CALGARY, Oct. 30, 2012 /CNW/ - Legacy Oil + Gas Inc. ("Legacy" or the
"Company")(TSX: LEG) is pleased to provide an operational update for
its activities in the Williston Basin and most recent Turner Valley
In the third quarter of 2012, the Company drilled 46 (36.2 net) wells
all targeting light oil, with a 100 percent success rate. This total
included 18 (14.6 net) horizontal wells in its Spearfish play at
Pierson, Manitoba and Bottineau County, North Dakota. The Company
continues to be on track to meet its full year production guidance.
At Pierson, Manitoba, the Company continues to deliver excellent
production results in the Spearfish compared to both the previous
operator's drilling and the type curve used in the 2011 year-end
independent engineering report. Legacy has achieved these rates while
constraining production to maximize ultimate recovery. All recent
wells carry significant fluid levels, with some wells having fluid just
below surface. The Company estimates that initial productive
capability of a number of these Pierson wells would range from 120 to
280 Boe per day; well in excess of the currently constrained rates. The
Company believes these achievements will lead to superior long term
performance, higher per well reserve bookings plus additional locations
Legacy has continued to improve capital efficiencies in the Spearfish
play in Pierson. Through a combination of reduced day rates for both
drilling and stimulation services and improved operations execution,
wells drilled in Pierson over the first nine months of 2012 have drill,
complete, equip and tie-in costs of less than $1.5 million. Wells
drilled in the most recent quarter have all-in capital costs between
$1.2 million to $1.3 million. Average number of drilling days has been
reduced from 10 days in 2011 to 6 to 7 days in the most recent
quarter. This excellent performance has been on "long" horizontal
wells which are typically drilled across an entire section. Operating
costs continue to be reduced as additional wells are tied-in to the
central oil battery. Current operating costs in Pierson are down 35
percent in the third quarter of 2012 from the third quarter of 2011.
At Bottineau County, North Dakota, no new operated wells were brought on
production in the quarter however the Company anticipates having 6 (4.5
net) additional wells on production in the fourth quarter of 2012. The
first two wells of this recent program have come on production at an
average production rate of more than 150 Boe per day per well. Legacy
has achieved these rates while constraining production to maximize
ultimate recovery as all wells carry fluid levels.
Legacy has also continued to improve capital efficiencies in the
Spearfish play in Bottineau County. Through a combination of reduced
day rates for both drilling and stimulation services and improved
operations execution, wells drilled in Bottineau County in the last
half of 2012 have drill, complete, equip and tie-in costs of less than
$1.6 million. Wells drilled in the most recent quarter have all-in
capital costs between $1.4 million to $1.5 million on an all-in basis.
Average number of drilling days has been reduced from 12 days in 2011
to 7 to 8 days in the most recent quarter. Similar to Pierson, this
excellent performance has been on "long" horizontal wells that are
typically drilled across an entire section.
The total Spearfish play development drilling inventory of 440 net
potential locations (88 percent unbooked) is based on eight wells per
section. Based on other operators' results in the play, Legacy's
location count could increase by 50 percent through downspacing. In
addition, the Company is evaluating the waterflood potential in the
play and anticipates recovery factors of up to 14 percent, based on
At Star Valley, Legacy has applied its leading fracture stimulation
design developed in Heward to this area with good success. Legacy
brought 11 (7.8 net) wells on production since the start of the third
quarter of 2012 and these wells have average 30 day initial rates of
200 Boe per day per well. As previously disclosed, the Company
believes the Bakken play boundaries have expanded and has increased its
drilling location inventory to more than 50 net wells in Star Valley.
At Taylorton, the Company has continued to observe improved waterflood
response in the original pilot area. The 91/12-29 horizontal well has
seen its oil production rate increase to nearly 50 Bbl per day, with a
corresponding increase in fluid rate, fluid level and reduction in
water cut. The pilot was expanded into section 28 in July 2012.
Continuous improvement of drilling and completion practices has
resulted in a reduction in capital costs in Taylorton, with drilling,
completion, equip and tie-in costs for recent wells being 15 percent
less than historical costs.
At Heward, the pilot waterflood project initiated in December 2011
continues to demonstrate waterflood response as the oil production rate
in eight offsetting wells has increased since the commencement of the
pilot. Individual well oil production rates are up 50 to 500 percent
from prior to initiation of the waterflood. Plans are underway for
expansion of the pilot waterflood project in the latter part of 2012.
Legacy has remained active drilling conventional Mississippian
horizontal wells throughout its SE Saskatchewan properties. These
wells typically cost approximately $1 million to drill, complete, equip
and tie-in as they generally are not fracture stimulated and have
excellent rates of return and quick payouts.
At Alameda/Steelman, Legacy's recent wells targeting the Frobisher and
Midale have achieved tremendous production results. Five of the wells
drilled in the third quarter of 2012 have average 30 day initial
production rates of 440 Boe per day per well. The majority of these
wells carry high fluid levels. The Company has identified a
significant number of follow-up locations in both areas.
