Legacy Oil + Gas Inc. Announces 2013 Budget and Public Guidance

CALGARY, Jan. 8, 2013 /CNW/ - Legacy Oil + Gas Inc. ("Legacy" or the 
"Company") is pleased to announce its capital and operating budget and 
associated public guidance for 2013. Continued success in the Company's 
dominant position in the Spearfish play in southern Manitoba and North Dakota 
and in its conventional assets in the Williston Basin has added significantly 
to its drilling inventory. These areas, along with Turner Valley, will play 
key roles in 2013 organic activity and growth. 
Legacy expects to spend $290 million in 2013 focused on light oil development 
with the majority of capital (81 percent) directed to drilling, completions 
and tie-ins. This capital spending is 12 percent lower than 2011 capital 
spending and 6 percent lower than 2012 forecast capital spending as a result 
of continued improvements in capital efficiencies. The capital spending is 
distributed as follows: drilling, completions and tie‐ins - $234 million; 
facilities - $35 million; land and seismic - $13 million and other - $8 
million. The majority of the capital spending will be allocated to the 
Company's major plays: Spearfish (Manitoba and North Dakota) - $80 million 
(28 percent), Alameda/Steelman - $52 million (18 percent), Turner Valley - $45 
million (16 percent), Star Valley - $31 million (11 percent) and Frys/Antler - 
$28 million (10 percent). 
Legacy is planning to drill 128 gross (109.4 net) wells in 2013, targeting 
high quality light oil. In addition to drilling, the Company is planning 
capital expenditures on pilot waterfloods at Frys/Antler and Pierson, as well 
as expansions of the successful pilot waterfloods at Taylorton and Heward. No 
capital has been budgeted for acquisitions, although the Company continues to 
evaluate new opportunities, both within and beyond its core areas. 
Legacy anticipates a 2013 average production rate of 17,900 Boe per day (89 
percent weighted to light oil and NGL) representing growth of 10 percent over 
2012 expected average production. The Company has incorporated a significant 
reduction in second quarter volumes to account for the possibility of an 
extended spring break up in its Williston Basin core area. Legacy expects to 
exit 2013 at approximately 19,700 Boe per day, representing 10 percent growth 
from 2012 exit rate guidance. The operational parameters used in the budget 
are as follows: 


    --  Exit Production - 19,700 Boe per day (91 percent light oil and
        NGL)
    --  Average Production - 17,900 Boe per day (89 percent light oil
        and NGL)
    --  Average Crude Quality - 39⁰ API
    --  Royalty Rate - 16 percent
    --  Operating Costs - $14.00 per Boe
    --  Transportation Costs - $2.50 per Boe
    --  G&A (expensed) - $2.50 per Boe
    --  Common Shares Outstanding (basic, weighted average) - 143.3
        million

At recent strip pricing and wider than historical differentials, this budget 
is expected to deliver cash flow in excess of $275 million, or $1.92 per basic 
common share, an increase of over 22 percent year over year. The Company 
anticipates wider than historical crude oil price differentials to narrow in 
the later part of 2013 as more North American production is transported by 
rail and pipeline capacity increase projects are completed. This cash flow 
generation results in a debt to forward cash flow ratio of approximately 1.8 
times. Projected 2013 year end net debt at recent strip pricing is expected to 
be $503 million, against a current borrowing capacity of $725 million. Cash 
flow sensitivity to changes in oil price is 1.9 percent per USD 1.00 per 
barrel change in WTI oil price.

Legacy begins 2013 with an extensive light oil development drilling inventory 
of more than 2,000 net locations, which represents over 15 years of 
development potential, based on expected 2013 activity levels. This 
significant opportunity set does not reflect the potential upside from the 
waterflood potential at Frys/Antler, Taylorton, Heward/Stoughton and the 
Spearfish, and recognizes only a portion of the Bottineau County, North Dakota 
Spearfish drilling potential. Furthermore, Legacy has material exposure to 
emerging light oil resource plays in southern Alberta for Alberta Bakken 
(through the Company's investment in LGX Oil + Gas Inc.), which could add 
significantly to the development drilling inventory and growth potential of 
the Company.

Legacy is a uniquely positioned, 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 TSX under the symbol LEG.

This press release shall not constitute an offer to sell, nor the solicitation 
of an offer to buy, any securities in the United States, nor shall there be 
any sale of securities mentioned in this press release in any state in the 
United States in which such offer, solicitation or sale would be unlawful 
prior to registration or qualification under the securities laws of any such 
state.

FORWARD LOOKING STATEMENTS: This press release contains forward-looking 
statements. More particularly, this press release contains statements 
concerning planned capital expenditures, the breakdown of planned capital 
expenditures by class and area, planned exploration and development 
activities, the anticipated 2013 average and exit rates of production, 
anticipated cash flow and cash flow per share in 2013, the anticipated year 
end net debt and debt to trailing cash flow ratio and the development and 
growth potential of Legacy's properties.

The forward-looking statements contained in this press release are based on 
certain key expectations and assumptions made by Legacy, including the 
operational parameters specifically set out in the press release and 
expectations and assumptions concerning the success of future drilling and 
development activities, the performance of existing wells, the performance of 
new wells, the successful application of technology, prevailing weather 
conditions, commodity prices, royalty regimes and exchange rates and the 
availability of capital, labour and services.

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 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 of labour and services, commodity price and 
exchange rate fluctuations, unexpected adverse weather conditions and changes 
to existing laws and regulations. Certain of these risks are set out in more 
detail in Legacy's Annual Information Form which has been filed on SEDAR and 
can be accessed at www.sedar.com.

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 
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.

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

Legacy Oil + Gas Inc. 4400, Eight Avenue Place 525 - 8th Avenue S.W. 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, Eight Avenue Place 525 - 8th Avenue S.W. Calgary, 
AB T2P 1G1

Telephone: 403.441.2300 Fax: 403.441.2017  

SOURCE: Legacy Oil + Gas Inc.

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CO: Legacy Oil + Gas Inc.
ST: Alberta
NI: OIL FIN 

-0- Jan/08/2013 22:11 GMT


 
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