Long Run Exploration Ltd. Announces Financial Results for the Fourth Quarter and Year Ended December 31, 2012 and 2012 Year End Re

Thu Mar 7, 2013 11:44pm EST

* Reuters is not responsible for the content in this press release.

  CALGARY, ALBERTA, Mar 07 (MARKET WIRE) --
LONG RUN EXPLORATION LTD. (TSX:LRE) ("Long Run" or the "Corporation") is
pleased to announce its results for the fourth quarter and year ended
December 31, 2012 and year end reserve results.

    In the fourth quarter, WestFire Energy Ltd. ("WestFire") and Guide
Exploration Ltd. ("Guide") completed an all share merger transaction. The
management team of Guide is leading the renamed Long Run Exploration Ltd.
Long Run is focusing on core properties in the Peace River and Edmonton
areas of Alberta. Short to medium term development will focus on Montney
oil projects at Peace River and Viking oil projects at Redwater. On a
land base of more than 1.8 million net acres, Long Run is actively
exploring new concepts while continuing to drive development and growing
production in our core areas. Over the long term, it is our intention to
build an exploration company with a balanced oil and gas portfolio that
focuses on resource plays in western Canada.

    Currently, Long Run is producing approximately 24,000 barrels of oil
equivalent per day (12,500 barrels of crude oil and NGLs plus 69 Mmcf/d
of natural gas), on target with our 2013 budget. Our winter drilling
program is approaching completion and we are working to tie-in these
wells prior to spring break-up.

    All financial, operational, and reserve comparatives are based on
historical WestFire information.

    2012 HIGHLIGHTS


--  Long Run replaced 927 percent of 2012 production achieving all-in
    Finding, Development and Acquisition ("FD&A") costs of $12.10 per boe on
    a Proved plus Probable ("P+P") basis, including changes in Future
    Development Costs ("FDC"), and achieved Total Proved ("TP") FD&A costs
    of $16.46 per boe, including FDC; 

--  Fourth quarter funds from operations was $55.8 million or $0.48 per
    share (basic), (excluding transaction costs of $17.4 million or $0.15
    per share (basic)); 

--  Using a fourth quarter funds flow netback of $28.34 per boe (excluding
    transaction costs) and 2012 P+P FD&A costs of $12.10 per boe, Long Run
    achieved a 2012 recycle ratio of 2.3x; 

--  Exit production for 2012 of 23,032 boe per day was in-line with
    forecasted exit volumes of 23,000 boe per day and an increase of 148
    percent (82 percent per share) compared to 2011 exit production of
    approximately 9,300 boe per day; 

--  Long Run successfully divested non-core assets in west central
    Saskatchewan for cash proceeds of approximately $180 million, before
    closing adjustments. As a result of this transaction, Long Run's 2012
    year-end net debt was $293.1 million, which positions Long Run with a
    debt to annualized 2012 fourth quarter funds from operations ratio
    (excluding transaction costs) of 1.3x, among the lowest in the junior
    and intermediate oil and gas sector.  

--  Long Run's 2013 capital program of $265 million targets to increase
    production to average 25,000 boe per day for 2013, with an increase in
    liquids production from approximately 11,500 bbls per day at the end of
    2012 to an average of approximately 13,400 bbls per day in 2013, an
    increase in average crude oil and liquids production in 2013 of
    approximately 17 percent. 


    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. 


    2012 RESERVES


--  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. 


    COMMODITY ENVIRONMENT 


--  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. 


    OPERATIONS UPDATE

    In the fourth quarter of 2012, Long Run spent $64.5 million in capital
which included drilling 29 (26.5 net) wells. This included 9 (net) Viking
oil wells at Redwater, 5 (net) Montney oil wells in the Peace River area,
12 (9.5 net) on subsequently divested west central Saskatchewan assets,
and 3 (net) exploration wells in the Peace River area. Long Run continues
to achieve results above management's expectations while keeping
on-stream costs in-line with historical averages.

    In the near term, Long Run will focus development primarily on oil
opportunities at Redwater and in the Peace River area, both in Alberta.
Up to 53 (50.4 net) wells are planned, including 18 (net) Montney oil
wells in the Peace Area, and 30 (27.4 net) Viking oil wells at Redwater.

    Total first quarter capital spending is expected to be approximately $100
million.

