CALGARY, March 10, 2015 /CNW/ - LGX Oil + Gas Inc.
("LGX" or the "Company") (TSXV: OIL) is pleased to announce its
2014 year-end reserves.
The financial and operational information
contained below is based on the Company's unaudited expected
results for the year ended December 31,
2014 and final audited results may vary.
RESERVES
In this press release, all references to reserves
are to gross company reserves, meaning LGX's working interest
reserves before deductions of royalties and before consideration of
LGX's royalty interests. The reserves were evaluated by GLJ
Petroleum Consultants Ltd. ("GLJ") in accordance with National
Instrument 51-101 - Standards of Disclosure for Oil and Gas
Activities ("NI 51-101") effective December
31, 2014. LGX's annual information form for the year
ended December 31, 2014 (the "AIF")
will contain LGX's reserves data and other oil and natural gas
information as mandated by NI 51-101. LGX is required to file
the AIF on SEDAR on or before March 31,
2015. A copy of the AIF will be available under LGX's
profile at www.sedar.com or at www.lgxoil.com. The summary
information provided below should be read in conjunction with the
detailed information in the AIF.
As of December 31,
2014, LGX's total gross proved plus probable reserves base
was 5,798 MBoe, an increase of 3 percent year over year.
Total proved plus probable reserves additions were 508 MBoe.
These additions represent 162 percent of the 314 MBoe produced
during 2014. Light and medium oil and NGL's accounted for 81
percent of the proved plus probable reserves base.
LGX's gross total proved reserves base was 2,834
MBoe. Total proved reserves represent 49 percent of the total
proved plus probable reserves. Proved producing reserves
represent 69 percent of the total proved reserves base. Total
proved reserves additions were 376 MBoe. These additions
represent 120 percent of the 314 MBoe produced during 2014.
Light and medium oil and NGL's accounted for 81 percent of the
total proved reserves base.
The following table is a summary, as at
December 31, 2014, of LGX's petroleum
and natural gas reserves as evaluated by GLJ. It is important
to note that the recovery and reserves estimates provided herein
are estimates only. Actual reserves may be greater or less then the
estimates provided herein. Reserves information may not add due to
rounding.
|
Gross Company
Reserves Summary (1)
|
|
|
|
|
Using GLJ December
31, 2014 Forecast Prices and Costs
|
|
|
|
|
As at December 31,
2014
|
|
|
|
|
|
Light and
|
|
|
Total Oil
|
|
Medium Oil
|
Natural
Gas
|
NGL's
|
Equivalent
|
|
(MBbl)
|
(MMcf)
|
(MBbl)
|
(MBoe)
|
Proved
Producing
|
1,558
|
2,333
|
7
|
1,954
|
Proved Developed
Non-Producing
|
78
|
154
|
2
|
106
|
Proved
Undeveloped
|
645
|
748
|
4
|
774
|
Total
Proved
|
2,282
|
3,234
|
14
|
2,834
|
Total
Probable
|
2,403
|
3,284
|
14
|
2,964
|
Total Proved plus
Probable
|
4,685
|
6,518
|
27
|
5,798
|
(1)
|
Gross Company
Reserves means the Company's working interest reserves before
calculations of royalties and before consideration of the Company's
royalty interests.
