CALGARY, Nov. 12, 2012 /CNW/ - Legacy Oil + Gas Inc. ("Legacy" or the
"Company") (TSX:LEG) is pleased to announce the results of an independent
resource assessment on certain of its assets. This resources assessment
further demonstrates the significant light oil resource potential contained in
a number of Legacy's resource plays. These plays represent a substantial
resource base of strong capital efficiency investments and will comprise the
majority of Legacy's capital budget in the coming years. The magnitude of
the aggregate of these plays will ensure the sustainability of Legacy's
business model in a variety of economic and industry conditions.
Assessment of the Company's Discovered Oil Initially In-Place ("DOIIP") and
Discovered Contingent Oil Resources (together the "CORA") have been completed
by Sproule Associates Limited ("Sproule"), an independent qualified reserves
evaluator, on behalf of the Company, covering the Company's interest in the
Spearfish, Bakken, Torquay and Chinkeh formations. The report was recently
completed and is effective April 30, 2012. This news release contains
certain information from the CORA, but does not contain the report in its
Company Working Interest
Ultimate Recoverable Oil( Discovered Contingent Oil
Discovered (2)) Resources((3)) Portion of
Initially Low Best High Low Best High Lands
in-Place Estimate Estimate Estimate Estimate Estimate Estimate DOIIP((4))
((1)) (MBbl) (MBbl) (MBbl) (MBbl) (MBbl) (MBbl) (MBbl) (%)
Spearfish 494,953 27,539 39,556 60,978 23,043 32,320 47,781 37.8
Bakken 240,052 18,417 36,412 54,355 10,138 23,522 37,705 71.9
Torquay 140,259 13,156 20,657 32,021 11,199 17,480 27,949 66.7
Chinkeh 137,613 4,260 9,628 15,001 3,973 9,271 14,568 41.6
(5)) 1,012,877 63,371 106,253 162,355 48,353 82,593 128,003 52.2
Low Best High
Estimate Estimate Estimate
Formation (%) (%) (%)
Spearfish 5.6 8.0 12.3
Bakken 7.7 15.2 22.6
Torquay 9.4 14.7 22.8
Chinkeh 3.1 7.0 10.9
Total 6.3 10.5 16.0
(1) The Spearfish formation is located within Legacy's properties at
Pierson, Manitoba and Bottineau County North Dakota. The Bakken
and Torquay formations are located within certain of Legacy's
properties in southeast Saskatchewan. The Chinkeh formation is
located within Legacy's property at Maxhamish, British Columbia.
These properties and Legacy's interest in them are described in
detail in Legacy's Annual Information Form dated March 20, 2012
for the year ended December 31, 2012 (the "AIF").
(2) Represents Discovered Oil Initially-in-Place less Discovered
Unrecoverable Oil Initially-in-Place.
(3) Represents Discovered Oil Initially-in-Place, less Discovered
Unrecoverable Oil Initially-in-Place, Reserves and Cumulative
(4) The Sproule report only assessed Discovered Oil Initially
In-Place and Discovered Contingent Oil Resources. The referenced
percentages reflect the portion of Legacy's total applicable land
interest to which Discovered Oil Initially In-Place and
Discovered Contingent Oil Resources have been attributed.
(5) These volumes are arithmetic sums that include probabilistically
aggregated volumes of Contingent Resources. Readers should be
aware statistical principles indicate that an arithmetic sum of
probabilistically aggregated volumes may be misleading as to the
volumes that may actually be recovered, particularly pertaining
to Low and High estimates.
(6) See under the heading "Definitions and Preparation" at the bottom
of this release for further information concerning the disclosure
contained in the above table.
(7) There are risks and uncertainties associated with the recovery of
resources. The economic viability of Legacy's Contingent
Resources is undetermined, as economic studies have not yet been
completed. There is no certainty that it will be commercially
viable to produce any portion of the resources. See below under
the heading "Preparation and Definitions" for a description of
such risks and uncertainties and a description of the
contingencies which must be overcome to enable the classification
of Contingent Resources as Reserves. See the AIF under the
heading "Risk Factors" for risks and uncertainties affecting
Legacy and the oil and natural gas exploration and production
industry in general.
In reviewing the above information, it is important to note:
-- A significant portion of Legacy's lands in the above noted
formations as well as a number of areas (including the
Company's interest in the 1.3 billion Bbl (gross) DOIIP field
at Turner Valley and Mississippian Conventional) were not
assessed in the CORA.
