Legacy Oil + Gas Inc.
TSX : LEG

Legacy Oil + Gas Inc.

January 25, 2010 19:20 ET

Legacy Oil + Gas Inc. Exceeds 2009 Exit Production Rate and Announces Details of 2010 Budget and Public Guidance

CALGARY, ALBERTA--(Marketwire - Jan. 25, 2010) -

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Legacy Oil + Gas Inc. ("Legacy") (TSX:LEG) Legacy Oil + Gas Inc. ("Legacy" or the "Company") is pleased to announce its capital and operating budget and associated public guidance for 2010.

The Company had a successful end to an active 2009, drilling 18 gross (15.5 net) wells between late November and early January 2010, resulting in 18 gross (15.5 net) oil wells, for a 100 percent success rate. This drilling success allowed the Company to exceed its year end 2009 production guidance of 5,750 Boe per day. An operational update, characterizing the details associated with this successful drilling campaign, will be released in the near future.

Capitalizing on this success, Legacy expects to spend $117 million in 2010. This spending will be largely weighted to drilling, completions and tie-ins at $89 million and will include facility spending of $7 million and land, seismic and other spending of $21 million. The Company is planning to drill 76 gross (58.7 net) wells in 2010 targeting high quality light oil, with the majority of the activity at Taylorton (15 gross, 11.3 net wells), Antler/Frys (11 gross, 8.0 net wells), Heward/Stoughton (9 gross, 7.5 net wells) and Edenvale/Nottingham (6 gross, 5.2 net wells). No capital has been budgeted for acquisitions, although the Company continues to evaluate new opportunities, both within and beyond its core area of southeast Saskatchewan.

Legacy anticipates a 2010 average production rate in excess of 6,500 Boe per day (97 percent weighted to oil) and a 2010 exit rate of over 7,250 Boe per day, representing 26 percent growth from 2009 exit rate guidance. These 2010 estimates represent a growth of 1,750 percent over 2009 second quarter average production of 391 Boe per day.

The operational parameters used in the budget are as follows:

Production 6,525 Boe per day (97 percent oil, 3 percent natural gas)
Average Crude Quality 39 degree API (97 percent light oil, 3 percent medium oil)
Royalty Rate 15.5 percent
Operating Costs (including Transportation) $13.50 per Boe
G&A (expensed) $2.25 per Boe
Common Shares Outstanding (basic) 74.2 million

At recent strip pricing, this budget is expected to deliver cash flow of approximately $115 million, ($1.55 basic common share) resulting in projected 2010 year end debt of $57 million and a debt to trailing cash flow ratio of 0.5 times. Cash flow sensitivity to changes in oil price is 2.7 percent per USD 1.00 per barrel change in WTI oil price.

Legacy begins 2010 with an extensive light oil development drilling inventory of 385 gross (268.9 net) locations, which represents 5 years of development potential, based on expected 2010 activity levels. This significant opportunity set does not reflect the potential upside from downspacing our Bakken light oil resource play lands from 4 to 8 wells per section or the waterflood potential at Antler.

Legacy has established itself as a leader in light oil resource play development and intends to lever this expertise into the discovery, commercialization, capture and ultimate development of additional light oil resource play opportunities. These efforts are intended to bolster Legacy's already impressive development growth opportunities while solidifying the long-term sustainability of our business plan.

Legacy is 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 in Saskatchewan and Manitoba. Legacy's common shares trade on the TSX Exchange under the symbol LEG.

FORWARD LOOKING STATEMENTS: This press release contains forward-looking statements. More particularly, this press release contains forward-looking statements concerning 2010 average and exit production rates, anticipated cash flow, planned capital expenditures and planned drilling activities. The forward-looking statements are based on certain key expectations and assumptions made by the Company, including expectations and assumptions concerning the success of optimization and efficiency improvement projects, the availability of capital, the success of future drilling and development activities, the performance of existing wells, the performance of new wells and prevailing commodity prices. Although the Company 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 the Company 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), commodity price and exchange rate fluctuations and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. Certain of these risks are set out in more detail in the Company'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 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: 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 per day 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.

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.

NEITHER THE TSX NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.

Contact Information

  • Legacy Oil + Gas Inc.
    Trent J. Yanko, P.Eng
    President + CEO
    (403) 441-2300
    (403) 441-2017 (FAX)
    or
    Legacy Oil + Gas Inc.
    Matt Janisch, P.Eng.
    Vice-President, Finance + CFO
    (403) 441-2300
    (403) 441-2017 (FAX)
    or
    Legacy Oil + Gas Inc.
    3900, Bow Valley Square II
    205 - 5th Avenue S.W.
    Calgary, AB T2P 2V7
    www.legacyoilandgas.com