Legacy Oil + Gas Inc.
TSX : LEG

Legacy Oil + Gas Inc.

February 08, 2010 16:35 ET

Legacy Oil + Gas Inc. Provides Operations Update

CALGARY, ALBERTA--(Marketwire - Feb. 8, 2010) -

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Legacy Oil + Gas Inc. ("Legacy" or the "Company") (TSX:LEG) is pleased to provide an operations update relating to fourth quarter 2009 and recent activity.

The Company drilled 22 gross (17.9 net) wells in the fourth quarter 2009, resulting in 22 gross (17.9 net) oil wells, for a 100 percent success rate. Activity included the drilling of 12 gross (9.9 net) Bakken horizontal wells in the Company's Stoughton/Heward, Star Valley and Taylorton areas. This successful operational momentum has continued into the first quarter 2010, with Legacy having drilled 4 gross (3.2 net) wells to-date, with five drilling rigs and three service rigs currently running in the field. Legacy also shot five 3D seismic surveys in the fourth quarter 2009, acquiring 134 square miles of data.

BAKKEN LIGHT OIL RESOURCE ASSETS

A detailed review of the historical drilling, completion and operating practices in Legacy's Heward, Stoughton and Taylorton properties is underway. The efforts of Legacy's technical team to-date have already achieved a positive step-change to initial and early-stage production results in all of the Company's Bakken properties, with additional work still on-going.

At Taylorton, the well completion technique continues to evolve, with the three most recent Legacy operated wells achieving a 26 percent average improvement in the first 90 days oil production rate compared to the historical average. The Company believes these results are an encouraging development and may be indicative of better than expected future well performance but will await more production history before revising the area's production model. Interpretation of the 44 square mile 3D seismic survey is on-going and will prove beneficial in directing the development and exploration drilling program in the area. Production treating equipment has been procured for the construction of a central oil battery and salt water disposal facility later this year. Surveying is underway to layout gathering line and well site development corridors to facilitate multi-well pad locations, minimizing surface disturbance, future well tie-in distances and capital costs.

At Heward, analysis has determined that a number of previously drilled Bakken producers had been frac'd out of zone. Legacy has revised the completion program and fracture stimulation treatment and applied it to the three recent Legacy operated wells in Heward. The three wells have achieved a 37 percent average improvement in the first 30 days oil production rate compared to the historical average. Furthermore, the Legacy operated wells are producing at water cuts that are one-third lower than the historical average, indicating a more effective completion and should lead to lower operating costs. These positive results help validate Legacy's internal view of the ultimate production potential of the asset and the strategic rationale behind the acquisition of the asset by Legacy in July 2009. The Company continues to assess the re-work potential of the existing producing Bakken wells which could represent a significant inventory of low-cost production additions. The Legacy operated Heward battery has been upgraded and de-bottlenecked to enhance treating capacity in advance of future production growth from the area. It is anticipated that the Heward oil battery will be connected to the Enbridge system in March 2010.

Results at Stoughton have been equally impressive with the two Legacy operated wells achieving an 80 percent average improvement in the first 30 days oil production rate compared to the historical average. Legacy is investigating a long-term fluid handling solution for the area to reduce operating costs.

CONVENTIONAL MISSISSIPPIAN ASSETS

Legacy's conventional Mississippian light oil assets provide an attractive inventory of high net-back, low cost, short payout drilling opportunities. The resultant cash flow from these assets is being reinvested in the drilling of additional Mississippian locations as well as funding the drilling of Legacy's extensive Bakken light oil inventory.

Legacy's second well into its 100 percent working interest Tilston new pool discovery at Nottingham continues to perform well, averaging 250 Boe per day since early October 2009. A number of follow-up drilling locations and construction of a central oil battery and salt water disposal facility are planned for later in 2010.

The Company drilled a successful 100 percent Alida horizontal well at Wauchope and the well has averaged 140 Boe per day in its first 40 days of production. A follow-up well is planned for the first quarter 2010. It is anticipated that Legacy's Wauchope battery will be connected to the Enbridge system by late April 2010, mitigating down-time during spring break up, reducing operating costs and enabling the use of the facility as a central collection point for other Legacy operated production in the vicinity.

At Frys, the Company drilled three successful 100 percent working interest Souris Valley vertical wells. Production is being restricted to evaluate the ultimate performance of these wells but has averaged 55 Boe per day per well in the first 30 days of production. Typical drill, complete and equip costs for these wells are approximately $600,000. Additional locations are being evaluated.

OUTLOOK

As previously disclosed, Legacy expects to invest $117 million in capital expenditures in 2010, largely weighted to the drilling, completion and tie-in of 76 gross (58.7 net) wells. The Company's high quality, light oil development inventory will drive strong per share production growth over the next three to five years. Concurrent with the execution of the development program, Legacy continues to evaluate and bring forward incremental opportunities that could add significant value for shareholders; including work-overs, infill drilling, step-out drilling, secondary recovery projects and greenfield initiatives.

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
    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