LGX Oil + Gas Inc. announces its financial and operational results for the three and nine months ended September 30, 2012
CALGARY, Nov. 8, 2012 /CNW/ - LGX Oil + Gas Inc. ("LGX" or the "Company") announces its financial and operational results for the three and nine months ended September 30, 2012.
The Company will file its unaudited Financial Statements and related Management Discussion and Analysis ("MD & A") for the three and nine months ended September 30, 2012 with the Canadian securities regulatory authorities on SEDAR. An electronic copy of these materials will be available under LGX's issuer profile on SEDAR at www.sedar.com and on the Company's website at www.lgxoil.com.
FINANCIAL + OPERATIONAL HIGHLIGHTS (1)
Financial + Operational Highlights below 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 to include both the SA Assets and LGX Oil + Gas Inc. (referred to collectively with its subsidiaries as "LGX" or the "Company"), unless otherwise indicated. For a comparisons to prior periods of Bowood Energy Inc., refer to page 12 of the MD&A of LGX Oil + Gas Inc. for the third quarter of 2012.
|Three Months Ended||Nine Months Ended|
|September 30||September 30|
|Unaudited (Cdn $, except per share amounts)||2012||2011||% change||2012||2011||% change|
|Petroleum and natural gas sales, net of royalties||864,621||-||n/a||1,270,804||-||n/a|
|Funds generated by (used in) operations (2)||(345,347)||(15,028)||(2,198)||(138,445)||(52,595)||(163)|
|Per share basic||(0.01)||n/a||n/a||(0.02)||n/a||n/a|
|Per share diluted (3)||(0.01)||n/a||n/a||(0.02)||n/a||n/a|
|Net income (loss)||10,254,593||(100,863)||10,267||10,442,354||(1,977,892)||628|
|Per share basic||0.38||n/a||n/a||1.16||n/a||n/a|
|Per share diluted (3)||0.38||n/a||n/a||1.16||n/a||n/a|
|Capital expenditures (excluding acquisitions)||1,410,996||7,629,923||(82)||2,556,717||17,414,474||(85)|
|Net debt and working capital surplus (deficit) (2)||(5,043,920)||(3,796,297)||(33)||(5,043,920)||(3,796,297)||(33)|
|Crude oil and natural gas liquids (Bbls per day)||95||-||n/a||50||-||n/a|
|Natural gas (Mcf per day)||1,939||-||n/a||651||-||n/a|
|Barrels of oil equivalent (Boe per day) (4)||418||n/a||n/a||158||n/a||n/a|
|Average realized price|
|Crude oil and natural gas liquids ($ per Bbl)||75.46||-||n/a||80.61||-||n/a|
|Natural gas ($ per Mcf)||2.19||-||n/a||2.19||-||n/a|
|Barrels of oil equivalent ($ per Boe) (4)||27.32||n/a||n/a||34.55||n/a||n/a|
|Netback ($ per Boe) (2)|
|Petroleum and natural gas sales||27.32||-||n/a||34.55||-||n/a|
|Operating Netback ($ per Boe) (2)||9.31||n/a||n/a||13.35||n/a||n/a|
|Undeveloped land holdings (gross acres)||217,334||88,405||146||217,334||88,405||146|
|Common Shares (000's)|
|Common shares outstanding, end of period||30,279||-||n/a||30,279||-||n/a|
|Weighted average common shares (basic)||26,887||-||n/a||9,028||-||n/a|
|Weighted average common shares (diluted) (3)||26,887||-||n/a||9,028||-||n/a|
|(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 2012 and unaudited condensed interim consolidated financial statements for the nine months ended September 30, 2012. For a comparison of the quarter to prior quarters of Bowood Energy Inc., refer to page 12 of the MD&A of LGX Oil + Gas Inc. for the third quarter of 2012.|
|(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 it 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 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.|
- Closed the purchase from Legacy Oil + Gas Inc. ("Legacy") of the SA Assets, comprised of 68,581 net acres of undeveloped land in southern Alberta for 200,000,000 pre-consolidation common shares. In conjunction with the asset purchase, the Company's management team was replaced with members from Legacy and the board of directors was reconstituted.
- Average production of 418 Boe per day in the third quarter of 2012.
- Decreased operating cost per Boe from $13.52 per Boe in the third quarter of 2011 to $12.06 per Boe in the third quarter of 2012 (11 percent decrease).
- Issued 120,000,000 units ("Units") at a price of $0.05 per Unit pursuant to a brokered private placement for net proceeds of approximately $5.7 million. Each Unit was comprised of one pre-consolidation common share and one share purchase warrant ("Warrant") entitling the holder to purchase one pre-consolidation common share at a price of $0.065 per share for a period of three years.
- Completed a rights offering to its shareholders resulting in the issuance of an additional 10,639,827 pre-consolidation common shares for net proceeds of approximately $532,000. Legacy was not entitled to participate in the rights offering with respect to the shares held by it.
- Shareholders approved a proposed name change to LGX Oil + Gas Inc. from Bowood Energy Inc. and a consolidation of outstanding common shares on a 20 to 1 basis. This name change and consolidation of shares was completed effective as of August 20, 2012.
- Increased lending value on the credit facility from $5.7 million to $7.0 million.