-- The Company's Undiscovered Oil Initially In-Place and
associated Prospective Resources were not included in the scope
of the CORA.
-- No attempt was made to estimate contingent natural gas or NGL
resources in the scope of the CORA.
-- The discovered contingent oil resources exclude current
Reserves volumes and cumulative production.
CONTIGENT RESOURCE ASSESSMENT SUBSTANTIATES LEGACY STRATEGY
Through a series of strategic acquisitions and a successful, methodical
appraisal, delineation and development drilling program, Legacy has control
and comprehension of a significant light oil resource base. More than 2,000
net locations have been identified and substantial waterflood recovery
Legacy was founded on the principles of building a sustainable business model
and the critical components are:
-- Free cash flow (after satisfying production declines)
-- Depth of resource and inventory
-- Low cost structure and/or high margins
-- Execution proficiency
-- Financial flexibility and balance sheet strength
As a result of Legacy's strong operating and financial results over the course
of 2012, the strategic term debt transaction and significant contingent oil
resource assessment results, the Company continues to demonstrate that we have
all the elements in place for sustained, cost-effective, per share growth for
the foreseeable future. The foundation and evolution of Legacy continues to
differentiate it from its peers and provides the basis for long-term value
creation for shareholders.
Legacy is a uniquely positioned, well‐capitalized, technically driven,
intermediate oil and natural gas company with a proven management team
committed to aggressive, cost‐effective growth of light oil reserves and
production in large hydrocarbon in-place assets and resource plays. Legacy's
common shares trade on the Toronto Stock Exchange under the symbol LEG.
Definitions and Preparation
The Discovered Oil Initially In-Place and Discovered Contingent Oil Resource
assessments in the Sproule report were prepared in accordance with the
definitions, standards and procedures contained in the Canadian Oil and Gas
Evaluation Handbook (the "COGE Handbook") and National Instrument 51-101 -
Standards of Disclosure for Oil and Gas Activities ("NI 51-101").
The following definitions from the COGE Handbook are used in this press
"Contingent Resources" means those quantities of petroleum estimated to be
potentially recoverable from known accumulations using established technology
or technology under development, but which do not currently qualify as
Reserves and are not commercially recoverable due to one or more
contingencies. Contingencies may include factors such as economic, legal,
environmental, political and regulatory matters or a lack of markets.
"Cumulative Production" means the cumulative quantity of petroleum that has
been recovered at a given date.
"Discovered Oil Initially-in-Place" or "DOIIP" means that quantity of oil that
is estimated, as of a given date, to be contained in known accumulations prior
to production. The recoverable portion of discovered oil initially-in-place
includes Cumulative Production, Reserves, and Contingent Resources; the
remainder is categorized as unrecoverable.
"Discovered Unrecoverable Oil Initially-In-Place" or "Discovered Unrecoverable
DOIIP" is that portion of DOIIP which is estimated, as of a given date, not to
be recoverable by future development projects. A portion of these quantities
may become recoverable in the future as commercial circumstances change or
technological developments occur; the remaining portion may never be recovered
due to the physical/chemical constraints represented by subsurface interaction
of fluids and reservoir rocks.
"Reserves" means estimated remaining quantities of petroleum anticipated to be
recoverable from known accumulations, as of a given date, based on the
analysis of drilling, geological, geophysical, and engineering data; the use
of established technology; and specified economic conditions, which are
generally accepted as being reasonable. Reserves are further classified
according to the level of certainty associated with the estimates and may be
sub-classified based on development and production status.
"Prospective Resources" means those quantities of petroleum estimated, as of a
given date, to be potentially recoverable from undiscovered accumulations by
application of future development projects. Prospective resources have both
an associated chance of discovery and a chance of development.
"Undiscovered Oil Initially-in-Place" means that quantity of oil that is
estimated, as of a given date, to be contained in accumulations yet to be
discovered. The recoverable portion of undiscovered oil initially-in-place is
referred to as Prospective Resources; the remainder is categorized as
All estimates of Contingent Resources represent gross resources, meaning the
company's working interest share in the Contingent Resources before deducting
royalties and without including any royalty interests of the Company.
Sproule's estimates of Contingent Resources were determined using
probabilistic methods. Probabilistic aggregation of the low and high
property estimates shown in the table might produce different total volumes
than the arithmetic sums shown in the table.