    Peace Area Montney


--  Results from this project have started to exceed management's
    expectations with wells completed with 20 or more frac stages exhibiting
    initial month average rates in excess of 200 boe per day. 

--  During the second half of 2012, Long Run expanded the Girouxville
    portion of this play and brought the 5,000 bbl per day capacity
    Girouxville crude oil processing facility on stream. This increases our
    oil processing capacity in the Peace Area to 10,000 bbl per day
    complemented by 50 Mmcf per day of gas processing. 

--  Enhanced oil recovery ("EOR") will be a key component in maximizing the
    value from this project. Long Run anticipates receiving regulatory
    approval for its EOR pilot project in the Peace Area during the first
    half of 2013, and is working towards a second EOR pilot with expected
    approval in late 2013. 


    Redwater Viking


--  During the fourth quarter of 2012, Long Run tested cemented liner
    completion systems which was a departure from the previously applied
    burst-port completion system. Long Run expects to see improved reservoir
    stimulation, resulting in better well performance from this change and
    other changes to the Redwater frac design. 

--  Currently, the average rate of the initial 12 wells completed since
    these changes is approximately 86 boe per day per well. 

Financial and Operating Highlights                                          
                                                                            
                      ------------------------------------------------------
                              Three months ended                            
                                     December 31     Year ended December 31 
                      ------------------------------------------------------
                          2012     2011 % change     2012     2011 % change 
                      ------------------------------------------------------
Financial                                                                   
(thousands, except per                                                      
 share amounts)                                                             
Gross revenue (1)      106,320   54,810       94% 284,754  141,970      101%
Funds from operations                                                       
 (2)                    38,407   29,896       28% 128,719   74,666       72%
 Basic per share          0.33     0.36       -8%    1.41     1.18       19%
 Diluted per share        0.33     0.36       -8%    1.41     1.17       21%
Net income (loss)      (56,590) (66,612)      15% (42,652) (52,667)      19%
 Basic per share         (0.49)   (0.80)      39%   (0.47)   (0.83)      43%
 Diluted per share       (0.49)   (0.80)      39%   (0.47)   (0.83)      43%
Capital expenditures,                                                       
 net                  (111,392)  72,552      n/a   32,169  178,178      -82%
Ending net debt        293,123  124,753      135% 293,123  124,753      135%
Operations                                                                  
Daily production                                                            
 Light oil and NGL                                                          
  (Bbls/d)              10,457    5,342       96%   7,561    3,308      129%
 Heavy oil (Bbls/d)      1,538      530      190%   1,015      531       91%
 Natural gas (Mcf/d)    56,453   16,376      245%  27,679   11,822      134%
----------------------------------------------------------------------------
Total production                                                            
 (BOE/d)                21,405    8,601      149%  13,189    5,809      127%
----------------------------------------------------------------------------
Average sales price                                                         
 Light oil and NGL                                                          
  (per bbl)              75.07    93.18      -19%   79.97    91.32      -12%
 Heavy oil (per bbl)     57.89    77.17      -25%   61.37    67.68       -9%
 Natural gas (per mcf)    3.35     3.32        1%    2.80     3.76      -26%
Netback per boe                                                             
 Sales price             50.27    71.01      -29%   57.30    67.36      -15%
 Risk management gain                                                       
  (loss)                  3.72    (1.75)     n/a     1.69    (0.40)     n/a 
----------------------------------------------------------------------------
 Net sales price         53.99    69.26      -22%   58.99    66.96      -12%
 Royalties               (6.36)   (7.49)     -15%   (6.03)   (7.94)     -24%
 Operating expenses     (11.78)  (16.83)     -30%  (14.57)  (16.39)     -11%
 Transportation          (2.27)   (1.31)      73%   (2.06)   (1.26)      63%
----------------------------------------------------------------------------
 Netback (2)             33.58    43.63      -23%   36.33    41.37      -12%
----------------------------------------------------------------------------
                                                                            
                                                                            
(1) Gross revenue includes petroleum and natural gas revenue plus realized  
 gains and losses on financial commodity derivative contracts.              
(2) See "Non-GAAP Measurements"                                             


