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.
Reader Advisories
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.