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.
EXPLORATION
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.
MANAGEMENT CHANGES
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.
ADVISORIES
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.
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.
Initial Production Rates:
Initial production rates disclosed herein may not necessarily be
indicative of long-term performance or ultimate recovery.
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)
261-8302 Long Run Exploration Ltd. Investor Relations (403)
261-6012 (888) 598-1330 toll
freeinformation@longrunexploration.com