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CALGARY, June 10 /CNW/ - Legacy Oil + Gas Inc. ("Legacy" or the "Company") (TSX: LEG) is pleased to announce that its banking syndicate, led by BMO Capital Markets and including National Bank, the Bank of Nova Scotia and ATB Financial, has completed its review of the assets acquired by Legacy in the recently closed acquisition of Villanova Resources Inc. and has increased the Borrowing Base to $150 million, from the previous $125 million. The next interim review is scheduled for October 31, 2010. The increase continues to provide Legacy with significant financial flexibility with which to conduct its operations.
Legacy is also pleased to update shareholders on the progress made in the successful expansion of its conventional SE Saskatchewan core area and establishing positions in two potentially significant, emerging light oil resource plays.
Keying off of the Tilston light oil new pool discovery made in 2009, the Company has expanded its opportunity base at Nottingham (100 percent working interest) through an active freehold leasing program and success at the April and June Saskatchewan Crown land sales. Legacy's latest horizontal well in the area has been on production since early October 2009 and continues to produce at 200 Boe per day. Interpretation of the 36 square mile 3D seismic survey shot in early 2010 has led to the identification of an extension to the Tilston pool discovered in 2009 along with a new separate Tilston pool, which has been confirmed with the drilling of a successful vertical well. This discovery well encountered a 14 metre oil column in the Tilston and on completion flowed light oil (38 degrees API) and associated natural gas at significant rates. Legacy has identified 22 gross (22 net) horizontal Tilston locations in the area and has plans for a central battery and salt water disposal facility.
Legacy has established itself as a leader in light oil resource play development and has levered this expertise through its efforts over the past 10 months into two new potential light oil resource play opportunities. Capital spending activity to-date on these two emerging new ventures has been funded as part of Legacy's previously announced 2010 capital budget.
Through a number of transactions, the Company has assembled 31,292 gross (25,033 net) acres or nearly 49 gross sections of undeveloped land in Bottineau County, North Dakota. The lands are operated by Legacy (80 percent working interest) and are located southeast and on trend with the Waskada light oil field in southern Manitoba. Legacy expects these lands to be prospective for Spearfish (Amaranth) development opportunities, based on geological mapping, 2D seismic data and existing vertical well control, oil shows and production. Offsetting acreage in both Manitoba and North Dakota has seen Spearfish drilling success by other operators, with more than 130 multi-frac horizontal wells drilled to-date, at well densities up to 24 wells per section. The Spearfish reservoir produces 36 degrees API light sweet crude from a depth of approximately 950 metres. The Company is in the process of permitting six wells in the area, with plans to initiate drilling in the third quarter of 2010.
In addition, Legacy is the operator of a farmout agreement in the Maxhamish area in NE British Columbia that covers 50,000 contiguous acres of light oil resources play prospective land. The farmout agreement provides for the Company to earn, on a rolling option basis, a 61.5 percent before payout (40 percent after payout) working interest in the lands. The Maxhamish area is prospective for 40 degrees API light sweet oil production from the Chinkeh Formation, found at a depth of approximately 1,600 metres. The Chinkeh reservoir appears to be an aerially extensive sheet sand that has produced minor quantities of oil from five vertical producers. To date, Legacy has successfully drilled and multi-stage fracture stimulated two horizontal oil wells and worked over three of the existing vertical oil producers. Results of these wells are being assessed and future plans will be determined accordingly. The drilling and workover activity has earned Legacy a 41.7 percent (before payout) working interest in 8,450 gross acres of land.
Legacy is a uniquely positioned, well-capitalized junior oil and natural gas company with a proven management team committed to aggressive, cost-effective growth of light oil reserves and production in Saskatchewan and Manitoba. Legacy's common shares trade on the TSX Exchange under the symbol LEG.
Neither the TSX nor its Regulation Services Provider (as that term is defined in the policies of the TSX) accepts responsibility for the adequacy or accuracy of this RELEASE.
FORWARD LOOKING STATEMENTS: This press release contains forward-looking statements. More particularly, this press release contains forward-looking statements concerning planned exploration and development activities, planned facilities construction and the prospective nature of Legacy's North Dakota properties.
The forward-looking statements contained in this document are based on certain key expectations and assumptions made by Legacy, including the geological characteristics of the properties discussed, the availability of capital, the success of future drilling and development activities, the performance of existing wells, the performance of new wells, the successful application of technology and prevailing commodity prices.
Although Legacy 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; 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), commodity price and exchange rate fluctuations, geological uncertainty and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. Certain of these risks are set out in more detail in Legacy's Annual Information Form which has been filed on SEDAR and can be accessed at www.sedar.com.
The forward-looking statements contained in this document are made as of the date hereof and Legacy 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: When used in this press release, Boe means a barrel of oil equivalent on the basis of 1 Boe to 6 thousand cubic feet of natural gas. Boe per day means a barrel of oil equivalent per day. Boe's may be misleading, particularly if used in isolation. A Boe conversion ratio of 1 Boe for 6 thousand cubic feet of natural gas is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
SOURCE Legacy Oil + Gas Inc.
For further information: For further information: Trent J. Yanko, P.Eng., President + CEO, Legacy Oil + Gas Inc., 3900, Bow Valley Square II, 205 - 5th Avenue S.W., Calgary, AB, T2P 2V7, Telephone: 403.441.2300, Fax: 403.441.2017; Matt Janisch, P.Eng., Vice-President, Finance + CFO, Legacy Oil + Gas Inc., 3900, Bow Valley Square II, 205 - 5th Avenue S.W., Calgary, AB, T2P 2V7, Telephone: 403.441.2300, Fax: 403.441.2017