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Long Run Exploration Ltd. Announces First Quarter 2013 Results

CALGARY, ALBERTA -- (Marketwired) -- 05/07/13 -- Long Run Exploration Ltd. ("Long Run" or the "Corporation") (TSX:LRE) is pleased to report financial and operational results for the quarter ended March 31, 2013. This represents the first full quarter of operations as Long Run, a significant milestone in the evolution of the Corporation. Long Run aggressively drilled both the Montney and the Viking this quarter, adding more than 3,000 boe per day of production from 2012 fourth quarter exit volumes to first quarter 2013 exit volumes. The majority of production additions in the first quarter were crude oil volumes, a trend which Long Run expects to continue through 2013. Given strong first quarter results driven by operational results which met or exceeded expectations, Long Run awaits the end of Spring break up and a return to executing the 2013 capital program.

The unaudited financial statements of Long Run for the period ended March 31, 2013 and the related Management's Discussion and Analysis ("MD&A") can be accessed on-line on SEDAR at www.sedar.com or on Long Run's website at www.longrunexploration.com.


--  First quarter 2013 exit production of approximately 26,300 boe per day
    was ahead of budget forecast. Continued operational improvements in the
    Montney at Girouxville / Normandville and in the Viking at Redwater were
    responsible for increased exit production volumes. Long Run continues to
    be on-track to meet its 2013 full-year average production guidance of
    25,000 boe per day. 
--  Due to an active first quarter development program and successful
    efforts in the Montney and Viking, production for the first quarter of
    2013 averaged 23,611 boe per day. This is an increase of 167 percent
    over the first quarter of 2012 and an increase of 10 percent over the
    fourth quarter of 2012. 2013 first quarter liquids production
    represented 52 percent of total production.  
--  First quarter 2013 development capital expenditures targeted crude oil
    in the Montney and the Viking.  
    --  The Corporation drilled 18 net wells in the Montney oil play at
        Girouxville / Normandville, all of which were completed, equipped
        and on-stream before the end of the quarter.  
    --  At Redwater, Long Run drilled 30 (28.6 net) light-oil wells. 
--  Funds flow from operations for the first quarter of 2013 was $48.6
    million ($0.39 per share diluted). This represents an increase of
    approximately 66 percent from the $29.4 million realized in the first
    quarter of 2012, and approximately 27 percent higher than the $38.4
    million generated in the fourth quarter of 2012.


--  First quarter production averaged 23,611 boe per day, weighted
    approximately 52 percent to oil and natural gas liquids. Compared to the
    first quarter 2012, production increased approximately 167 percent due
    to the fourth quarter 2012 business combination with Guide Exploration
    Ltd. and to a successful first quarter capital program which achieved
    strong production results from crude oil development plays. 
--  Higher production volumes in the first quarter increased funds flow from
    operations to approximately $48.6 million or $0.39 per share (diluted),
    a 27 percent (18 percent per share) increase over the $38.4 million or
    $0.33 per share (diluted) generated in the fourth quarter of 2012. 
--  Funds flow from operations was impacted by higher operating costs
    ($13.53 per boe) in the first quarter of 2013 as compared with $11.78
    per boe in the fourth quarter of 2012. Operating costs increased due to
    normal-course workover activity across our crude oil properties and
    lower natural gas volumes at Boyer due to cold weather during the months
    of January and February. 
--  The net loss of $0.8 million during the first quarter of 2013, compared
    to earnings of $1.2 million in the first quarter of 2012 and a loss of
    $56.6 million in the fourth quarter of 2012. The first quarter 2013 net
    loss included a $10.8 million unrealized loss on derivative financial
    contracts. The fourth quarter 2012 loss included an impairment of $128.0
    million on oil and natural gas properties.  
--  Capital expenditures totaled $103.9 million in the first quarter of 2013
    with the Montney and Viking constituting the bulk of development
--  On March 28, 2013, Long Run completed a $13.5 million transaction in the
    Cherhill area of Alberta. The transaction focused on the strategic
    consolidation of crude oil and solution natural gas processing capacity
    and infrastructure, developed and undeveloped acreage, as well as
    production which was averaging approximately 2,400 mcf/d of natural gas
    and 200 barrels per day of crude oil and natural gas liquids at the time
    of closing.  
--  Subsequent to the end of the quarter, Long Run renewed its three-year,
    revolving credit facility of $450 million and extended the facility to
    May 31, 2016. The bank syndicate is jointly led by The Bank of Nova
    Scotia and National Bank of Canada, and includes a broad syndicate of
    Canadian and international banks. 


