CALGARY, Nov. 25, 2015 /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
nine months ended September 30,
2015. 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.
FINANCIAL +
OPERATIONAL HIGHLIGHTS(1)
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
September
30
|
|
September
30
|
|
Unaudited (Cdn $,
except per share amounts)
|
2015
|
2014
|
%
change
|
2015
|
2014
|
%
change
|
Financial
|
|
|
|
|
|
|
Petroleum and natural
gas sales, net of royalties
|
2,954,229
|
4,331,707
|
(32)
|
8,617,098
|
16,241,881
|
(47)
|
Funds generated by
operations (2)
|
599,383
|
1,148,432
|
(48)
|
1,367,108
|
6,090,852
|
(78)
|
|
Per share
basic
|
0.01
|
0.01
|
-
|
0.02
|
0.07
|
(71)
|
|
Per share diluted
(3)
|
0.01
|
0.01
|
-
|
0.02
|
0.07
|
(71)
|
Net income
(loss)
|
(15,675,139)
|
(1,074,202)
|
1,359
|
(21,937,507)
|
(1,621,574)
|
1,253
|
|
Per share
basic
|
(0.18)
|
(0.01)
|
1,700
|
(0.25)
|
(0.02)
|
1,150
|
|
Per share diluted
(3)
|
(0.18)
|
(0.01)
|
1,700
|
(0.25)
|
(0.02)
|
1,150
|
Capital expenditures
- Exploration and development(4)
|
(11,004)
|
5,872,876
|
(100)
|
1,130,388
|
8,298,683
|
(86)
|
Net debt and working
capital deficit(2)
|
(30,093,977)
|
(21,840,956)
|
38
|
(30,093,977)
|
(21,840,956)
|
38
|
Operating
|
|
|
|
|
|
|
Production
|
|
|
|
|
|
|
|
Crude oil and natural
gas liquids (Bbls per day)
|
616
|
537
|
15
|
564
|
638
|
(12)
|
|
Natural gas (Mcf per
day)
|
1,099
|
1,360
|
(19)
|
1,215
|
1,318
|
(8)
|
|
Barrels of oil
equivalent (Boe per day) (5)
|
799
|
764
|
5
|
766
|
858
|
(11)
|
Average realized
price
|
|
|
|
|
|
|
|
Crude oil and natural
gas liquids ($ per Bbl)
|
50.00
|
92.22
|
(46)
|
53.96
|
94.57
|
(43)
|
|
Natural gas ($ per
Mcf)
|
2.93
|
4.03
|
(27)
|
2.75
|
4.77
|
(42)
|
|
Barrels of oil
equivalent ($ per Boe) (5)
|
42.58
|
71.99
|
(41)
|
44.10
|
78.81
|
(44)
|
Netback ($ per
Boe)(2)(5)
|
|
|
|
|
|
|
|
Petroleum and natural
gas sales
|
42.58
|
71.99
|
(41)
|
44.10
|
78.81
|
(44)
|
|
Royalties
|
2.39
|
10.36
|
(77)
|
2.89
|
9.47
|
(69)
|
|
Operating
expenses
|
20.09
|
29.30
|
(31)
|
22.71
|
27.51
|
(17)
|
|
Transportation
expenses
|
3.44
|
4.35
|
(21)
|
3.23
|
4.49
|
(28)
|
Operating Netback ($
per Boe)(2)(5)
|
16.66
|
27.98
|
(40)
|
15.27
|
37.34
|
(59)
|
Undeveloped land
holdings (gross acres)
|
89,504
|
116,479
|
(23)
|
89,504
|
116,479
|
(23)
|
|
(net
acres)
|
57,332
|
110,672
|
(48)
|
57,332
|
110,672
|
(48)
|
Common Shares
(000's)
|
|
|
|
|
|
|
Common shares
outstanding, end of period
|
88,658
|
88,658
|
-
|
88,658
|
88,658
|
-
|
Weighted average
common shares (basic)
|
88,658
|
88,658
|
-
|
88,658
|
88,658
|
-
|
Weighted average
common shares (diluted) (3)
|
88,658
|
88,658
|
-
|
88,658
|
88,658
|
-
|
(1)
|
Consolidated
financial and operating highlights for LGX Oil + Gas Inc. and all
of its subsidiaries ("LGX" or the "Company").
|
(2)
|
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.
|
(3)
|
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.
|
(4)
|
Refer to Capital
Expenditures in the Management Discussion and Analysis for the
three and nine months ended September 30, 2015.
|
(5)
|
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.
