LGX Oil + Gas Inc. Announces its Financial and Operational Results for the Three and Six Months Ended June 30, 2012.

/THIS NEWS RELEASE IS NOT FOR DISSEMINATION IN THE UNITED STATES OR TO U.S. PERSONS./

CALGARY, Aug. 28, 2012 /CNW/ - LGX Oil + Gas Inc. ("LGX" or the "Company") announces its financial and operational results for the three and six months ended June 30, 2012.

The Company will file its unaudited Financial Statements and related Management Discussion and Analysis ("MD & A") for the three and six months ended June 30, 2012 with the Canadian securities regulatory authorities on SEDAR.  An electronic copy of these materials will be available under LGX's issuer profile on SEDAR at www.sedar.com and on the Company's website at www.lgxoil.com.

About LGX Oil + Gas Inc.

With operations based in Calgary, Alberta, LGX Oil + Gas Inc. is a TSX-V Tier 2 corporation. Through its wholly owned subsidiary, Bowood Energy Ltd., the Company is engaged in the acquisition, exploration, development, and production of oil and natural gas resources.  Current projects are in the Province of Alberta.

As of August 28, 2012 the Company has 30,278,660 common shares outstanding and has a net debt of approximately zero.

The per share and common share numbers in the table below takes into effect the share consolidation of 20 to 1 that took place on August 20, 2012 (see Events after the Reporting Period below).

Financial and Operating Highlights

Certain selected financial and operational information for the three and six months ended June 30, 2012 is set out below and should be read in conjunction with LGX's Financial Statements and MD & A.

	Three Months Ended June 30				Six Months Ended June 30
(Cdn $ except common share data)	2012		2011		2012		2011
Petroleum and natural gas revenue	1,155,040		1,332,199		2,706,839		2,918,762
Funds flow from operations	(447,380)		104,403		(306,144)		418,716
Per share - basic ^(1)	(0.03)		0.01		(0.02)		0.03
- diluted ^(1)	(0.03)		0.01		(0.02)		0.03
Net income (loss)	(1,556,810)		134,238		(2,388,265)		(426,067)
Per share - basic^(1)	(0.11)		0.01		(0.17)		(0.03)
- diluted ^(1)	(0.11)		0.01		(0.17)		(0.03)
Capital expenditures	182,828		2,878,037		539,285		4,442,164
Net debt/(surplus)	5,125,595		(2,318,300)		5,125,595		(2,318,300)
Shareholders' equity	34,496,540		50,056,448		34,496,540		50,056,448
Total assets	43,228,188		59,713,837		43,228,188		59,713,837
Common share data ^(1)
Basic	13,746,669		13,736,227		13,746,669		13,736,227
Diluted	13,746,669		13,736,227		13,746,669		13,736,227
Average daily production
Natural gas (mcf/d)	2,260		2,258		2,430		2,274
Liquids (Oil & NGLs) (bbls/d)	108		55		120		82
Oil equivalent (boe/d)	485		431		525		461
Average sales price ^(2)
Natural gas ($/mcf)	1.97		4.13		2.10		4.05
Liquids (Oil & NGLs) ($/bbl)	76.11		96.17		81.54		84.78
Oil equivalent ($/boe)	26.17		33.93		28.35		35.01
Operating cost ($/boe)	12.95		14.76		11.95		13.47
Operating netback ($/boe) ^(2)	8.52		16.89		11.07		18.16

(1)  The per share and common share numbers take into effect the share consolidation of 20 to 1 that
took place on August 20, 2012 (see Events after the Reporting Period below).   Pre-consolidation shares
outstanding as at June 30, 2012 are 274,933,373 basic and diluted common shares (274,724,533- June
30, 2011).

(2)  Figures include the effect of fixed commodity contracts.

Accomplishments

• Announced the asset purchase of 68,581 net acres of Legacy Oil + Gas Inc. ("Legacy") undeveloped land in southern Alberta, excluding assets in the greater Turner Valley area, for 200,000,000 common shares.  In conjunction with the asset purchase, Bowood Energy Inc.'s ("Bowood") existing management team would be replaced with members from Legacy and the Bowood board of directors would be reconstituted.
  
  
• Increased average production from 431 Boe per day in the second quarter of 2011 to 485 Boe per day in the second quarter of 2012 (13 percent increase).
  
  
• Decreased operating cost per Boe from $14.76 per Boe in the second quarter of 2011 to $12.95 per Boe in the second quarter of 2012 (12 percent decrease).
  
  
• Increased lending value on the credit facility from $5.7 million to $7.0 million.