--  WTI crude oil prices averaged US$94.37 per barrel in the first quarter
    of 2013, compared to US$102.93 per barrel for the first quarter of 2012
    and US$88.18 per barrel in the fourth quarter of 2012. During the first
    quarter of 2013, Edmonton light sweet oil traded at an average discount
    of $6.18 per barrel compared to WTI. This compares to an average
    discount of $10.70 per barrel compared to WTI during the first quarter
    of 2012, and of $4.19 per barrel during the fourth quarter of 2012. 
--  In the first quarter of 2013, the AECO Monthly Index averaged $3.20 per
    mcf compared to $2.15 per mcf in the first quarter of 2012 and $3.21 per
    mcf in the fourth quarter of 2012.


Peace River Area Montney

--  Production in the Peace River area averaged 9,453 boe per day in the
    first quarter of 2013, an increase of 41 percent over the 6,691 boe per
    day average in the fourth quarter of 2012. The Peace River Area Montney
    contributed 40 percent of Long Run's first quarter 2013 production
--  Recent well results are, on average, above the established type-curve.
    Continued use of cemented liner completion design is yielding improved
    completion reliability. Long Run believes operational and engineering
    improvements in this play realized over the past several months will
    lead to an increased inventory of drilling locations and higher booked
    reserves in the longer-term. 
--  Enhanced oil recovery ("EOR") work in the Montney at Normandville is
    progressing on-schedule. Water injection began on April 1, 2013 on this
    project with a response anticipated in 2014. Long Run believes this
    pressure maintenance program will improve recoveries, lower natural
    gas/oil ratios, and enhance overall project economics. 

Redwater Viking

--  In the first quarter of 2013 Redwater production averaged approximately
    5,195 boe per day, more than 22 percent of Long Run's total production
    volumes. 30 (28.6 net) wells were drilled in this play during the first
    quarter with 26 gross wells tied-in. Higher production volumes have been
    achieved through modifications of drilling technique and completion
    technology. These improved results are driving strong project economics
    which confirm the deep value in this play. On-stream well costs remain
    at $1.2 million. 
--  Plans continue to advance EOR work in this play. To ensure that maximum
    value from this property is achieved, Long Run is moving forward with
    the initial stages of a pilot water injection scheme and plans to
    implement injectivity before the end of 2013 to further test this
    concept. Long Run anticipates initial results from the early stages of
    this project to be available in 2014. 


--  During the first quarter of 2013, Long Run re-completed a 100% working
    interest vertical well into the Duvernay located in the Smoky Heights
    area at 3-26-72-2W6. Initial testing recovered light oil and associated
    natural gas volumes. Additional analysis will be available in coming
    months when further testing is completed.  

Results Overview                                                            
($000s, except per share)          2013                                 2012
                                     Q1       Q4       Q3        Q2       Q1
Funds flow from operations (1)   48,644   38,407   26,546    34,385   29,381
  Per share, diluted               0.39     0.33     0.32      0.41     0.35
Net earnings (loss)                (827) (56,590)  (4,747)   17,506    1,179
  Per share, basic & diluted      (0.01)   (0.49)   (0.06)     0.21     0.01
Production (BOE/d)                                                          
    Liquids (Bbl/d) (2)          12,358   11,995    7,854     8,291    6,133
    Natural Gas (Mcf/d)          67,516   56,453   18,214    19,548   16,288
    Total (BOE/d)                23,611   21,405   10,890    11,549    8,848
Prices, including derivatives                                               
    Liquids ($/Bbl) (2)           73.03    75.49    77.67     80.68    85.15
    Natural Gas ($/Mcf)            3.63     4.19     2.44      1.94     2.29
  Total $/BOE                     49.12    53.99    61.34     61.57    64.92
Revenues, before royalties      103,613   99,000   60,094    64,025   53,486
Capital expenditures            103,936   64,524   31,379    45,081   69,425
Net acquisitions (divestitures)  16,928 (175,916)  (2,325)        -        -
Net debt                        366,305  293,123                            

