LGX Oil + Gas Inc. announces 2014 year-end reserves

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.

Trent J. Yanko, P.Eng., President + CEO; Matt Janisch, Vice President, Finance + CFO; 4400, 525 - 8th Avenue S.W., Calgary, AB T2P 1G1, Telephone: [phone]