|
Net Present Value of Future Net Revenue – Forecast Prices and
Costs
|
Before Future
Income Tax Expenses and Discounted at
|
|
0%
|
|
5%
|
|
10%
|
|
15%
|
|
20%
|
|
|
|
|
|
(M$)
|
|
(M$)
|
|
(M$)
|
|
(M$)
|
|
(M$)
|
Proved
|
|
|
|
|
|
|
|
|
|
|
Developed
Producing
|
51,642
|
|
38,160
|
|
30,191
|
|
25,012
|
|
21,404
|
|
Developed
Non-Producing
|
3,857
|
|
2,989
|
|
2,396
|
|
1,973
|
|
1,658
|
|
Undeveloped
|
21,818
|
|
11,422
|
|
5,778
|
|
2,400
|
|
237
|
Total
Proved
|
77,317
|
|
52,571
|
|
38,366
|
|
29,385
|
|
23,299
|
Probable
|
115,361
|
|
57,853
|
|
33,328
|
|
20,521
|
|
13,003
|
Total Proved plus
Probable
|
192,678
|
|
110,424
|
|
71,694
|
|
49,907
|
|
36,302
|
|
After Future
Income Tax Expenses and Discounted at
|
|
0%
|
|
5%
|
|
10%
|
|
15%
|
|
20%
|
|
|
|
|
|
(M$)
|
|
(M$)
|
|
(M$)
|
|
(M$)
|
|
(M$)
|
Proved
|
|
|
|
|
|
|
|
|
|
|
Developed
Producing
|
51,642
|
|
38,160
|
|
30,191
|
|
25,012
|
|
21,404
|
|
Developed
Non-Producing
|
3,857
|
|
2,989
|
|
2,396
|
|
1,973
|
|
1,658
|
|
Undeveloped
|
21,818
|
|
11,422
|
|
5,778
|
|
2,400
|
|
237
|
Total
Proved
|
77,317
|
|
52,571
|
|
38,366
|
|
29,385
|
|
23,299
|
Probable
|
100,032
|
|
52,207
|
|
30,896
|
|
19,365
|
|
12,415
|
Total Proved plus
Probable
|
177,349
|
|
104,778
|
|
69,261
|
|
48,750
|
|
35,714
|
Pricing Assumptions – Forecast Prices and Costs
GLJ employed the following pricing, exchange rate
and inflation rate assumptions as of December 31, 2014 in the GLJ Report in estimating
reserves data using forecast prices and costs. For the year
ended December 31, 2014, LGX's
average realized sales prices were $4.50/Mcf for natural gas and $89.82/Bbl for crude oil and NGLs.
|
Medium and Light
Crude Oil
|
Natural
Gas
|
NGL
|
Year
|
WTI
Cushing
Oklahoma
40° API
(US$/Bbl)
|
Canadian
Light
Sweet
40° API
($/Bbl)
|
Cromer
Medium
29.3º API
($/Bbl)
|
AECO - C
Spot
($/MMBtu)
|
Pentanes Plus ($/Bbl)
|
Exchange
Rate
($US/$Cdn)
|
2014
(Actual)
|
93.00
|
94.18
|
89.86
|
4.50
|
88.61
|
0.905
|
2015
|
62.50
|
64.71
|
61.47
|
3.31
|
69.24
|
0.850
|
2016
|
75.00
|
80.00
|
76.00
|
3.77
|
85.60
|
0.875
|
2017
|
80.00
|
85.71
|
81.43
|
4.02
|
91.71
|
0.875
|
2018
|
85.00
|
91.43
|
86.86
|
4.27
|
97.83
|
0.875
|
2019
|
90.00
|
97.14
|
92.29
|
4.53
|
103.94
|
0.875
|
2020
|
95.00
|
102.86
|
97.71
|
4.78
|
110.06
|
0.875
|
2021
|
98.54
|
106.18
|
100.87
|
5.03
|
113.62
|
0.875
|
2022
|
100.51
|
108.31
|
102.89
|
5.28
|
115.89
|
0.875
|
2023
|
102.52
|
110.47
|
104.95
|
5.53
|
118.20
|
0.875
|
2024
|
104.57
|
112.67
|
107.04
|
5.71
|
120.56
|
0.875
|
|
|
|
|
|
|
|
|
|
Reconciliation of Changes in Reserves
The following table sets forth a reconciliation
of LGX's gross reserves as at December 31,
2014, derived from the GLJ Report using forecast prices and
cost estimates, reconciled to the gross reserves of LGX as at
December 31, 2013.