    CAPITAL EXPENDITURES


Exploration and evaluation assets, property and equipment, net        $000s 
----------------------------------------------------------------------------
Balance at December 31, 2011                                        585,826 
Additions                                                           210,410 
Guide Arrangement                                                   505,802 
Disposals                                                          (110,525)
Decommissioning liability additions                                  28,392 
Capitalized share-based and deferred compensation                       839 
Derecognition expense                                                  (784)
Non-monetary transactions                                             6,373 
Depletion and depreciation                                         (121,568)
Impairment of property and equipment                               (144,116)
----------------------------------------------------------------------------
Balance at December 31, 2012                                        960,649 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Year ended December 31                     2012                2011         
----------------------------------------------------------------------------
                                          $000s         %     $000s        %
Land                                     15,157         7    41,195       23
Geological and geophysical                3,612         2     4,543        3
Drilling and completion                 149,293        71   102,344       57
Plant and facilities                     43,160        21    31,292       17
Inventory                                (1,313)       (1)      228        -
Other assets                                501         -       393        -
----------------------------------------------------------------------------
Exploration & evaluation assets,                                            
 property & equipment expenditures      210,410       100   179,995      100
----------------------------------------------------------------------------
----------------------------------------------------------------------------


    SHARE INFORMATION

    The following table summarizes the outstanding shares of Long Run as of
December 31:


                                                         2012           2011
----------------------------------------------------------------------------
Common Shares                                     110,107,152     67,355,377
Non-Voting Convertible Shares                      15,512,858     15,613,564
Options                                             8,042,000      4,849,135
Warrants to purchase 0.4167 Common Shares           2,300,000              -


    RESERVES

    At December 31, 2012, total proved reserves as a percentage of proved
plus probable reserves were 65 percent. All of our reserves were
evaluated, effective December 31, 2012, in a report (the "Sproule
Report") prepared by the independent engineering firm Sproule Associates
Limited ("Sproule").

    The following summarizes the Corporation's crude oil, natural gas and
natural gas liquids reserves and the net present value of the future net
revenues therefrom using forecast prices and costs as evaluated in the
Sproule Report. The reserve estimates contained in the Sproule Report
have been calculated in compliance with National Instrument 51-101
Standards of Disclosure for Oil and Gas Activities ("NI 51-101"). Under
NI 51-101, proved reserves estimates are defined as having a high degree
of certainty with a targeted 90 percent probability in aggregate that
actual reserves recovered over time will equal or exceed proved reserve
estimates. For proved plus probable reserves under NI 51-101, the
targeted probability is an equal (50 percent) likelihood that the actual
reserves to be recovered will be equal to or greater than the proved plus
probable reserves estimate. The reserves estimates set forth below are
estimates only and there is no guarantee that the estimated reserves will
be recovered. Actual reserves may be greater than or less than the
estimates provided herein.

    Additional information with respect to the Corporation's reserves at
December 31, 2012 will be contained in the Corporation's Annual
Information Form for the year ended December 31, 2012 which will be filed
on SEDAR at www.sedar.com on or before March 31, 2013.

    Gross reserves are the total of the Corporation's working interest share
before deduction of royalties owned by others and without including any
of the Corporation's royalty interests. Net reserves are the total of the
Corporation's working interest reserves after deducting amounts
attributable to royalties owned by others, plus the Corporation's royalty
interest reserves. 

    SUMMARY OF OIL AND GAS RESERVES

    AS OF DECEMBER 31, 2012

    FORECAST PRICES AND COSTS


                                                RESERVES                    
                            ------------------------------------------------
                            LIGHT AND MEDIUM                                
                                         OIL       HEAVY OIL     NATURAL GAS
                            ------------------------------------------------
                               Gross     Net   Gross     Net   Gross     Net
RESERVES CATEGORY             (Mbbl)  (Mbbl)  (Mbbl)  (Mbbl)  (MMcf)  (MMcf)
----------------------------------------------------------------------------
                                                                            
Proved Developed                                                            
 Producing                     7,667   6,571     829     713 132,183 119,131
 Non-Producing                   233     205     159     130  16,103  13,697
Proved                                                                      
 Undeveloped                   8,942   7,965     553     469  42,908  38,823
                            ------------------------------------------------
Total Proved                  16,842  14,741   1,540   1,312 191,194 171,651
Probable                      11,719   9,856   1,254   1,061  90,234  79,641
                            ------------------------------------------------
Total Proved plus Probable    28,561  24,597   2,794   2,373 281,428 251,291
                            ------------------------------------------------
                            ------------------------------------------------

