CALGARY, Aug. 11, 2014 /CNW/ - LGX Oil + Gas Inc. ("LGX" or the "Company") (TSXV:OIL) is pleased to announce it has filed on SEDAR its unaudited financial statements and related Management's Discussion and Analysis ("MD&A") for the three and six months ended June 30, 2014. Selected financial and operational information is outlined below and should be read in conjunction with LGX's unaudited financial statements and the related MD&A which are available for review at www.lgxoil.com or www.sedar.com.
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FINANCIAL + OPERATIONAL HIGHLIGHTS(1)
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Three Months Ended
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Six Months Ended
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30-Jun
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30-Jun
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Unaudited (Cdn $, except per share amounts)
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2014
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2013
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% change
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2014
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2013
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% change
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Financial
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Petroleum and natural gas sales, net of royalties
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5,490,455
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4,156,240
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32
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11,910,174
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8,047,380
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48
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Funds generated by operations (2)
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1,874,662
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1,609,234
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16
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4,942,420
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2,724,883
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81
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Per share basic
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0.02
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0.02
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-
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0.06
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0.03
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100
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Per share diluted (3)
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0.02
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0.02
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-
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0.06
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0.03
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100
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Net income (loss)
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(727,033)
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(3,127,371)
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(77)
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(547,372)
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(4,280,996)
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(87)
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Per share basic
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(0.01)
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(0.04)
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(75)
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(0.01)
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(0.05)
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(80)
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Per share diluted (3)
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(0.01)
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(0.04)
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(75)
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(0.01)
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(0.05)
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(80)
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Capital expenditures - Exploration and development(4)
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493,819
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361,856
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36
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2,425,807
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842,076
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188
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Net debt and working capital surplus (deficit)(2)
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(17,116,598)
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(8,058,946)
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112
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(17,116,598)
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(8,058,946)
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112
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Operating
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Production
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Crude oil and natural gas liquids (Bbls per day)
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646
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578
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12
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690
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595
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16
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Natural gas (Mcf per day)
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1,307
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1,729
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(24)
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1,296
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1,768
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(27)
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Barrels of oil equivalent (Boe per day) (5)
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864
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866
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-
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906
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890
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2
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Average realized price
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Crude oil and natural gas liquids ($ per Bbl)
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98.15
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84.63
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16
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97.57
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79.97
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22
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Natural gas ($ per Mcf)
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4.55
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3.44
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32
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5.18
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3.19
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62
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Barrels of oil equivalent ($ per Boe) (5)
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80.28
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63.37
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27
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81.72
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59.81
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37
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Netback ($ per Boe)(2)(5)
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Petroleum and natural gas sales
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80.28
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63.37
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27
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81.72
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59.81
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37
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Royalties
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10.44
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10.63
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(2)
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9.09
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9.85
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(8)
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Operating expenses
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29.28
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20.17
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45
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26.74
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20.97
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28
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Transportation expenses
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4.13
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2.81
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47
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4.55
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2.40
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90
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Operating Netback ($ per Boe)(2)(5)
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36.43
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29.76
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22
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41.34
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26.59
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55
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Undeveloped land holdings (gross acres)
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117,759
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186,461
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(37)
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117,759
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186,461
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(37)
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(net acres)
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111,622
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173,040
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(35)
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111,622
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173,040
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(35)
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Common Shares (000's)
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Common shares outstanding, end of period
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88,658
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88,658
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-
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88,658
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88,658
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-
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Weighted average common shares (basic)
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88,658
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88,658
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-
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88,658
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88,658
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-
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Weighted average common shares (diluted) (3)
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88,658
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88,658
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-
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88,658
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88,658
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-
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(1)
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Consolidated financial and operating highlights for LGX Oil + Gas Inc. and all of its subsidiaries ("LGX" or the "Company").
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(2)
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Management uses funds generated by operations, net debt and working capital surplus (deficit) and operating netback to analyze operating performance and leverage. These terms, as presented, do not have a standardized meaning prescribed by International Financial Reporting Standards and therefore they may not be comparable with the calculation of similar measures for other entities.
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(3)
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In calculating the net income (loss) per share diluted, the Company excludes the effect of outstanding stock options and share warrants outstanding and uses the weighted average common shares (basic) where the Company has a net loss for the period. In calculating funds generated by operations per share diluted, the Company includes the effect of outstanding stock options and share warrants using the treasury stock method.
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(4)
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Refer to Capital Expenditures in the Management Discussion and Analysis for the three and six months ended June 30, 2014.
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(5)
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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.
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ACCOMPLISHMENTS
- Increased funds generated from operations of $1.6 million ($0.02 per share) in the second quarter of 2013 to $1.9 million ($0.02 per share) in the second quarter of 2014 (16 percent increase)
- Increased operating netbacks from $29.76 per Boe in the second quarter of 2013 to $36.43 per Boe in the second quarter of 2014 (22 percent increase)
- Reduced net debt and working capital deficit from $18.5 million at the end of the first quarter of 2014 to $17.1 million at the end of the second quarter of 2014 (7 percent decrease)
OPERATIONS REVIEW
Big Valley and Banff
The Company continues to generate drilling locations and acquire surveys on its emerging Alberta Bakken play, following the success of the 14-2-9-24W4 ("14-2") Big Valley (Three Forks) discovery well on the Blood Reserve. Approval on the first follow-up well has been received and the Company expects to receive approval shortly for the second follow-up location. Spudding of the two horizontal development wells targeting the Big Valley formation is expected to take place in the third quarter with first production anticipated in the fourth quarter of 2014. LGX has identified and is preparing additional Big Valley locations for future drilling. A competitor has drilled three significant Banff wells on geological trend, five miles north of LGX lands, and continues to license and drill additional Banff wells. These Banff wells each commenced production at over 300 barrels oil per day and continue to produce strongly. The first of these wells has produced over 100,000 barrels of oil in 20 months. LGX's interpretation from geological and seismic work is that the Banff trend continues south onto the Company's land. LGX has identified numerous Banff locations on its lands for future drilling.
Manyberries
The Company was able to complete several workovers in the Manyberries field during the second quarter which increased production by approximately 100 Boe per day. These workovers were in accordance with the provisions of the previously announced order for the protection of the Greater Sage-Grouse (the "Emergency Order") and LGX is continuing to work with Environment Canada to get additional clarity on the practical application of the Emergency Order.
EXECUTIVE ADDITION
Mark Franko joined Legacy Oil + Gas Inc. ("Legacy") as Vice President, Legal and General Counsel during the quarter. To maintain consistency with Legacy, Mr. Franko has been named Vice President, Legal and General Counsel of LGX as well. He was most recently a partner with McCarthy Tetrault LLP and has been the Corporate Secretary of LGX since July 2012.
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.
Forward-Looking Information - This press release contains forward-looking statements. More particularly, it contains forward-looking statements concerning planned drilling and development activities.
The forward-looking statements contained in this press release are based on certain key expectations and assumptions made by LGX, including the expectations and assumptions concerning the timing and successful completion of the planned drilling of the two Alberta Bakken wells.
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, 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 and 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.
Trent J. Yanko, P.Eng., President + CEO; Matt Janisch, Vice President, Finance + CFO; 4400, 525 - 8th Avenue S.W., Calgary, AB, T2P 1G1, Telephone: 403.441.2300Copyright CNW Group 2014