"Low estimate" is considered to be a conservative estimate of the quantity of
resources that will actually be recovered. It is likely that the actual
remaining quantities recovered will exceed the low estimate. Those resources
at the low end of the estimate range have the highest degree of certainty - a
90 percent confidence level - that the actual quantities recovered will equal
or exceed the estimate.
"Best estimate" is considered to be the best estimate of the quantity of
resources that will actually be recovered. It is equally likely that the
actual remaining quantities recovered will be greater or less than the best
estimate. Those resources that fall within the best estimate have a 50
percent confidence level that the actual quantities recovered will equal or
exceed the estimate.
"High estimate" is considered to be an optimistic estimate of the quantity of
resources that will actually be recovered. It is unlikely that the actual
remaining quantities of resources recovered will meet or exceed the high
estimate. Those resources at the high end of the estimate range have a lower
degree of certainty - a 10 percent confidence level - that the actual
quantities recovered will equal or exceed the estimate.
The Discovered Oil Initially-In-Place estimates include unrecoverable volumes
and are not an estimate of the volume of the substances that will ultimately
For Legacy, the contingencies which must be overcome to enable the
classification of Contingent Resources as Reserves include, but are not
limited to, regulatory application submission with no major issues raised,
access to markets, intent to proceed by the operator and partners as evidenced
by major capital expenditures planned within five years and the technical and
economic success of development programs. The estimate of Contingent Resources
has not been adjusted for risk based on the chance of development. The
Contingent Resource estimates assume the same recovery process and well types
currently being used to operate Legacy's properties, which were economic as at
the date of this release. Positive factors relevant to the Contingent
Resource estimates include the extensive history of commercial petroleum
production in the formations, including geological information and production
performance history, the use of well-established economic recovery methods and
well technology, and dominant production infrastructure ownership.
Uncertainties associated with recovery of the estimated discovered resources
include, but are not limited to, the current recovery factor for any specific
location and the corresponding ultimate recovery factor, which uncertainties
were reflected in the recovery factor distribution employed in the evaluation
of the estimated discovered resources. The timing of the recovery of these
estimated discovered resources is also uncertain, and depends on factors
including the priority assigned by the Company to development, technical and
economic success and commodity prices.
All of the estimates of the quantities and recoverability of resources
contained in this press release should be considered to be forward-looking
statements. These estimates are based on certain key assumptions made by
Sproule and Legacy, including those specifically detailed in this press
release. These estimates are estimates only and there is no guarantee that
they will prove to be accurate due to an number of risks and factors,
including those specifically detailed in this press release and those risks
and factors affecting Legacy and the oil and natural gas exploration industry
in general set out in Legacy's Annual Information Form for the year ended
December 31, 2011 dated March 20, 2012.
In addition, this press release contains forward looking statements concerning
the expenditure of the majority of Legacy's capital budget in the coming years
on the referenced properties, the number of net drilling locations that Legacy
has and the waterflood potential of Legacy's properties. These
forward-looking statements are based on certain key expectations and
assumptions made by Legacy, including expectations and assumptions concerning
the success of future drilling, development and completion activities, the
viability of waterflood projects, the availability and performance of
facilities and pipelines, the geological characteristics of Legacy's
properties, the application of regulatory and licensing requirements and the
availability of capital. Although Legacy 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
Legacy 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, risks associated with the
oil and natural gas industry in general (e.g., operational risks in
development, exploration and production; the uncertainty of reserve estimates;
the uncertainty of estimates and projections relating to production, costs and
expenses, and health, safety and environmental risks), constraint in the
availability of services, commodity price and exchange rate fluctuations,
adverse weather conditions and uncertainties resulting from potential delays
or changes in plans with respect to exploration or development projects,
waterflood projects or capital expenditures. These and other risks are set
out in more detail in Legacy's Annual Information Form for the year ended
December 31, 2011 dated March 20, 2012.
The forward-looking statements contained in this press release are made as of
the date hereof and Legacy 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
Trent J. Yanko, P.Eng. President + CEO
Legacy Oil + Gas Inc. 4400, 525-8th Avenue SW Calgary, AB T2P 1G1
Telephone: 403.441.2300 Fax: 403.441.2017
Matt Janisch, P.Eng. Vice-President, Finance + CFO
Legacy Oil + Gas Inc. 4400, 525-8th Avenue SW Calgary, AB T2P 2V7
Telephone: 403.441.2300 Fax: 403.441.2017
SOURCE: Legacy Oil + Gas Inc.
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