                                        RESERVES            
                            --------------------------------
                                 NATURAL GAS                
                                     LIQUIDS           TOTAL
                            --------------------------------
                               Gross     Net   Gross     Net
RESERVES CATEGORY             (Mbbl)  (Mbbl)  (MBOE)  (MBOE)
------------------------------------------------------------
                                                            
Proved Developed                                            
 Producing                     2,421   1,566  32,947  28,705
 Non-Producing                   293     184   3,368   2,802
Proved                                                      
 Undeveloped                     695     504  17,342  15,408
                            --------------------------------
Total Proved                   3,409   2,254  53,657  46,915
Probable                       1,497   1,003  29,508  25,193
                            --------------------------------
Total Proved plus Probable     4,905   3,257  83,165  72,109
                            --------------------------------
                            --------------------------------


    PRICING

    Pricing utilized in the Sproule Report was an average of the January 1,
2013 pricing forecast of each of Sproule, GLJ Petroleum Consultants Ltd.
and McDaniel & Associates Consultants Ltd. and are summarized below.


                                          OIL                               
                        ---------------------------------------             
                                      Edmonton Oil     Hardisty  Natural Gas
                                             Price        Heavy Alberta Spot
                          WTI Cushing  40 degrees  12 degrees          Gas
                             Oklahoma          API          APIPrice($Cdn/Mc
Year                        ($US/Bbl)   ($Cdn/Bbl)   ($Cdn/Bbl)           f)
----------------------------------------------------------------------------
                                                                            
Forecast                                                                    
2013                            90.71        85.68        62.75         3.35
2014                            91.64        90.61        67.58         3.80
2015                            92.30        91.60        68.62         4.18
2016                            96.17        95.48        72.15         4.71
2017                            97.29        96.59        72.98         5.12
2018                            98.44        97.71        73.81         5.36
2019                            99.94        99.21        74.95         5.45
2020                           101.76       101.03        76.33         5.57
2021                           103.61       102.88        77.74         5.67
2022                           105.54       104.81        79.22         5.77
2023                           107.46       106.69        80.64         5.87
2024                           109.43       108.65        82.11         5.99
2025+                   Escalated oil, gas and product prices at 1.83% per  
                        year thereafter                                     
                                                                            

                                                                            
                                                                            
                                           Butanes                          
                        Pentanes Plus        Price    Inflation     Exchange
                             Edmonton     Edmonton    Rates(1)      Rate(2) 
Year                       ($Cdn/Bbl)   ($Cdn/Bbl)       %/Year   ($US/$Cdn)
----------------------------------------------------------------------------
                                                                            
Forecast                                                                    
2013                            94.89        64.19         1.83         1.00
2014                            96.57        69.01         1.83         1.00
2015                            95.97        70.91         1.83         1.00
2016                           100.08        73.88         1.83         1.00
2017                           101.22        74.74         1.83         1.00
2018                           102.41        75.60         1.83         1.00
2019                           104.00        76.76         1.83         1.00
2020                           105.88        78.17         1.83         1.00
2021                           107.82        79.60         1.83         1.00
2022                           109.85        81.11         1.83         1.00
2023                           111.82        82.57         1.83         1.00
2024                           113.85        84.10         1.83         1.00
2025+                   Escalated oil, gas and product prices at 1.83% per  
                        year thereafter                                     


    (1) Inflation rates for forecasting prices and costs. 

    (2) Exchange rates used to generate the benchmark reference prices in
this table.

    NET PRESENT VALUE OF FUTURE NET REVENUE

    NET PRESENT VALUES OF FUTURE NET REVENUE (1)


                                                                            
                                                                            
                              BEFORE INCOME TAXES DISCOUNTED AT (%/year)    
                          --------------------------------------------------
                                   0         5        10        15        20
RESERVES CATEGORY              (MM$)     (MM$)     (MM$)     (MM$)     (MM$)
----------------------------------------------------------------------------
                                                                            
Proved Developed                                                            
 Producing                   773,203   639,904   552,564   490,061   442,829
 Non-Producing                59,791    44,491    35,243    29,077    24,677
Proved Undeveloped           308,144   212,822   151,919   109,868    79,236
                          --------------------------------------------------
Total Proved               1,141,138   897,217   739,726   629,007   546,742
Probable                     789,387   526,439   379,381   287,140   224,942
                          --------------------------------------------------
Total Proved plus Probable 1,930,525 1,423,656 1,119,107   916,147   771,684
                          --------------------------------------------------
                          --------------------------------------------------
                                                                            