Events after the Reporting Period

Subsequent to the end of the second quarter, on July 5, 2012, the shareholders of Bowood approved the previously announced strategic transaction with Legacy whereby Legacy sold certain undeveloped lands in southern Alberta to Bowood in exchange for 200,000,000 common shares of Bowood (the "Asset Purchase").   Following completion of the Asset Purchase, Bowood had 474,033,373 common shares outstanding of which 42.1% were owned by Legacy.   As well, the former officers of Bowood resigned and were replaced by Trent Yanko as President and Chief Executive Officer, Matt Janisch as Vice-President, Finance, and Chief Financial Officer, and Mark Franko as Corporate Secretary.   Also, the board of directors of Bowood was reconstituted to be comprised of James Pasieka as Chairman, Trent Yanko, Chris Bloomer, Jim Welykochy, and Neil Roszell. Legacy and Bowood concurrently entered into a management, technical and administrative services agreement whereby Bowood will be managed by Legacy's current management and staff in exchange for a monthly fee.

On August 2, 2012, Bowood issued 120,000,000 units ("Units") at a price of $0.05 per Unit pursuant to a brokered private placement for net proceeds of approximately $5.7 million.   Each Unit was comprised of one Bowood Share and one share purchase warrant ("Warrant") entitling the holder to purchase one Bowood Share at a price of $0.065 per share for a period of three years.

On August 17, 2012, Bowood completed a rights offering to its shareholders resulting in the issuance of an additional 10,639,827 pre-consolidated common shares for net proceeds of approximately $532,000.   Legacy was not entitled to participate in the rights offering with respect to the shares held by it.

During the July 5, 2012 shareholder's meeting, the Bowood shareholders also approved a proposed name change to LGX Oil + Gas Inc. from Bowood Energy Inc. and a consolidation of outstanding common shares on a 20 to 1 basis.   This name change and consolidation of shares was completed effective as of August 20, 2012.

Outlook

The recent downturn in the Canadian energy sector that resulted from the continued weakness in natural gas prices has created an attractive entry point in the A&D cycle.  In the wake of this downturn, existing companies, including senior producers, are dealing with reduced cashflows, restricted access to capital and stretched balance sheets.  At the same time, decreased industry activity has resulted in a drop in the cost of services, materials and land.

LGX management believes that the number of consolidation opportunities, the reduced capital and operating cost structure and the leverage to continued strong oil prices, create an excellent initiation point for a re-invigorated, high-growth junior oil and natural gas company.  LGX is managed by an experienced team with a proven track record of aggressively growing oil and natural gas companies on a cost-effective per share basis.  The recapitalized LGX will be strategically focused on both a geographic and commodity basis and will maintain prudent fiscal management which will allow us to be well-positioned to profit from the current environment.  A strategic imperative exists to aggressively grow the Company to a size that, when combined with high-netback oil production, strong balance sheet and substantial exposure to the high impact southern Alberta Bakken play, will differentiate LGX from our peer-group competitors.

With successful completion of the recent private placement financing and rights offering resulting in the elimination of the Company's long term debt, LGX expects to focus on predominately light oil opportunities in southern Alberta, growing through a targeted acquisition and consolidation strategy coupled with development and high impact exploration drilling.  LGX's recapitalized corporate structure will allow for the further delineation of its more than 155,000 net acres of undeveloped land, exploitation of the current drilling inventory and expansion of the Company's opportunity suite through internally generated prospects and strategic light oil acquisitions.

The recapitalized LGX represents an opportunity to participate in a uniquely positioned, well-capitalized 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.

Issuance of Stock Options

The Company has granted a total of 1,800,000 stock options to directors, officers and management company employees pursuant to the Company's approved stock option plan.  The options are exercisable at a price of $1.09 per share.  The options have a five-year term and vest as to one third each year following the date of grant.

Reader Advisories

FORWARD LOOKING STATEMENTS: This press release contains forward-looking statements. More particularly, this press release contains statements concerning LGX's corporate strategy and the anticipated focus on light oil opportunities in southern Alberta. 

The forward-looking statements contained in this press release are based on certain key expectations and assumptions made by LGX, including prevailing market conditions, available acquisition opportunities, access to capital and prevailing commodity prices. 

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, uncertainty as to the availability of acquisition opportunities and uncertainty as to market conditions, access to capital and commodity prices.

The forward-looking statements contained in this press release are made as of the date hereof and LGX 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: When used in this press release, Boe means a barrel of oil equivalent on the basis of 1 Boe to 6 thousand cubic feet of natural gas. Boe/d means a barrel of oil equivalent per day. Boe's may be misleading, particularly if used in isolation. A Boe conversion ratio of 1 Boe for 6 thousand cubic feet of natural gas is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.   

 

 

 

SOURCE: LGX Oil + Gas Inc.

Trent J. Yanko, P.Eng.
President + CEO

Matt Janisch
Vice President, Finance + CFO

4400, 525 - 8^th Avenue S.W.
Calgary, AB T2P 1G1

Telephone: [phone]