|
|
Light
and
Medium
Crude
Oil
|
Natural
Gas
Liquids
|
Natural
Gas
|
Total
Oil
Equivalent
|
Proved
|
(MBbls)
|
(MBbls)
|
(MMcf)
|
(MBOE)
|
|
Balance at December
31, 2013
|
2,184
|
14
|
3,446
|
2,772
|
|
Extensions and
Improved Recovery
|
376
|
-
|
494
|
459
|
|
Technical
Revisions
|
(10)
|
2
|
1
|
(8)
|
|
Discoveries
|
-
|
-
|
-
|
-
|
|
Acquisitions
|
-
|
-
|
-
|
-
|
|
Dispositions
|
-
|
-
|
-
|
-
|
|
Economic
Factors
|
(35)
|
(1)
|
(232)
|
(75)
|
|
Production
|
(233)
|
(2)
|
(475)
|
(314)
|
|
Balance at December
31, 2014
|
2,282
|
14
|
3,234
|
2,834
|
|
|
Light
and
Medium
Crude
Oil
|
Natural
Gas
Liquids
|
Natural
Gas
|
Total
Oil
Equivalent
|
Probable
|
(MBbls)
|
(MBbls)
|
(MMcf)
|
(MBOE)
|
|
Balance at December
31, 2013
|
2,359
|
13
|
2,754
|
2,832
|
|
Extensions and
Improved Recovery
|
72
|
-
|
529
|
160
|
|
Technical
Revisions
|
(25)
|
2
|
59
|
(14)
|
|
Discoveries
|
-
|
-
|
-
|
-
|
|
Acquisitions
|
-
|
-
|
-
|
-
|
|
Dispositions
|
-
|
-
|
-
|
-
|
|
Economic
Factors
|
(2)
|
(1)
|
(59)
|
(13)
|
|
Production
|
-
|
-
|
-
|
-
|
|
Balance at December
31, 2014
|
2,404
|
14
|
3,284
|
2,965
|
|
|
Light
and
Medium
Crude
Oil
|
Natural
Gas
Liquids
|
Natural
Gas
|
Total
Oil
Equivalent
|
Proved +
Probable
|
(MBbls)
|
(MBbls)
|
(MMcf)
|
(MBOE)
|
|
Balance at December
31, 2013
|
4,543
|
28
|
6,200
|
5,604
|
|
Extensions and
Improved Recovery
|
448
|
-
|
1,024
|
619
|
|
Technical
Revisions
|
(36)
|
4
|
60
|
(22)
|
|
Discoveries
|
-
|
-
|
-
|
-
|
|
Acquisitions
|
-
|
-
|
-
|
-
|
|
Dispositions
|
-
|
-
|
-
|
-
|
|
Economic
Factors
|
(37)
|
(2)
|
(291)
|
(88)
|
|
Production
|
(233)
|
(2)
|
(475)
|
(314)
|
|
Balance at December
31, 2014
|
4,686
|
27
|
6,518
|
5,799
|
Future Development Costs
The table below sets out the total development
costs deducted in the estimation in the GLJ Report of future net
revenue attributable to proved reserves and proved plus probable
reserves (using forecast prices and costs).
|
|
Forecast Prices and
Costs
|
|
|
Proved
Reserves
|
|
Proved
Plus
Probable
Reserves
|
|
|
|
|
|
(M$)
|
|
(M$)
|
2015
|
|
11,484
|
|
11,880
|
2016
|
|
1,995
|
|
17,208
|
2017
|
|
3,810
|
|
10,868
|
2018
|
|
3,948
|
|
11,584
|
2019
|
|
598
|
|
834
|
Remaining
Years
|
|
980
|
|
1,373
|
Total
Undiscounted
|
|
22,815
|
|
53,747
|
CAPITAL EXPENDITURES AND FINDING AND DEVELOPMENT
COSTS
LGX incurred capital expenditures of $17.0 million in 2014, all of which was dedicated
to organic growth. The Corporation did not complete any
acquisitions in 2014. The Company's total proved plus probable
finding and development costs for 2014 were $32.87 per Boe (including change in Future
Development Costs ("FDC")).