                                                                            
                                                                            
                               AFTER INCOME TAXES DISCOUNTED AT (%/year)    
                          --------------------------------------------------
                                   0         5        10        15        20
RESERVES CATEGORY              (MM$)     (MM$)     (MM$)     (MM$)     (MM$)
----------------------------------------------------------------------------
                                                                            
Proved Developed                                                            
 Producing                   773,203   639,904   552,564   490,061   442,829
 Non-Producing                59,791    44,491    35,243    29,077    24,677
Proved Undeveloped           308,144   212,822   151,919   109,868    79,236
                          --------------------------------------------------
Total Proved               1,141,138   897,217   739,726   629,007   546,742
Probable                     628,527   426,660   312,662   240,210   190,672
                          --------------------------------------------------
Total Proved plus Probable 1,769,665 1,323,876 1,052,388   869,216   737,414
                          --------------------------------------------------
                          --------------------------------------------------


    (1) Net present value of future net revenue does not represent fair
market value. Tables may not add due to rounding.

    NET ASSET VALUE

    As at December 31, 2012


----------------------------------------------------------------------------
                                                   $ million                
----------------------------------------------------------------------------
PV10% (Before Tax)                           TP          P+P                
----------------------------------------------------------------------------
Reserve Value (1)                                              Sproule / Dec
                                    $     739.7  $   1,119.1        31, 2012
----------------------------------------------------------------------------
Undeveloped land (2)                $      75.7  $      75.7                
----------------------------------------------------------------------------
Net Debt (3)                        $    (293.1) $    (293.1)               
----------------------------------------------------------------------------
Net Asset Value                     $     522.3  $     901.7                
----------------------------------------------------------------------------
Basic Shares O/S (million) (4)            125.6        125.6                
----------------------------------------------------------------------------
NAV/share                           $      4.16  $      7.18                
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
PV5% (Before Tax)                                                           
----------------------------------------------------------------------------
Reserve Value (1)                                              Sproule / Dec
                                    $     897.2  $   1,423.7        31, 2012
----------------------------------------------------------------------------
Undeveloped Land (2)                $      75.7  $      75.7                
----------------------------------------------------------------------------
Net Debt (3)                        $    (293.1) $    (293.1)               
----------------------------------------------------------------------------
Net Asset Value                     $     679.8  $   1,206.3                
----------------------------------------------------------------------------
Basic Shares O/S (million) (4)            125.6        125.6                
----------------------------------------------------------------------------
NAV/share                           $      5.41  $      9.60                
----------------------------------------------------------------------------


    (1) Reserve value is the net present value of future net revenues before
tax which does not represent fair market value, as derived from the
Sproule Report.

    (2) As internally evaluated at $75.7 million using an average of $98.91
per acre.

    (3) See "Non-GAAP Measurements"

    (4) Basic shares include outstanding common shares and outstanding
non-voting convertible shares.

    (5) The above does not include asset retirement obligations. The Sproule
Report included abandonment costs only for undeveloped locations with
reserves.

    RESERVES RECONCILIATION


                                              LIGHT AND MEDIUM OIL          
                                     ---------------------------------------
                                                               Gross Proved 
                                                         Gross         Plus 
                                     Gross Proved     Probable     Probable 
FACTORS                                    (Mbbl)       (Mbbl)       (Mbbl) 
----------------------------------------------------------------------------
                                                                            
December 31, 2011                          12,678        8,301       20,979 
                                                                            
Extensions                                    232        1,177        1,409 
Infill Drilling                             1,081          521        1,602 
Technical Revisions                          (192)      (2,301)      (2,493)
Discoveries                                     0            0            0 
Acquisitions                                9,283        7,095       16,379 
Dispositions                               (3,623)      (3,139)      (6,762)
Economic Factors                             (166)          65         (101)
Production                                 (2,453)           0       (2,453)
                                     ---------------------------------------
                                                                            
December 31, 2012                          16,842       11,719       28,561 
                                     ---------------------------------------
                                     ---------------------------------------

                                                    HEAVY OIL               
                                     ---------------------------------------
                                                               Gross Proved 
                                                         Gross         Plus 
                                     Gross Proved     Probable     Probable 
FACTORS                                    (Mbbl)       (Mbbl)       (Mbbl) 
----------------------------------------------------------------------------
                                                                            
