CALGARY, July 29, 2015 /CNW/ - LGX Oil + Gas Inc. ("LGX" or the "Company") (TSXV: OIL) is pleased to provide further operational updates on the 2015 drilling commitments and production results from recent southern Alberta activity.
LGX has executed an agreement with Kainai Energy Limited Partnership by its general partner Kainai Energy Corp. ("Kainai") whereby Kainai and LGX shall cooperate on a reasonable commercial efforts basis to seek approval from the Blood Tribe Chief & Council ("Blood Council") to continue LGX's contiguous 94.75 section Petroleum and Natural Gas lease #OL-6360 ("Blood Lease") beyond the end of its primary term of September 30, 2015 for a further five (5) year term. The Blood Lease currently provides for an obligation to commence drilling two wells on the Blood Lease on or before September 30, 2015 (the "Drilling Commitment").
LGX and Kainai have also agreed to cooperate to seek an amendment to the Blood Lease that allows for a payment, waiver, or other forbearance to be made in lieu of Drilling Commitment. If the amendment is obtained Kainai shall become responsible for fulfilling, at its sole cost, risk and expense, the obligations under the Blood Lease as amended. If Kainai satisfies the amended obligations pursuant to the Blood Lease, LGX shall assign Kainai an additional 30 percent working interest in an undeveloped portion of the Blood Lease excluding thereout all production and reserves. Post the assignment, 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 have a 50 percent working interest in the remaining 78 sections of the Blood Lease.
The Blood Tribe Chief, Charles Weasel Head, stated: "LGX and its predecessor, Bowood Energy, have had a long and successful relationship working on the Blood Tribe Reserve which we are pleased to see continue under the new joint venture with Kainai. Through the Blood Tribe's equity ownership interest in Kainai, we look forward to the LGX transaction providing even greater alignment with the Tribe, as well as to the benefits to be achieved for the Tribe through our increased active ownership interest in the Blood Lease."
The recently re-completed well at 6-36-8-24 W4M in the Banff Formation has been producing at an average daily rate of approximately 315 Bbl oil per day in its first 30 days of production and has produced a total of 12,000 barrels of oil. The 6-36 well is still producing in excess of 350 Bbl of oil per day with less than a one percent water cut and a high fluid level from the un-frac'd Banff Formation. LGX has a 100 percent interest in the well prior to recovery of 200 percent of the drilling, completion, equipping and tie-in costs, at which point its interest will revert to 80 percent. Please refer to important Reader Advisories at the end of this news release. The positive test results from the 6-36 Banff completion, sustained production from recent competitor offsets and the number of Banff oil shows and tests from previously drilled wells across the area have validated the geophysical and geological model for the play. LGX estimates that up to 40 sections of LGX land offsetting the 6-36 well may be prospective for Banff oil production as well as for the already established Big Valley play.
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 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.
Caution Respecting Production Results - The production results for the Banff Formation completion at the 6-36 well disclosed in this press release are initial results of production only and are not determinative of the rates at which such well will continue production and decline thereafter. Due to the likelihood of high initial declines from the tested rates, the results are not indicative of long-term performance or ultimate recovery from the well. Readers are cautioned not to place undue reliance on such rates in considering the long-term performance of the well or the aggregate production of the Company.
Forward-Looking Information - This press release contains forward-looking statements. More particularly, it contains forward-looking statements concerning the continuation and amendment of the Blood Lease and prospectivity of LGX's properties with respect to the Banff Formation.
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 geological characteristics of LGX's properties.
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, operational risks in development, exploration and production and risks associated with uncertainty in geological and seismic interpretation. These and other risks are set out in more detail in LGX's Annual Information Form for the year ended December 31, 2014 dated March 24, 2015.
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, 4210, 525 - 8th Avenue S.W., Calgary, AB T2P 1G1, Telephone: 403.441.2300; Curt Ziemer, CGA, Vice President, Finance + CFO, 4210, 525 - 8th Avenue S.W., Calgary, AB T2P 1G1, Telephone: 403.441.2300