|
|
|
2014 Capital
Expenditures
|
Total Proved plus
Probable (1)
|
Total Proved
(1)
|
Capital costs ($
thousands)
|
|
|
Exploration
& development drilling & associated costs
|
17,345
|
17,345
|
Land &
Seismic
|
(356)
|
(356)
|
|
|
|
Change in
FDC
|
(290)
|
(278)
|
2014 Reserve
Additions (MBoe) (2)
|
|
|
Exploration &
development
|
508
|
376
|
Finding &
Development Costs ($ per Boe) (3)
|
|
|
2014 excluding change
in FDC
|
33.44
|
45.18
|
2014 including change
in FDC
|
32.87
|
44.44
|
|
|
|
2013 excluding change
in FDC
|
10.17
|
23.94
|
2013 including change
in FDC
|
25.57
|
44.09
|
|
|
|
2-year weighted
average cost, excluding change in FDC
|
16.03
|
31.80
|
2-year weighted
average cost, including change in FDC
|
27.41
|
44.22
|
The Company is only disclosing two years of
finding and developments costs as LGX feels the previous years are
not comparable due to the reverse takeover completed in
2012.
|
(1)
|
The aggregate of
the exploration and development costs incurred in the most recent
financial period and the change during that period in estimated
future development costs generally will not reflect total finding
and development costs related to reserve additions for that
period.
|
|
(2)
|
Boes may be
misleading, particularly if used in isolation. A Boe
conversion ratio of 1 Boe: 6 Mcf natural gas has been used,
which is based on an energy equivalency conversion method primarily
applicable at the burner tip and does not necessarily represent a
value equivalency at the wellhead.
|
|
(3)
|
Includes
revisions. Determined by dividing the sum of exploration,
development, land & seismic costs and, where indicated, changes
to FDC by additions to reserves, other than additions through net
acquisitions.
|
Net asset value ("NAV") per share
The following table outlines LGX's NAV per Basic
Common Share using the Proved plus Probable reserve value at
December 31, 2014, before taxes and
discounted at 10%, and forecast pricing and costs:
($MM except share and
per share amounts)
|
|
Proved Plus Probable
Reserve Value NPV10 BT(incl. future capital)
|
$71.7
|
Undeveloped Land
(109,393 acres @ $225/acre)
|
$24.6
|
Net
Debt
|
($30.3)
|
Total Net Assets
(basic)
|
$66.0
|
Basic Common Shares
Outstanding (MM)
|
88.7
|
Estimated NAV per
Basic Common Share
|
$0.74
|
LGX expects to release its 2014 year end
operational and financial results Tuesday,
March 24, 2015.
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.
Reader Advisories
Reserves Data
The determination of oil and natural gas
reserves involves the preparation of estimates that have an
inherent degree of associated uncertainty. Categories of proved and
probable reserves have been established to reflect the level of
these uncertainties and to provide an indication of the probability
of recovery. The estimation and classification of reserves
requires the application of professional judgment combined with
geological and engineering knowledge to assess whether or not
specific reserves classification criteria have been satisfied.
Knowledge of concepts including uncertainty and risk, probability
and statistics, and deterministic and probabilistic estimation
methods is required to properly use and apply reserves
definitions.
The recovery and reserve estimates of oil, NGL
and natural gas reserves provided herein are estimates only.
Actual reserves may be greater than or less than the
estimates provided herein. The estimated future net revenue from
the production of LGX's natural gas and petroleum reserves does not
represent the fair market value of LGX's reserves.
The reserve data provided in this news release
presents only a portion of the disclosure required under NI
51-101. All of the required information will be contained in
LGX's AIF, which will be filed on SEDAR on or before March 31, 2015.
Caution Respecting BOE
In this press release, the abbreviation BOE
means barrel of oil equivalent on the basis of 1 BOE to 6 Mcf of
natural gas when converting natural gas to BOEs. BOEs may be
misleading, particularly if used in isolation. A BOE
conversion ratio of 6 Mcf to 1 BOE 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 conversion ratio of 6 Mcf to
1 BOE, utilizing a conversion ratio of 6 Mcf to 1 BOE may be
misleading as an indication of value.
Calculation of Netbacks
Netbacks are calculated by deducting royalties
paid and operating costs, including transportation costs, from
prices received, excluding the effects of hedging.
SOURCE LGX Oil + Gas Inc.