December 31, 2011                             741          397        1,138 
                                                                            
Extensions                                     15           44           59 
Infill Drilling                                69           12           81 
Technical Revisions                           (69)        (100)        (169)
Discoveries                                     0            0            0 
Acquisitions                                1,213          986        2,199 
Dispositions                                  (14)         (50)         (64)
Economic Factors                              (99)         (35)        (134)
Production                                   (317)           0         (317)
                                     ---------------------------------------
                                                                            
December 31, 2012                           1,540        1,254        2,794 
                                     ---------------------------------------
                                     ---------------------------------------
                     NATURAL GAS LIQUIDS               NATURAL GAS          
                ------------------------------------------------------------
                                        Gross                         Gross 
                                       Proved                        Proved 
                    Gross     Gross      Plus     Gross     Gross      Plus 
                   Proved  Probable  Probable    Proved  Probable  Probable 
FACTORS            (Mbbl)    (Mbbl)    (Mbbl)    (MMcf)    (MMcf)    (MMcf) 
----------------------------------------------------------------------------
                                                                            
December 31,                                                                
 2011               4,824     1,604     6,428    63,934    24,496    88,430 
                                                                            
Extensions              1         3         3       150       753       903 
Infill Drilling         3         1         4       770       336     1,106 
Technical                                                                   
 Revisions         (1,811)     (601)   (2,413)  (16,269)   (8,515)  (24,784)
Discoveries             0         0         0         0         0         0 
Acquisitions          846       528     1,373   155,665    74,615   230,280 
Dispositions          (32)      (20)      (52)   (1,635)   (1,175)   (2,810)
Economic Factors      (52)      (17)      (69)   (1,329)     (276)   (1,605)
Production           (369)        0      (369)  (10,092)        0   (10,092)
                ------------------------------------------------------------
                                                                            
December 31,                                                                
 2012               3,409     1,497     4,906   191,194    90,234   281,428 
                ------------------------------------------------------------
                ------------------------------------------------------------

                                           TOTAL             
                               ------------------------------
                                                       Gross 
                                                      Proved 
                                   Gross     Gross      Plus 
                                  Proved  Probable  Probable 
               FACTORS            (MBOE)    (MBOE)    (MBOE) 
               ----------------------------------------------
                                                             
               December 31,                                  
                2011              28,899    14,385    43,283 
                                                             
               Extensions            273     1,349     1,622 
               Infill Drilling     1,281       590     1,871 
               Technical                                     
                Revisions         (4,783)   (4,422)   (9,205)
               Discoveries             0         0         0 
               Acquisitions       37,286    21,045    58,331 
               Dispositions       (3,942)   (3,405)   (7,347)
               Economic Factors     (538)      (34)     (571)
               Production         (4,820)        0    (4,820)
                               ------------------------------
                                                             
               December 31,                                  
                2012              53,657    29,509    83,165 
                               ------------------------------
                               ------------------------------


    (1) The Corporation has no unconventional reserves (Bitumen, Synthetic
Crude Oil, Natural Gas from Coal, etc.).

    FD&A


----------------------------------------------------------------------------
                                                                            
                                               2012                     2011
                                Proved          P+P       Proved         P+P
----------------------------------------------------------------------------
                                                                            
Capital Expenditures ($M)                                                   
 Exploration and                                                            
  development expenditures                                                  
  (2)                      $    99,131  $    99,131  $   138,854 $   138,854
 Change in future                                                           
  development capital                                                       
  ("FDC")                  $   (62,096) $   (46,541) $   140,282 $   160,148
 All in exploration and                                                     
  development capital      $    37,035  $    52,590  $   279,136 $   299,002
 Acquisition (net of                                                        
  disposition)(3)          $   449,839  $   488,428  $   383,519 $   383,519
 Total Capital             $   486,874  $   541,018  $   662,656 $   682,522
----------------------------------------------------------------------------
                                                                            
Reserve Additions                                                           
 Development                    (3,767)      (6,283)       5,346       6,699
 Acquisitions (net of                                                       
  dispositions)                 33,344       50,984       17,488      24,465
 Total Additions                                                            
  (including revisions)         29,578       44,702       22,834      31,164
----------------------------------------------------------------------------
                                                                            
