Operations Update: Zag Licence - Morocco

JERSEY, CHANNEL ISLANDS--(Marketwire - Jan 24, 2012) - Longreach Oil and Gas Limited (TSX VENTURE: LOI) ("Longreach" or "the Company"), the independent oil and gas company holding substantial exploration and development licences in Morocco, is pleased to announce the completion of a 2D seismic programme on the Zag license.

The programme covered a total of 1,674km of 2D seismic, which is considerably greater than the 500km required under the terms of the license. The programme covered a regional grid of around 10 km spacing over the eastern half of the licence and is the first of its kind in what the Company believes is a highly prospective basin.

The key highlights of the programme were:

• The seismic crew commenced recording data on 6 October 2011 and completed the survey on 23 January 2012
• State-of-the-art cableless recording system, a Vibroseis source array and in-field processing to monitor data quality were used, that will allow further assessment of the petroleum potential of the basin
• The programme followed a high-resolution aeromagnetic survey that was completed by licence partners in 2009
• Polish contractor, NovaSeis Sp. was used for the programme

The initial field processing of the seismic data has shown the configuration and fault trends of the basin. When the processing is completed, a comprehensive review of the Paleozoic basin will be undertaken to assess the potential of a variety of plays, such as reefs in the Devonian, conventional reservoirs throughout the section and an unconventional gas play in the Silurian shale section.

The Zag License is located in the Zag-Tindouf Basin Complex within the prolific hydrocarbon producing Palaeozoic basins that stretch across North Africa. Zag is directly west of the Algerian Reggane basin, where during 2009 Repsol announced an 800 BCF discovery. The licence covers an area of approximately 21,807 Km². Longreach Oil and Gas Ltd. holds a 22.5% net interest in the licence which is operated by San Leon Energy plc.

Commenting, Bryan Benitz, Chairman and CEO of Longreach, said:

"We believe that Zag has enormous conventional and unconventional prospectively and is analogous to significant gas discoveries east of the licence in neighbouring Algeria. This seismic programme is our first step towards realising that potential.

The Zag licence is part of Longreach's high impact exploration programme, which sits alongside our near term development and production opportunities".

Additional information on Longreach Oil and Gas Limited can be found at www.longreachoilandgas.com or through Longreach's investor relations agent

Additional information on Longreach Oil and Gas Limited can also be found at www.sedar.com

About Longreach:

Longreach holds varying interests in five exploration licences in southern onshore and offshore Morocco, totalling approximately 13 million acres of exploration acreage.

In the Essaouira basin in Central Morocco, Longreach operates and holds a 50% working interest in three exploration blocks collectively known as Sidi Moktar. According to information available from the Office National des Hydrocarbures et des Mines (ONHYM), historical production of 30.5 Bcf was achieved on the Sidi Moktar exploration licences. The onshore Sidi Moktar licence surrounds the existing producing Meskala field (which is not a part of the Sidi Moktar licence), with gas pipeline infrastructure in place that runs through the permit area. Tie in to this pipeline is believed by management to be achievable, with gas expected to be piped to the town of Youssoufia, where major phosphate plants exist with unmet natural gas demand.

The Company holds a 22.5% net interest in the Tarfaya onshore licence. Multiple prospective structures have been identified based on current 2D seismic and the Company's joint venture partners completed a new 608 km 2D seismic programme in September 2011, which has shown a considerable improvement in data quality that will allow further assessment of the licence.

The Company holds a 7.5% net interest in each of the offshore Sidi Moussa and Foum Draa licences. Multiple prospects/leads have been identified on each licence.

Special Note Regarding Analogous Information

The Company cautions that information regarding Repsol YPF S.A. ("Repsol"), contained in this press release is "analogous information" as that term is used in the Canadian Oil and Gas Evaluation Handbook ("COGE Handbook"), and is not the result of an independent estimate prepared by a qualified reserves evaluator or auditor nor has such information been prepared in accordance with the COGE Handbook. Although the Company believes discoveries by Repsol in areas adjacent to the Company's Zag exploration licence may indicate the possibility of a discovery on the Zag exploration licence, no assurance can be given by the Company that any discovery will be made on the Zag exploration licence. Similarly, although the Company believes that production on the Meskala field, which is adjacent to the Sidi Moktar licences, may indicate that production is possible on the Kechoula field, no assurance can be given by the Company that commercial production on any of the Sidi Moktar exploration licences will be achieved, or as to the levels of production that may be possible on any of the Sidi Moktar exploration licences if production is achieved.

Special Note Regarding Forwarding Looking Statements:

This press release contains forward-looking statements. These statements relate to future events or the Company's future performance. All statements other than statements of historical fact are forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict", "project", "potential", "targeting", "intend", "could", "might", "continue" or the negative of these terms or other similar terms. Forward-looking statements in this press release include, but are not limited to, statements with respect to the completion of the Farm-in agreement, the performance characteristics of the Company's oil and gas properties, and the realization of the anticipated benefits of acquisitions.

Forward-looking statements are only predictions. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. Some of the risks and other factors which could cause results to differ materially from those expressed in the forward-looking statements contained in this press release include, but are not limited to: risks inherent in oil and gas operations; political risk, incorrect assessments of the value of acquisitions or resource estimates; any unanticipated disputes or deficiencies related to title matters; and risks associated with operating in and being part of a joint venture.

Although the forward-looking statements contained in this press release are based upon assumptions which management of the Company believes to be reasonable, the Company cannot assure that actual results will be consistent with its expectations and assumptions. Undue reliance should not be placed on the forward-looking statements contained in this news release as there can be no assurance that the plans, intentions or expectations upon which they are based will occur. These statements speak only as of the date of this press release, and the Company does not undertake any obligation to publicly update or revise any forward-looking statements except as expressly required by applicable securities laws.

Neither 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.