FOURTH QUARTER FINANCIAL AND PRODUCTION RESULTS
-- Fourth quarter production averaged 21,405 boe per day, weighted approximately 56 percent to oil and liquids. Compared to the fourth quarter 2011, production increased approximately 149 percent with 2012 full year light oil volumes increasing 157 percent over 2011.-- Higher production volumes in the fourth quarter increased funds from operations to approximately $55.8 million (excluding transaction costs) or $0.48 per share (basic), a 33 percent increase per share over the $29.9 million or $0.36 per share (basic) generated in the third quarter of 2012, (inclusive of Q4 2012 transaction costs funds from operations was $38.4 million or $0.33 per share (basic));-- Operating costs improved for the fourth quarter of 2012, down 35 percent to $11.78 per boe, compared to $18.20 per boe in the third quarter of 2012, and down more than 30 percent from the fourth quarter of 2011 when operating costs were $16.83 per boe;-- Capital spending of approximately $64.5 million in the fourth quarter of 2012 targeted oil development in the Montney at Girouxville and in the Viking at Redwater.-- During the fourth quarter of 2012, Long Run recorded a net loss of $56.6 million ($0.49 per share (basic)) primarily due to a property, plant and equipment impairment charge of $144.1 million for the year ended December 31, 2012 resulting from a weakening of the future price forecasts and a reduction of the estimated reserve volumes at Kaybob, partially offset by a gain on disposal of assets, and income from operations.
-- Total Proved plus Probable ("P+P") gross reserves increased by approximately 92 percent (27 percent per share) to 83.2 mmboe compared with 43.3 mmboe at December 31, 2011;-- Total Proved ("TP") gross reserves increased by approximately 86 percent to 53.7 mmboe compared with 28.9 mmboe at December 31, 2011. TP reserves represent 65 percent of our P+P portfolio of 83.2 mmboe, a number which Long Run believes will increase further with 87 percent of development capital being directed into crude oil plays in the Montney in the Peace area and in the Viking at Redwater, two plays which continue to show improving results delivering low finding and development costs;-- In Long Run's emerging oil play in the Peace River area, P+P reserve bookings for the area increased 34 percent from year end 2011 from 21.2 mmboe to 28.5 mmboe (Guide, December 31, 2011), which is a trend likely to accelerate with Long Run's plan to drill 50 wells into this emerging oil play in 2013;-- Assuming 2013 average daily forecasted production volumes of 25,000 boe per day, Long Run's P+P reserve life index is approximately 9.1 years.
2012 FINDING, DEVLEOPMENT and ACQUISITION COSTS
-- On a P+P basis, Long Run replaced 927 percent of 2012 production achieving total Finding, Development and Acquisition ("FD&A") costs, including Future Development Capital ("FDC"), of $12.10 per boe. On a TP basis, FD&A costs were $16.46 per boe, including FDC.
-- WTI crude oil prices averaged US$94.19 per barrel in 2012, compared to US$95.00 per barrel in 2011. Edmonton light sweet traded at an average discount of $7.97 per barrel in 2012 compared to WTI (2011 - premium of $1.22 per barrel).-- WTI crude oil prices averaged US$88.20 per barrel in the fourth quarter of 2012, compared to US$92.19 per barrel in the third quarter of 2012 and US$94.02 per barrel for the fourth quarter of 2011. Edmonton light sweet oil traded at a discount of $3.46 per barrel compared to WTI during the fourth quarter of 2012 (2011 - premium of $1.44 per barrel) compared to a discount of $7.40 per barrel during the third quarter of 2012.-- In 2012, the AECO Monthly Index averaged $2.40 per mcf compared to $3.67 per mcf in 2011.-- In the fourth quarter of 2012, the AECO Monthly Index averaged $3.06 per mcf compared to $2.19 per mcf in the third quarter of 2012 and $3.47 per mcf for the fourth quarter of 2011.