Long Run Exploration Ltd. Announces Sale of Non-Core Assets and Provides Capital Guidance for 2013
November 15 2012 - 5:35PM
Marketwired
Long Run Exploration Ltd. ("Long Run" or the "Company") (TSX:LRE)
is pleased to announce that it has signed a definitive purchase and
sale agreement (the "Agreement") to sell certain non-core assets
for total cash proceeds of approximately $180 million, before any
closing adjustments.
The non-core assets include the Company's Viking interests
located in the Plato / Dodsland / Lucky Hills areas of
Saskatchewan. These assets are currently producing approximately
1,900 boe per day (1,800 barrels per day of crude oil and 600 mcf
per day of natural gas, based on field estimates). Subject to
receipt of all regulatory approvals, the sale is expected to close
on or about December 14, 2012. The proceeds from the sale will be
used to reduce indebtedness. As a result of this transaction, our
anticipated year-end net debt will be approximately $290 million,
including bank debt of approximately $240 million.
Following the sale of this asset, we anticipate production to be
approximately 23,000 boe per day weighted 48% to crude oil and
NGLs.
The Board of Directors of Long Run has approved a capital budget
for 2013. We anticipate a robust exploration and development
program of between $260 - $270 million. Our capital plan will focus
on the development of key oil resource plays in the Montney zone of
the Peace River Arch and in the Viking zone of central Alberta.
Exploration initiatives include further delineation of our Duvernay
shale resource play, extension of the Triassic oil fairway in the
Peace River Arch and initial exploration into our emerging Slave
Point oil resource play flanking the Peace River Arch.
As part of our ongoing risk management program, we have recently
entered into a number of new financial contracts. Long Run has now
hedged approximately 50% of our 2013 forecast production volumes
(43% of crude oil and 56% of natural gas). Crude oil is hedged at
prices averaging $92.51 per barrel and natural gas is hedged at an
average price of $3.72 per mcf.
Long Run anticipates releasing on November 26, 2012, an
operational update which will include an overview of current
operations and more details on our 2013 budget.
Cormark Securities Inc. acted as financial advisor to Long Run
on the asset divestiture.
Long Run is a Calgary-based intermediate oil company focused on
light-oil development and exploration in western Canada. For
further information about Long Run, visit the Company's website at
www.longrunexploration.com.
ADVISORIES
Forward Looking Statements:
Certain information regarding Long Run in this news release
including management's assessment of future plans and operations,
the anticipated closing date and effective date of the disposition
of the assets and the use of proceeds therefrom, anticipated
production following the disposition, anticipated year-end net debt
and bank debt, 2013 capital expenditure budget and nature of
expenditures and timing of release of operational update are
forward looking statements. Since forward-looking statements
address future events and conditions, by their very nature they
involve inherent risks and uncertainties including, without
limitation, risks related to closing of the disposition and
satisfaction of the conditions precedent thereto, the effect of the
business combination and resulting operations, risks associated
with oil and gas exploration, development, exploitation,
production, marketing and transportation, loss of markets,
volatility of commodity prices, currency fluctuations, imprecision
of reserve estimates, environmental risks, competition from other
producers, inability to retain drilling rigs and other services,
capital expenditure costs, including drilling, completion and
facilities costs, unexpected decline rates in wells, wells not
performing as expected, delays resulting from or inability to
obtain required regulatory approvals and ability to access
sufficient capital from internal and external sources. As a
consequence, actual results may differ materially from those
anticipated in the forward-looking statements.
Forward-looking statements or information are based on a number
of factors and assumptions which have been used to develop such
statements and information but which may prove to be incorrect.
Although the Company believes that the expectations reflected in
such forward-looking statements or information are reasonable,
undue reliance should not be placed on forward-looking statements
because the Company can give no assurance that such expectations
will prove to be correct. In addition to other factors and
assumptions which may be identified in this document, assumptions
have been made regarding, among other things: the impact of
increasing competition; the general stability of the economic and
political environment in which the Company operates; the timely
receipt of any required regulatory approvals; the ability of the
Company to obtain financing on acceptable terms; field production
rates and decline rates; the ability to replace and expand oil and
natural gas reserves through acquisition, development and
exploration results; the timing and costs of pipeline, storage and
facility construction and expansion and the ability of the Company
to secure adequate product transportation; future oil and natural
gas prices; currency, exchange and interest rates; the regulatory
framework regarding royalties, taxes and environmental matters in
the jurisdictions in which the Company operates; and the ability of
the Company to successfully market its oil and natural gas
products. Readers are cautioned that the foregoing list of factors
and assumptions is not exhaustive. Additional information on these
and other factors that could affect Long Run's operations and
financial results are included in reports on file with Canadian
securities regulatory authorities and may be accessed through the
SEDAR website (www.sedar.com), at Long Run's website
(www.longrunexploration.com). Furthermore, the forward looking
statements contained in this news release are made as at the date
of this news release and Long Run does not undertake any obligation
to update publicly or to revise any of the included forward looking
statements, whether as a result of new information, future events
or otherwise, except as may be required by applicable securities
laws.
BOES:
Disclosure provided herein in respect of barrels of oil
equivalent (boe) may be misleading, particularly if used in
isolation. A boe conversion ratio of 6 Mcf: 1 Bbl is based on an
energy equivalency conversion method primarily applicable at the
burner tip and does not represent a value equivalency at the
wellhead. Given that the value ratio based on the current price of
crude oil as compared to natural gas is significantly different
from the energy equivalency of 6:1; utilizing a conversion on a 6:1
basis may be misleading as an indication of value.
Contacts: Long Run Exploration Ltd. William E. Andrew Executive
Chairman and Chief Executive Officer (403) 261-6012 Long Run
Exploration Ltd. Dale A. Miller President (403) 261-6012 Long Run
Exploration Ltd. Jason Fleury Vice President, Capital Markets (403)
261-6012information@longrunexploration.com
www.longrunexploration.com