On July 5, 2012, the shareholders of the Company approved the previously announced strategic transaction with Legacy whereby Legacy sold the SA Assets in exchange for 200,000,000 pre-consolidation common shares of the Company (the "Asset Purchase"). Following completion of the Asset Purchase, the Company had 474,933,373 pre-consolidation common shares outstanding of which 42.1 percent were owned by Legacy. As well, the former officers of the Company resigned and were replaced by Trent Yanko as President and Chief Executive Officer, Matt Janisch as Vice-President, Finance, and Chief Financial Officer, and Mark Franko as Corporate Secretary. Also, the board of directors of the Company was reconstituted to be comprised of James Pasieka as Chairman, Trent Yanko, Chris Bloomer, Jim Welykochy, and Neil Roszell. Legacy and the Company concurrently entered into a management, technical and administrative services agreement whereby the Company will be managed by Legacy's current management and staff in exchange for a monthly fee.
During the July 5, 2012 shareholder's meeting, the shareholders also approved a proposed name change to LGX Oil + Gas Inc. from Bowood Energy Inc. and a consolidation of outstanding common shares on a 20 to 1 basis. This name change and consolidation of shares was completed effective as of August 20, 2012.
On August 2, 2012, the Company issued 120,000,000 units ("Units") at a price of $0.05 per Unit pursuant to a brokered private placement for net proceeds of approximately $5.7 million. Each Unit was comprised of one pre-consolidation common share and one share purchase warrant ("Warrant") entitling the holder to purchase one pre-consolidation common share at a price of $0.065 per share for a period of three years.
On August 17, 2012, the Company completed a rights offering to its shareholders resulting in the issuance of an additional 10,639,827 pre-consolidation common shares for net proceeds of approximately $532,000. Legacy was not entitled to participate in the rights offering with respect to the shares held by it.
EVENTS AFTER THE REPORTING PERIOD
On October 16, 2012, LGX announced it had drilled a vertical exploration well at 6-16-7-23 W4M to a total depth of 2,205 m ahead of schedule and under budget. The well is located approximately nine miles south of LGX's 8-30 horizontal oil well which produces from the Big Valley Formation. The 6-16 well encountered oil shows through the Big Valley Formation and other horizons and has been cored, logged and cased. The well cores and logs will be evaluated for further activity on the well, including a possible horizontal leg and/or completion. Also, to further the evaluation of the play, LGX has undertaken a 95 square mile 3D seismic program, centred over the Company's lands on the Blood reserve. Shooting and interpretation of the seismic program should be complete late 2012 and will be beneficial in directing 2013 development activities
On November 7, 2012, LGX completed the acquisition of highly focused, high working interest, operated producing oil assets in southeast Alberta, consisting of light oil production, reserves and undeveloped land in the Manyberries area (the "Acquisition"). To finance the cash portion of the Acquisition and for general corporate purposes, the Company completed a bought deal prospectus financing on November 7, 2012 with a syndicate of underwriters to raise $47.5 million.
Through the Acquisition, LGX acquired 600 Boe per day of high quality, high netback, light oil assets focused in the Manyberries area of southeast Alberta for total consideration of $46 million (subject to customary closing adjustments) consisting of $42.5 million in cash and approximately 4.07 million LGX common shares. With the Acquisition, LGX increases its oil and NGL weighting to approximately 67 percent of proforma production.
Subsequent to the quarter end, LGX's board of directors approved the following appointments; Curt Labelle, Vice President - Production, Dale Mennis, Vice President - Land, Mark Oliver, Vice President - Exploration, Bill Wee, Vice President - Operations, and Curt Ziemer, Vice President - Accounting.
A strategic imperative exists to aggressively grow the Company to a size that, when combined with high-netback oil production, strong balance sheet and substantial exposure to the high impact southern Alberta Bakken play, will differentiate LGX from our peer-group competitors. The recently closed Manyberries transaction and associated financing are evidence of LGX's strategy in action.
Manyberries brings the Company high quality light oil assets that can deliver significant development drilling and exploitation opportunities through the application of new technology while contemporaneously building a sustainable, predictable production base that provides internally generated free cash flow to fund LGX's extensive light oil exploration drilling inventory on its dominant land holdings on the Southern Alberta Bakken.
Proforma the Acquisition, LGX has the following characteristics:
|Current Production||1,000 Boe/d (67% light oil and NGL's)|
|Proved plus Probable Reserves (1):||4.7 MMBoe (68% light oil and NGL's)|
|Proved plus Probable RLI (2):||12.9 years|
|Undeveloped Land:||186,800 net acres|
|(1)||Gross Company Reserves. Reserves evaluated by GLJ Petroleum Consultants Ltd. as at December 31, 2011 for LGX and by GLJ Petroleum Consultants Ltd. as at March 31, 2012 and "look ahead" evaluated as of September 30, 2102 for the Acquisition, both in accordance with National Instruments 51-101. Gross Company Reserves means the Company's working interest reserves before the calculation of royalties, and before the consideration of the Company's royalty interests.|
|(2)||Based on current production.|
Work has already begun on several low risk exploitation opportunities in Manyberries. LGX has also started completion operations on the recently drilled 6-16 Big Valley well and will be moving forward with the 95 square mile 3D seismic survey over its Blood reserve leases.
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.
Forward-Looking Information - This press release contains forward-looking statements. More particularly, it contains forward-looking statements concerning LGX's planned exploration and development activities.
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, 2011 dated April 20, 2012.
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.For further information:
Trent J. Yanko, P.Eng.
President + CEO
Vice President, Finance + CFO
4400, 525 - 8th Avenue S.W.
Calgary, AB T2P 1G1