Results Overview                                                            
($000s, except per share)                                              2011 
                                           Q4             Q3             Q2 
Funds flow from operations (1)         29,896         27,448         10,641 
  Per share, diluted                     0.36           0.33           0.23 
Net earnings (loss)                   (66,612)        11,427          4,387 
  Per share, basic & diluted            (0.80)          0.14           0.10 
Production (BOE/d)                                                          
    Liquids (Bbl/d) (2)                 5,872          5,499          2,243 
    Natural Gas (Mcf/d)                16,376         17,766          6,392 
    Total (BOE/d)                       8,601          8,460          3,308 
Prices, including derivatives                                               
    Liquids ($/Bbl) (2)                 88.74          85.97          90.26 
    Natural Gas ($/Mcf)                  3.41           4.20           4.83 
  Total $/BOE                           69.26          66.79          70.55 
Revenues, before royalties             56,192         51,568         21,377 
Capital expenditures                   72,552         59,361         20,453 
Net acquisitions (divestitures)             -            (52)        (1,704)
Net debt                              124,753                               
(1) See "Non-GAAP Measurements".                                            
(2) Liquids includes light oil, heavy oil and natural gas liquids.          
Capital Investment                                                          
($000s)                                     Q1 2013     Q4 2012      Q1 2012
Drilling and completion                      80,767      46,620       53,339
Plant and facilities                         19,652       9,967        9,659
Land                                          1,659       6,806        5,505
Geological and geophysical                    1,314         772          834
Other assets                                    544         359           88
Capital expenditures                        103,936      64,524       69,425
Acquisitions                                 22,949           -            -
Dispositions                                 (6,021)   (175,916)           -
Capital investment                          120,864    (111,392)      69,425
Share Capital                                                               
                                        May 6,      March 31,   December 31,
(# of units)                              2013           2013           2012
Common Shares                      110,107,152    110,107,152    110,107,152
Non-Voting Convertible Shares       15,512,858     15,512,858     15,512,858
Options                              9,661,400      9,727,400      8,042,000
Warrants(1)                          2,300,000      2,300,000      2,300,000
(1) Each common share purchase warrant ("Warrant") entitles the holder to   
    purchase 0.4167 of a common share at an exercise price of $3.10 per     
    0.4167 of a share until September 15, 2014. The Warrants are not        
    exercisable until the twenty-day volume weighted average trading price  
    of the common shares exceeds $12.00 per share.                          

Non-GAAP Measurements

This press release contains terms commonly used in the oil and natural gas industry, such as funds flow from operations, and funds flow from operations per share. These terms are not defined by International Financial Reporting Standards (IFRS) and should not be considered an alternative to, or more meaningful than, cash provided by operating activities or net earnings as determined in accordance with IFRS as an indicator of Long Run's performance. Management believes that funds flow from operations is a useful financial measurement which assists in demonstrating the Corporation's ability to fund capital expenditures necessary for future growth or to repay debt. Long Run's determination of funds flow from operations may not be comparable to that reported by other companies. All references to funds flow from operations throughout this report are based on cash flow from operating activities before changes in non-cash working capital and abandonment expenditures. The Corporation calculates funds flow from operations per share by dividing funds flow from operations by the diluted weighted average number of Common Shares outstanding.

Long Run uses the term net debt herein. This measure does not have any standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other companies.

With respect to funds flow from operations and net debt, reference is made to the Corporation's Management's Discussion and Analysis for the three months ended March 31, 2013 which includes a table showing how they have been determined.

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 in this news release including management's assessment of future plans and operations, 2013 average production guidance, expectation that operational and engineering improvements at Peace River will lead to increased drilling inventory and higher booked reserves, timing of new wells coming on-stream, timing of response to water injections at Peace River, plans to continue pilot enhanced recovery oil project at Redwater and the timing thereof, and timing of testing and availability of additional analysis of Duvernay well 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 Corporation 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 Corporation 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 Corporation operates; the timely receipt of any required regulatory approvals; the ability of the Corporation 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 Corporation 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 Corporation operates; and the ability of the Corporation 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.


Netbacks are calculated by subtracting royalties, transportation costs and operating costs from revenues.

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