CALGARY, ALBERTA--(Marketwire - Nov. 26, 2012) - Long Run Exploration Ltd. ("Long Run" or the "Company") (TSX:LRE) is pleased to provide an operational update to the end of November, 2012.
Long Run has drilled 20.8 wells (net) in the fourth quarter to-date, with an additional 10 wells (net) planned for the remainder of 2012. Of those already drilled, 5.8 (net) have been horizontal wells targeting crude oil in the Montney zone in the Peace River area and 7 (net) have targeted the Viking zone in the Edmonton area. After the impact of the previously announced $180 million Saskatchewan Viking asset sale of approximately 1,900 boe per day, Long Run's 2012 exit production rate is anticipated to be approximately 23,000 boe per day. 2013 annual average production volumes are forecast to be approximately 25,000 boe per day targeting balanced oil and natural gas production.
As indicated in the November 15, 2012 press release, Long Run has announced a 2013 capital spending program of between $260 - $270 million, with approximately 50 percent of forecast spending targeting crude oil in the Peace River Montney play at Normandville and Girouxville. The Company also plans on spending approximately 30 percent of 2013 planned capital spending on the Edmonton Area Viking play at Redwater targeting light oil. Exploration drilling, land acquisition, and seismic will make up approximately 10 percent of the 2013 budget. Long Run anticipates drilling approximately 130 wells (net) in 2013.
PEACE RIVER MONTNEY OIL PLAY
Long Run is currently producing approximately 7,400 boe per day from both the Normandville and Girouxville properties, of which approximately 60% is crude oil. Operating costs have been consistent at approximately $8.50 per boe. As part of the 2013 capital budget, the Company plans to drill more than 50 wells in these properties.
As a result of changes to drilling and well trajectory design, Long Run has reduced drilling days from an average of more than 11 days to just over 8 days on the most recent 6 wells. Production rates have increased due to changes in completion methodology. These changes to completion methodology have increased average initial production rates while maintaining drill, complete, and tie-in costs at $2.0 million per well. The Company's most recent 12 wells recorded rates averaging more than 300 boe per day (70% crude oil) over the first 60 days of production.
Long Run believes that through ongoing refinements to well design, bit selection, and completion methodology, this play will continue to yield positive results with strong capital efficiencies.
EDMONTON AREA VIKING OIL
The Company is currently producing 4,000 boe per day, 88% crude oil, from the Redwater property. Capital spending throughout 2013 will be approximately $90 million with up to 70 wells planned.
Average drill times for this property have been consistently 5 days and we believe the reliability of our drill times will continue. Long Run believes that the current on-stream cost of approximately $1.2 million can be improved upon and efforts are underway to introduce efficiencies to reduce these costs. As part of the 2013 capital program, we are pursuing improved oil rates and EURs by further refining our drilling and completion techniques.
Long Run's exploration efforts continue, anchored by a dominant land position of more than 600,000 net acres in the Peace River Arch. The Company has drilled initial exploratory wells in the Jack and Josephine areas and is planning on drilling at Flood before the end of the year. All of these exploratory wells target the Triassic Montney and Charlie Lake formations. The Company continues to expand the scope of exploratory drilling on the Peace River Triassic fairway and anticipate a number of 2013 wells will target new areas of Montney, Charlie Lake, and Doig potential. Earlier in 2012 Long Run drilled a Duvernay vertical test well to obtain reservoir information. Preliminary laboratory test results on core samples are encouraging and analysis is ongoing. We look forward to updating results in these projects as they become available.
Shivon Crabtree, Vice President, Finance and Chief Financial Officer will be leaving Long Run in early 2013. Ms. Crabtree has provided strong, ethical financial leadership to Long Run and its predecessor companies. She will assist in the succession process and will work to ensure a smooth transition period for Long Run shareholders and staff. Long Run management and its Board of Directors thank Ms. Crabtree for her many contributions and wish her all the best in the future.
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.
Forward Looking Statements:
Certain information regarding Long Run in this news release including management's assessment of future plans and operations, anticipated 2012 exit production rate, 2013 capital expenditure budget and the nature of expenditures, forecast 2013 average production rate and commodity mix, expectation that Montney oil play will continue to yield positive results through ongong refinements as outlined and expected continuance of reliability of drill times at Redwater and expected improvements to on-stream costs 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, 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.
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.
Initial Production Rates:
Initial production rates disclosed herein may not necessarily be indicative of long-term performance or ultimate recovery.
Long Run Exploration Ltd.
William E. Andrew
Executive Chairman and Chief Executive Officer
Long Run Exploration Ltd.
Dale A. Miller
Long Run Exploration Ltd.
Vice President, Capital Markets
Long Run Exploration Ltd.
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