CALGARY, Aug. 21, 2014 /CNW/ - LGX Oil + Gas Inc. ("LGX" or the "Company") (TSXV:OIL) is pleased to announce that it has spud the first horizontal well in its 2014 Alberta Bakken development drilling program, revised its 2014 exit production guidance to 1,500 Boe per day from the previously announced exit production guidance of 1,400 Boe per day and replaced its previous banking facility with a new $30 million banking facility.
LGX spud the first well (15-25-8-24W4) of a budgeted two well horizontal drilling program on August 13, 2014, targeting the Big Valley Formation with first production anticipated in the fourth quarter of 2014. This well offsets LGX's highly successful 14-2 well drilled late in 2013. LGX will now drill the 15-25 well at 100 percent working interest and expects to also drill the second well at 100 percent working interest. The Company now expects to spud the second well in mid-September immediately following rig release of the first well with first production anticipated late in the fourth quarter of 2014. These wells were delayed slightly from the original budget due to the late arrival of the drilling rig.
As a result of the above developments, the Company now expects average production of approximately 1,000 Boe per day for 2014 with exit production of 1,500 Boe per day (exit production is approximately 67 percent higher than 2013 exit production guidance). To account for the increase in working interest as well as additional scope in the completions of the wells, the Company now expects capital spending in 2014 to be approximately $18.5 million.
To fund this program, LGX has entered into a new banking facility with the Alberta Treasury Branch consisting of a $20 million revolving demand credit facility and a $10 million non-revolving term credit facility. The features of the term credit facility include a two year committed term (subject to extension upon mutual consent) available in two tranches with full payment of the principle on maturity. The term credit facility is subject to financial and reserve-based covenants. The new facility replaces the previous $25 million facility. The revolving portion of the new facility is a borrowing base facility subject to annual review by the lender, with the next review scheduled for no later than May 31, 2015. The new credit facility provides the Company with a significant increase to its financial flexibility to conduct its operations.
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.
Neither 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 fact that LGX anticipates securing a 100% working interest in the second well of its 2014 drilling program, (ii) the anticipated timing of the spudding of the second well of the 2014 drilling program, (iii) the anticipated timing of first production from the wells drilled in the 2014 drilling program, (iv) the anticipated 2014 average and exit rates of production and (v) anticipated capital spending in 2014.
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: (i) whether LGX's partner in the second well of its 2014 drilling program will elect to participate in the well, (ii) the timing of the drilling and completion of the two wells in the 2014 drilling program, (iii) the success and performance of the two wells to be drilled in 2014, (iv) the performance of existing wells, (v) 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) to the LGX's Manyberries property, (vi) the availability and performance of facilities and pipelines, (vii) the geological characteristics of LGX's properties, (viii) the successful application of drilling, completion and seismic technology, (ix) prevailing weather and break-up conditions, commodity prices, royalty regimes and exchange rates, * the application of regulatory and licensing requirements, and (xi) the availability and cost 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 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. These include, but are not limited to, the risk that one or both of the wells in the 2014 drilling program will not be successfully drilled and completed or will not perform as expected, 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, constraint in the availability of capital, commodity price and exchange rate fluctuations, adverse weather or break-up conditions, uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures, uncertainties as to the application and impact of the Emergency Order, and uncertainties as to the outcome of efforts by LGX to quash or amend the Emergency Order or to obtain compensation for losses related to the Emergency Order. These and other risks are set out in more detail in LGX's Annual Information Form for the year ended December 31, 2013 dated March 24, 2014.
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.
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.
For further information: 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