CALGARY, Feb. 3, 2015 /CNW/ - LGX Oil + Gas Inc. ("LGX" or the "Company") (TSXV: OIL) is pleased to provide completion results from late 2014 southern Alberta drilling activity. LGX drilled two horizontal wells into the Big Valley (Three Forks) Formation (12-2-8-24W4 and 6-36-8-24W4). The total capital expenditures for the two wells came in on budget at approximately $14 million.
The 12-2 well was drilled with a 1,402 m horizontal lateral and was completed with a 20 stage fracture stimulation. The well was put on production late November 2014 and averaged 315 Bbl per day of light oil for the first 30 days of production. LGX has a 100 percent working 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.
The 6-36 well was drilled with a 1,134 m horizontal lateral and was completed with a 20 stage fracture stimulation. The well was put on production late November 2014 and averaged 185 Bbl per day of light oil for the first 30 days of production. Water cuts are higher than the offsetting wells, indicating that load fluid is still being recovered from the well and maximum oil productive capability has not been achieved to-date. LGX has a 100 percent working 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.
The latest two wells, combined with previous production results, confirm the Big Valley (Three Forks) Formation continues to be prospective in the area. LGX believes that 20+ sections its land are prospective for the Big Valley. Both wells encountered significant hydrocarbon shows in the overlying Banff Formation as indicated by drill cuttings, gas detector readings and strong oil "kicks" while drilling through the zone. The additional oil shows, as well as further geological and seismic interpretation and analysis, confirm the potential for a second play in the shallower Banff Formation. An operator with lands immediately offsetting LGX acreage to the north has achieved strong production results in the Banff Formation. Further drilling is required to confirm the extent of both plays and to hold lands under LGX's agreement with the Blood Tribe First Nation.
Based on field estimates and subject to final, audited results, the Company's average daily production in 2014 was approximately 860 Boe per day and the Company achieved a peak rate of production of over 1,200 Boe per day in December 2014. The average and exit rates of production were below previous guidance due to delays in completion timing as the 2014 wells were drilled from the same pad and completion operations could not commence until both wells were drilled.
The Company is currently formulating a capital budget for 2015 in the context of the current challenging oil price environment and expects to announce the capital budget and associated 2015 production guidance in the near future.
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 Initial Production Results: The production results for the two Big Valley (Three Forks) wells disclosed in this press release are initial results for the first thirty days of production only and are not determinative of the rates at which such wells will continue production and decline thereafter. These results are not necessarily indicative of current performance, long-term performance or ultimate recovery from the wells. Readers are cautioned not to place undue reliance on such rates in considering the long-term performance of the wells 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 prospectivity of LGX's properties with respect to the Big Valley (Three Forks) and Banff Formations.
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, 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