|
1,554
|
623
|
13
|
2,298
|
367
|
2,634
|
Total Proved plus
Probable
|
2,716
|
1,057
|
25
|
3,916
|
586
|
4,549
|
(1)
|
Gross Company
Reserves means the Company's working interest reserves before
calculations of royalties and before consideration of the Company's
royalty interests.
|
Net Present Value of Future Net Revenue – Forecast Prices and
Costs
|
Before Future
Income Tax Expenses and Discounted at
|
|
0%
|
5%
|
10%
|
15%
|
20%
|
Proved
|
(M$)
|
(M$)
|
(M$)
|
(M$)
|
(M$)
|
|
Developed
Producing
|
4,296
|
3,775
|
3,359
|
3,049
|
2,814
|
|
Developed
Non-Producing
|
17,991
|
13,753
|
10,638
|
8,387
|
6,745
|
|
Undeveloped
|
10,304
|
5,434
|
2,756
|
1,224
|
320
|
Total
Proved
|
32,591
|
22,962
|
16,753
|
12,660
|
9,879
|
Probable
|
75,178
|
38,752
|
21,171
|
11,804
|
6,477
|
Total Proved plus
Probable
|
107,769
|
61,715
|
37,924
|
24,465
|
16,356
|
|
After Future Income
Tax Expenses and Discounted at
|
|
0%
|
5%
|
10%
|
15%
|
20%
|
Proved
|
(M$)
|
(M$)
|
(M$)
|
(M$)
|
(M$)
|
|
Developed
Producing
|
4,296
|
3,775
|
3,359
|
3,049
|
2,814
|
|
Developed
Non-Producing
|
17,991
|
13,753
|
10,638
|
8,387
|
6,745
|
|
Undeveloped
|
10,304
|
5,434
|
2,756
|
1,224
|
320
|
Total
Proved
|
32,591
|
22,962
|
16,753
|
12,660
|
9,879
|
Probable
|
75,178
|
38,752
|
21,171
|
11,804
|
6,477
|
Total Proved plus
Probable
|
107,769
|
61,715
|
37,924
|
24,465
|
16,356
|
Pricing Assumptions – Forecast Prices and Costs
GLJ employed the following pricing, exchange rate and inflation
rate assumptions as of December 31,
2015 in the GLJ Report in estimating reserves data using
forecast prices and costs. For the year ended December 31, 2015, LGX's average realized sales
prices were $2.73/Mcf for natural gas
and $52.93/Bbl for crude oil.
|
Medium and Light
Crude Oil
|
Natural
Gas
|
NGL
|
|
Year
|
WTI
Cushing
Oklahoma
40° API
(US$/Bbl)
|
Canadian
Light Sweet
40° API
($/Bbl)
|
Cromer
Medium
29.3º
API ($/Bbl)
|
AECO - C
Spot
($/MMBtu)
|
Pentanes
Plus
($/Bbl)
|
Exchange
Rate
($US/$Cdn)
|
2015
(Actual)
|
48.82
|
57.23
|
51.91
|
2.70
|
60.45
|
0.7832
|
2016
|
44.00
|
55.86
|
50.80
|
2.76
|
60.79
|
0.7250
|
2017
|
52.00
|
64.00
|
59.52
|
3.27
|
68.48
|
0.7500
|
2018
|
58.00
|
68.39
|
63.60
|
3.45
|
73.17
|
0.7750
|
2019
|
64.00
|
73.75
|
68.59
|
3.63
|
78.91
|
0.8000
|
2020
|
70.00
|
78.79
|
73.27
|
3.81
|
84.30
|
0.8250
|
2021
|
75.00
|
82.35
|
76.59
|
3.90
|
88.12
|
0.8500
|
2022
|
80.00
|
88.24
|
82.06
|
4.10
|
94.41
|
0.8500
|
2023
|
85.00
|
94.12
|
87.53
|
4.30
|
100.71
|
0.8500
|
2024
|
87.88
|
96.48
|
89.73
|
4.50
|
103.24
|
0.8500
|
2025
|
89.63
|
98.41
|
91.52
|
4.60
|
105.30
|
0.8500
|
Escalated at 2.0% per
year thereafter.
|
Reconciliation of Changes in Reserves
The following table sets forth a reconciliation of LGX's gross
reserves as at December 31, 2015,
derived from the GLJ Report using forecast prices and cost
estimates, reconciled to the gross reserves of LGX as at
December 31, 2014.
