CALGARY, July 29, 2015 /CNW/ - LGX Oil + Gas Inc.
("LGX" or the "Company") (TSXV: OIL) is pleased to provide further
operational updates on the 2015 drilling commitments and production
results from recent southern Alberta activity.
LGX has executed an agreement with Kainai Energy Limited
Partnership by its general partner Kainai Energy Corp. ("Kainai")
whereby Kainai and LGX shall cooperate on a reasonable commercial
efforts basis to seek approval from the Blood Tribe Chief &
Council ("Blood Council") to continue LGX's contiguous 94.75
section Petroleum and Natural Gas lease #OL-6360 ("Blood Lease")
beyond the end of its primary term of September 30, 2015 for a further five (5) year
term. The Blood Lease currently provides for an obligation to
commence drilling two wells on the Blood Lease on or before
September 30, 2015 (the "Drilling
Commitment").
LGX and Kainai have also agreed to cooperate to seek an
amendment to the Blood Lease that allows for a payment, waiver, or
other forbearance to be made in lieu of Drilling Commitment.
If the amendment is obtained Kainai shall become responsible
for fulfilling, at its sole cost, risk and expense, the obligations
under the Blood Lease as amended. If Kainai satisfies the
amended obligations pursuant to the Blood Lease, LGX shall assign
Kainai an additional 30 percent working interest in an undeveloped
portion of the Blood Lease excluding thereout all production and
reserves. Post the assignment, LGX will retain a 100 percent
working interest (80 percent after a 200 percent payout) in the
production and reserves, retain an 80 percent working interest in
the 16.75 sections of land surrounding the Company's drilling
activity and have a 50 percent working interest in the remaining 78
sections of the Blood Lease.
The Blood Tribe Chief, Charles Weasel
Head, stated: "LGX and its predecessor, Bowood Energy, have
had a long and successful relationship working on the Blood Tribe
Reserve which we are pleased to see continue under the new joint
venture with Kainai. Through the Blood Tribe's equity
ownership interest in Kainai, we look forward to the LGX
transaction providing even greater alignment with the Tribe, as
well as to the benefits to be achieved for the Tribe through our
increased active ownership interest in the Blood Lease."
The recently re-completed well at 6-36-8-24 W4M in the Banff
Formation has been producing at an average daily rate of
approximately 315 Bbl oil per day in its first 30 days of
production and has produced a total of 12,000 barrels of oil.
The 6-36 well is still producing in excess of 350 Bbl of oil per
day with less than a one percent water cut and a high fluid level
from the un-frac'd Banff Formation. LGX has a 100 percent
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. Please refer to
important Reader Advisories at the end of this news
release. The positive test results from the 6-36 Banff completion, 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 already established Big
Valley play.
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 Production Results - The production
results for the Banff Formation completion at the 6-36 well
disclosed in this press release are initial results of production
only and are not determinative of the rates at which such well will
continue production and decline thereafter. Due to the
likelihood of high initial declines from the tested rates, the
results are not indicative of long-term performance or ultimate
recovery from the well. Readers are cautioned not to place
undue reliance on such rates in considering the long-term
performance of the well 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 continuation and
amendment of the Blood Lease and prospectivity of LGX's properties
with respect to the Banff Formation.
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, 2014 dated March 24,
2015.
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.