|
ACCOMPLISHMENTS
As a result of the Company's active cost cutting measures,
LGX:
- Reduced operating expenses from $29.30 per Boe in the third quarter of 2014 to
$20.09 per Boe in the third quarter
of 2015 (31 percent decrease)
- Reduced transportation expenses from $4.35 per Boe in the third quarter of 2014 to
$3.44 per Boe in the third quarter of
2015 (21 percent decrease)
- Reduced operating and transportation expenses from $26.43 per Boe in the second quarter of 2015 to
$23.53 per Boe in the third quarter
of 2015 (11 percent decrease)
- Reduced general and administrative expenses from $7.48 per Boe in the third quarter of 2014 to
$2.76 per Boe in the third quarter of
2015 (63 percent decrease)
In addition, LGX:
- Increased production to 799 Boe/day in the third quarter of
2015 from 764 Boe/day in the third quarter of 2014 (5 percent
increase)
- Increased oil and liquids production mix to 77 percent in the
third quarter of 2015 from 70 percent in the third quarter of 2014
(10 percent increase)
- Increased production to 799 Boe/day in the third quarter of
2015 from 677 Boe/day in the second quarter of 2015 (18 percent
increase)
OUTLOOK
The positive results from the 6-36 Banff completion over the quarter, 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 established Big Valley play. The 6-36 well is currently
shut-in due to suspected mechanical issues and will be worked over
to be potentially brought back on production by the end of the
year.
The Company has proven the concept of an over-pressured, oil
saturated, light oil resource play over a broad area on its lands
in the Big Valley and Banff formations. Capital cost
reductions have been demonstrated through the course of the 2014
program and additional savings are anticipated in the current low
commodity price environment. The Company has significant
exposure to the upside of both plays and only a small portion of
the potential has been recognized in the Company's reserve
report.
The Company continues to work in accordance with the provisions
of the previously announced order for the protection of the Greater
Sage-Grouse (the "Emergency Order") and is continuing to work with
Environment Canada to get additional clarity on the practical
application of the Emergency Order.
With cash flows impacted by oil prices at six year lows, LGX is
working proactively to ensure it has the ability to meet its
financial obligations under its credit facilities.
EVENTS AFTER THE REPORTING PERIOD
On October 28, 2015, LGX announced
that Curt Labelle, Vice President
Production of the Company, effective immediately is no longer an
officer of the Company.
On November 16, 2015, LGX
announced entering into a new banking facility with the Alberta
Treasury Branch consisting of a $30
million revolving demand credit facility. The new facility
replaces the previous $20 million
revolving demand credit facility and a $10
million non-revolving term credit facility. The new
facility is a borrowing base facility subject to annual review by
the lender, with the next review scheduled for no later than
December 31, 2015. Upon review, there
is no guarantee that the facilities will be maintained at their
current levels.
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
This press release contains forward-looking statements. More
particularly, it contains forward-looking statements
concerning: (i) the prospectivity of LGX's properties
with respect to the Big Valley and
Banff Formation, (ii) the successful workover and timing of
bringing production on of the 6-36 well and (iii) the anticipated
future capital cost reductions.
The forward-looking statements contained in this press
release are based on certain key expectations and assumptions made
by LGX, including the assumptions specifically set out in this
press release and expectations and assumptions concerning: (i)
prevailing commodity prices; (ii) the availability and cost of
capital, labour and services; (iii) the effectiveness of cost
reduction initiatives; (iv) the performance of existing wells, (v)
the availability and performance of facilities and pipelines, (vi)
the geological characteristics of LGX's properties, (vii)
prevailing weather and break-up conditions, royalty regimes and
exchange rates, (viii) the application of regulatory and licensing
requirements, and (ix) the application of the previously announced
emergency order for the protection of the Greater Sage-Grouse (the
"Emergency Order") and the Species at Risk Act (Canada) at LGX's Manyberries property.
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, including but not limited to, fluctuations in
prevailing commodity prices, risks associated with the oil and gas
industry in general (e.g., operational risks in development,
exploration and production; delays or changes in plans with respect
to exploration or development projects or capital expenditures; the
uncertainty of reserve estimates; the uncertainty of estimates and
projections relating to production, costs and expenses; and health,
safety and environmental risks), uncertainty as to the availability
and cost of capital, labour and services, exchange rate
fluctuations, fluctuations in oil price differentials, unexpected
adverse weather conditions and changes to existing laws and
regulations. These and other risks are set out in more
detail in the AIF.
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.
Caution Respecting Boe
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.