|
Light
and
|
|
|
|
|
|
|
Medium
Crude
|
Tight
|
Natural
Gas
|
Conventional
|
Shale
|
Total
Oil
|
|
Oil
|
Oil
|
Liquids
|
Natural
Gas
|
Gas
|
Equivalent
|
Proved
|
(MBbls)
|
(MBbls)
|
(MBbls)
|
(MMcf)
|
(MMcf)
|
(MBOE)
|
|
Balance at December
31, 2014
|
2,282
|
-
|
14
|
3,234
|
-
|
2,834
|
|
Product Type
Transfers
|
(746)
|
746
|
-
|
(382)
|
382
|
-
|
|
Extensions and
Improved Recovery
|
-
|
104
|
-
|
-
|
62
|
114
|
|
Technical
Revisions
|
(196)
|
(340)
|
4
|
(163)
|
(224)
|
(596)
|
|
Economic
Factors
|
(64)
|
(5)
|
(2)
|
(629)
|
-
|
(176)
|
|
Production
|
(115)
|
(71)
|
(3)
|
(442)
|
-
|
(262)
|
|
Balance at December
31, 2015
|
1,161
|
434
|
12
|
1,618
|
220
|
1,915
|
|
|
|
|
|
|
|
|
|
|
Light
and
|
|
|
|
|
|
|
|
Medium
Crude
|
Tight
|
Natural
Gas
|
Conventional
|
Shale
|
Total
Oil
|
|
|
Oil
|
Oil
|
Liquids
|
Natural
Gas
|
Gas
|
Equivalent
|
Probable
|
(MBbls)
|
(MBbls)
|
(MBbls)
|
(MMcf)
|
(MMcf)
|
(MBOE)
|
|
Balance at December
31, 2014
|
2,403
|
-
|
14
|
3,284
|
-
|
2,965
|
|
Product Type
Transfers
|
(835)
|
835
|
-
|
(487)
|
487
|
-
|
|
Extensions and
Improved Recovery
|
-
|
184
|
-
|
-
|
109
|
202
|
|
Technical
Revisions
|
18
|
(409)
|
(1)
|
(153)
|
(236)
|
(456)
|
|
Economic
Factors
|
(32)
|
12
|
-
|
(346)
|
6
|
(77)
|
|
Production
|
-
|
-
|
-
|
-
|
-
|
-
|
|
Balance at December
31, 2015
|
1,554
|
623
|
13
|
2,298
|
367
|
2,634
|
|
|
|
|
|
|
|
|
|
|
Light
and
|
|
|
|
|
|
|
|
Medium
Crude
|
Tight
|
Natural
Gas
|
Conventional
|
Shale
|
Total
Oil
|
|
|
Oil
|
Oil
|
Liquids
|
Natural
Gas
|
Gas
|
Equivalent
|
Proved +
Provable
|
(MBbls)
|
(MBbls)
|
(MBbls)
|
(MMcf)
|
(MMcf)
|
(MBOE)
|
|
Balance at December
31, 2014
|
4,685
|
-
|
27
|
6,518
|
-
|
5,798
|
|
Product Type
Transfers
|
(1,581)
|
1,581
|
-
|
(869)
|
869
|
-
|
|
Extensions and
Improved Recovery
|
-
|
288
|
-
|
-
|
171
|
317
|
|
Technical
Revisions
|
(177)
|
(748)
|
3
|
(316)
|
(460)
|
(1,052)
|
|
Economic
Factors
|
(96)
|
7
|
(2)
|
(975)
|
6
|
(253)
|
|
Production
|
(115)
|
(71)
|
(3)
|
(442)
|
-
|
(262)
|
|
Balance at December
31, 2015
|
2,716
|
1,057
|
25
|
3,916
|
586
|
4,549
|
Future Development Costs
The table below sets out the total development costs deducted in
the estimation in the GLJ Report of future net revenue attributable
to proved reserves and proved plus probable reserves (using
forecast prices and costs).