At Turner Valley, Legacy has continued to evolve drilling and completion
practices to optimize both production rate and capital costs. Drilling
to-date has targeted infill locations testing areas of varying water
cut, reservoir pressure, proximity to water injection and three
different stratigraphic horizons. As previously disclosed, horizontal
wells in Turner Valley have typically come on production with a high
water cut and as load fluid is recovered, the water cuts decrease and
the oil rates increase. This phenomenon has been observed in the 22
previously drilled unfrac'd horizontal wells and in the wells drilled
by Legacy. In turn, the Company expects the Turner Valley horizontal
wells to produce at stable, low decline rates based on the production
profile demonstrated by both the previously drilled and Legacy drilled
The Hartell #6 well and Boyd #1 well continue to deliver excellent
performance. Hartell #6 has produced nearly 50 MBoe in 11 months of
production and Boyd #1 has produced nearly 40 MBoe in six months of
production and has averaged 250 Boe per day for the last four months.
Both wells did not reach peak rates until considerably after first
production date. Production has continued to trend higher on the
remainder of the Turner Valley wells as artificial lift optimization
has taken place, production run times have improved and recovery of
load fluid has resumed.
Legacy's most recent horizontal well at Herriman #5 is an example of the
progression of positive production results as the Turner Valley
completion practices are further refined. The well has increased from
100 Boe per day to over 300 Boe per day in its first weeks of
production, while still producing at approximately 70 percent water cut
and carrying a high fluid level. Offset producers have water cuts
between 16 and 45 percent and it is anticipated Herriman #5 will
continue to trend lower in water cut and higher in oil rate.
The Company has made great strides in reducing capital costs since the
end of 2011/early 2012. With an ongoing program, refinement of mud
programs and bit selection, Legacy continues to improve its drilling
performance in Turner Valley, leading to decreased capital costs. The
recent dual lateral horizontal wells have cost approximately $6 million
for drilling, completion, equip and tie-in, driving much improved
capital efficiencies. Legacy believes there is potential for
additional capital cost reductions on future wells.
Operational momentum that began in late 2011 has continued through
2012. Legacy continues to deliver solid production growth with
improved capital efficiencies from its extensive inventory of 1,200 net
light oil development locations and waterflood assets. The Company
plans to release its third quarter 2012 results on November 8, 2012 and
has scheduled a conference call to discuss the results on Friday,
November 9, 2012 at 9:00 a.m. (MDT) (11:00 a.m. EDT).
Legacy is a uniquely positioned, technically driven intermediate oil and
natural gas company with a proven management team committed to
aggressive, cost-effective growth of light oil reserves and production
in large hydrocarbon in-place assets and resource plays. Legacy's
common shares trade on the TSX under the symbol LEG.
Forward-Looking Information - This press release contains
forward-looking statements. More particularly, this press release
contains forward-looking statements concerning: (i) the Company being
on track to meet its full year production guidance, (ii) the initial
productive capability of wells drilled at Pierson, (iii) the Company's
belief that the recent performance of wells at Pierson will lead to
superior long term performance and higher per well reserves bookings,
(iv) the number of identified drilling locations at Pierson, (v)
anticipated improvements in operating costs at Pierson, (vi) the
initial productive capability of wells drilled at Bottineau County,
(vii) the Company's belief that the recent performance of wells at
Bottineau County will lead to superior long term performance and higher
per well reserves bookings, (viii) the number of identified drilling
locations at Bottineau County, (ix) the total number of potential
drilling locations in the Company's Spearfish play, * anticipated
recovery factors in the Spearfish play, (xi) the Company's plans to
expand its waterflood project at Taylorton and the potential impact on
reserves bookings and decline rates, (xii) the number of identified
drilling locations at Star Valley, and (xiii) the Company's
expectations as to the production characteristics of horizontal wells
at Turner Valley.
The forward-looking statements contained in this press release are based
on certain key expectations and assumptions made by Legacy, including
expectations and assumptions concerning: (i) the success of future
drilling and development activities, (ii) the performance of existing
wells, (iii) the performance of new wells, (iv) the availability and
performance of facilities, (v) the geological characteristics of
Legacy's properties, (vi) the successful application of drilling,
completion and seismic technology, (vii) prevailing weather conditions,
commodity prices, royalty regimes and exchange rates, (viii) the
application of regulatory and licensing requirements and (ix) the
availability of capital, labour and services.
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 (which
include operational risks in development, exploration and production;
risk that there will be 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; the uncertainty
of well performance; and health, safety and environmental risks),
uncertainty as to weather conditions, uncertainty as to the
availability of labour and services, commodity price and exchange rate
fluctuations and changes to existing laws and regulations. These and
other 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 press release 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
SOURCE: Legacy Oil + Gas Inc.
For further information:
Trent J. Yanko, P.Eng.
President + CEO
Legacy Oil + Gas Inc.
4400, 525 - 8th Avenue S.W.
Calgary, AB T2P 1G1
Matt Janisch, P.Eng.
Vice-President, Finance + CFO
Legacy Oil + Gas Inc.
4400, 525 - 8th Avenue S.W.
Calgary, AB T2P 1G1