Finding and Development                                                     
 Costs (F&D - $/boe)                                                        
 F&D with change in FDC                                                     
  (4)(5)                            (1)          (1) $     52.22 $     44.63
Finding, development and                                                    
 acquisition costs                                                          
 FD&A with change in FDC                                                    
  (4)(5)                   $     16.46  $     12.10  $     29.02 $     21.90
----------------------------------------------------------------------------

--------------------------------------------------
                                                  
                                 3-Year Avg./Total
                                Proved         P+P
--------------------------------------------------
                                                  
Capital Expenditures ($M)                         
 Exploration and                                  
  development expenditures                        
  (2)                      $   309,944 $   309,944
 Change in future                                 
  development capital                             
  ("FDC")                  $   140,142 $   205,286
 All in exploration and                           
  development capital      $   450,086 $   515,230
 Acquisition (net of                              
  disposition)(3)          $   836,580 $   875,169
 Total Capital             $ 1,286,667 $ 1,390,399
--------------------------------------------------
                                                  
Reserve Additions                                 
 Development                     5,118       5,717
 Acquisitions (net of                             
  dispositions)                 51,032      75,465
 Total Additions                                  
  (including revisions)         56,150      81,183
--------------------------------------------------
                                                  
Finding and Development                           
 Costs (F&D - $/boe)                              
 F&D with change in FDC                           
  (4)(5)                   $     87.95 $     90.12
Finding, development and                          
 acquisition costs                                
 FD&A with change in FDC                          
  (4)(5)                   $     22.91 $     17.13
--------------------------------------------------


    (1) New management and the new evaluator viewed the development plans in
certain properties differently than previously evaluated, resulting in
2012 F&D being negative and therefore not being meaningful. For both FD&A
and F&D, the 2012 values are included in the three year averages.

    (2) The aggregate of the exploration and development costs incurred in
the most recent financial year and the change during that year in
estimated future development costs generally will not reflect total
finding and development costs related to reserve additions for that year.

    (3) In 2012, the acquisition costs related to corporate acquisitions
reflect the fair market value. In prior years the acquisition costs
related to the corporate acquisitions reflect the consideration paid plus
the net debt assumed, both valued at closing and does not reflect the
fair market value allocated to the acquired oil and gas assets under
generally accepted accounting principles.

    (4) Calculation includes reserve revisions. Long Run calculates FD&A
costs which incorporate both the costs and associated reserve additions
related to acquisitions net of any dispositions during the year. Since
acquisitions can have a significant impact on Long Run's annual reserve
replacement costs, the Corporation believes the FD&A costs provide a more
meaning portrayal of Long Run's cost structure. 

    (5) The 2012 FD&A calculations were based on Long Run's reserves at
December 31, 2012 evaluated by Sproule and WestFire's reserves at
December 31, 2011. The FD&A calculations prior to 2012 were based on
WestFire's reserves from December 31, 2009 to December 31, 2011.

    Non-GAAP Measurements 

    The MD&A contains terms commonly used in the oil and gas industry, such
as funds flow from operations, funds flow from operations per share, and
operating netback. 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 weighted average number of common shares outstanding. 

    Long Run uses the term net debt in the MD&A and presents a table showing
how it has been determined. This measure does not have any standardized
meaning prescribed by IFRS and therefore may not be comparable to similar
measures presented by other companies.

    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

    Oil and Gas Information:

    Barrels of oil equivalent ("boe") may be misleading, particularly if used
in isolation. A boe conversion ratio of six thousand cubic feet of
natural gas to one barrel of crude oil 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 conversion ratio of
6:1, utilizing a conversion on a 6:1 basis is misleading as an indication
of value.

    The estimates of reserves and future net revenue for individual
properties may not reflect the same confidence level as estimates of
reserves and future net revenue for all properties, due to the effects of
aggregation.

    Forward Looking Statements: 

    Certain information regarding Long Run in this news release including
management's assessment of future plans and operations, 2013 capital
expenditures budget and nature of expenditures, 2013 expected average
production and crude oil and liquids production, nature of development
capital expenditures and the effects thereof, expected timing of receipt
of regulatory approval for pilot project at the Peace area and the
anticipated effects of new design and completion systems at Redwater, 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. 

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
(888) 598-1330
information@longrunexploration.com
www.longrunexploration.com

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