|
|
Forecast Prices and
Costs
|
|
|
Proved
Reserves
|
|
Proved Plus
Probable Reserves
|
|
|
|
|
|
(M$)
|
|
(M$)
|
2016
|
|
-
|
|
26
|
2017
|
|
951
|
|
2,392
|
2018
|
|
10,147
|
|
14,780
|
2019
|
|
3,455
|
|
25,054
|
2020
|
|
1,657
|
|
7,110
|
Remaining
Years
|
|
534
|
|
1,442
|
Total
Undiscounted
|
|
16,744
|
|
50,804
|
NET ASSET VALUE ("NAV") PER SHARE
The following table outlines LGX's NAV per Basic Common Share
using the Proved plus Probable reserve value at December 31, 2015, before taxes and discounted at
10%, and forecast pricing and costs:
($MM except share and
per share amounts)
|
|
Proved Plus Probable
Reserve Value NPV10 BT(incl. future capital)
|
$37.9
|
Undeveloped Land
(56,915 acres @ $200/acre)
|
$11.3
|
Net
Debt
|
($30.4)
|
Total Net Assets
(basic)
|
$18.8
|
Basic Common Shares
Outstanding (MM)
|
88.7
|
Estimated NAV per
Basic Common Share
|
$0.21
|
EVENTS AFTER THE REPORTING PERIOD
On February 1, 2016, LGX announced
that it has initiated a process to consider a range of strategic
alternatives available to the Company, with a view to enhancing
shareholder value, as it believes the current share price is not
reflective of long term value within the Company's asset
base. These alternatives may include, but are not limited to,
a sale of all or a material portion of the LGX assets, the outright
sale of the Company, or merger or other transaction involving a
third party, and/or alternative financing initiatives. LGX
engaged Sayer Energy Advisors to advise the Company in connection
with this comprehensive review and analysis of strategic
alternatives in connection with the process.
On March 7, 2016, the Company
entered into an amended agreement with its lender to permit a
temporary $600,000 increase of the
credit facility to $30,600,000
available until the earlier of April 29,
2016 or the lender making demand for repayment in full of
the Company's indebtedness to the lender. In addition,
effective January 31, 2016, interest
on the credit facility shall continue to accrue but shall not be
payable until further review. As well, the Company's financial
covenant subsequent to December 31,
2015 was suspended. The credit facility is currently
under review by the lender.
On March 24, 2016, the Company
reviewed numerous bids as a result of this strategic alternative
process. Currently LGX has entered into an agreement pursuant to
which LGX has agreed to sell its overriding royalty interests in
North Dakota to a private company
for consideration of $1.3
million. Bids received for other assets are at various
stages of evaluation or negotiation.
OUTLOOK
With cash flows impacted by oil prices reaching 12 year lows,
LGX is working proactively to ensure it has the ability to meet its
financial obligations under its credit facilities. The Company
has agreed to sell its overriding royalty interests in North Dakota and is currently evaluating bids
for other assets. LGX is also evaluating additional strategic
alternatives, including but not limited to: further asset
sales, mergers, accessing third party capital and joint
ventures. The Company continues proactive discussions with its
lender regarding the facility and the covenants.
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 and the positive completion result from
the 6-36 well. The Company has significant exposure and tenure
to the upside of both plays and only a small portion of the
potential has been recognized in the Company's reserve report.
The company continues to work with Environment Canada in
managing its operations with respect to the Emergency Order at its
Manyberries property. However, the
Emergency Order has severely impacted the viability of the
Manyberries property and the
Company will pursue its claim against the Attorney General of
Canada seeking compensation in the
amount of $60 million if it is deemed
in the best interest of LGX stakeholders.
ANNUAL GENERAL MEETING
LGX's Annual General Meeting, is scheduled for 11:00 am on June 30,
2016 at The Petroleum Club, Viking A 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,
2015, December 31, 2014 and
December 31, 2013 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 403.441.2345 or at
4400, 525-8th Avenue SW, Calgary,
Alberta, T2P 1G1.
LGX's common shares trade on the TSX Venture Exchange under the
symbol OIL.
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 expectation that, at current
commodity prices, LGX may approach non-compliance with the existing
financial covenants under its credit facilities in the near future;
(ii) the results of bids received by the Company as part of the
strategic alternatives process and the likelihood of a transaction
in connection therewith; (iii) closing of the sale of
the Company's overriding royalty interest in North Dakota; iv) anticipated
savings on operating expenses, G&A and capital costs; (v) the
anticipated 2016 average rate of production; and (vi) LGX's
expectation that it will generate slightly positive funds
flow from operations at current strip pricing for
2016.
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. Most importantly, certain of the forward-looking
statements are highly dependent on prevailing commodity prices and
significant fluctuations in prevailing commodity prices may impact
anticipated cash flows, production and compliance with debt
covenants. Other factors and risks 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; 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.
Caution Respecting Initial Production Results
The production results for the two Big Valley (Three Forks) wells disclosed in
this press release are initial results for the first thirty days of
production only and are not determinative of the rates at which
such wells will continue production and decline
thereafter. These results are not necessarily indicative of
current performance, long-term performance or ultimate recovery
from the wells. Readers are cautioned not to place undue
reliance on such rates in considering the long-term performance of
the wells or the aggregate production of the Company.
SOURCE LGX Oil + Gas Inc.