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Press release from CNW Group

Legacy Oil + Gas Inc. announces southeast Saskatchewan corporate acquisition and increased 2010 guidance

Thursday, May 13, 2010

Legacy Oil + Gas Inc. announces southeast Saskatchewan corporate acquisition and increased 2010 guidance16:14 EDT Thursday, May 13, 2010/NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF U.S. SECURITIES LAW./CALGARY, May 13 /CNW/ - Legacy Oil + Gas Inc. ("Legacy") (TSX:LEG) is pleased to announce the acquisition (the "Acquisition") of Villanova Resources Inc., a Saskatchewan based private oil company ("Villanova") and an increase to Legacy's production guidance for 2010.SUMMARY OF THE ACQUISITIONThrough the Acquisition, Legacy is acquiring high quality, high netback, light oil assets focused in the Company's southeast Saskatchewan core area for total consideration of $18 million in cash and 8.1 million Legacy common shares. The share exchange ratio as part of the transaction was determined using a price of $12.95 per Legacy common share. The producing properties are predominately operated with high working interests, 3D seismic coverage and control of key producing infrastructure and are associated with a light oil prospective undeveloped land base. The Acquisition also adds several key sections of land in Legacy's Taylorton core area. << The Acquisition has the following characteristics: Current Production: 1,000 Boe/d (100% light oil, average 35 degree API) Proved plus Probable Reserves(1): 4.5 MMBoe Proved plus Probable RLI: 12.2 years Undeveloped Land: 60,818 net acres 3D Seismic 115 square miles Total Development Drilling Locations: 161.0 gross, 136.5 net Operating Netback(2): $50.50 per Boe Assumed Net Debt: $7.2 million 1) Reserves evaluated by GLJ Petroleum Consultants Ltd. ("GLJ") as at March 31, 2010. Gross Company Reserves. Gross Company Reserves means the Company's working interest reserves before the calculation of royalties, and before the consideration of the Company's royalty interests. 2) Based on US$75.00/Bbl WTI and US$/CDN$ exchange rate of 0.95 and calculated by subtracting royalties and operating costs from revenues. TRANSACTION METRICS The Acquisition is accretive to Legacy on a per share basis on all key metrics. Net of undeveloped land and seismic at an estimated value of $12.0 million and based on Legacy's 5 day VWAP ending May 12, 2010, the transaction metrics are as follows: Production: $109,500 per Boe/d Proved plus Probable Reserves(1): $24.64 per Boe Proved plus Probable Recycle Ratio(2): 2.0 times 1) Reserves as disclosed above. 2) Utilizing Netback shown above. >> PLAN OF ARRANGEMENTLegacy and Villanova have entered into an agreement (the "Arrangement Agreement") pursuant to which Legacy has agreed to acquire all of the outstanding common shares of Villanova by means of a plan of arrangement under the Business Corporations Act (Alberta). Legacy will, subject to adjustment based on the net debt of Villanova at the time of the closing of the transaction, pay $18 million cash and issue a total of approximately 8.1 million Legacy common shares to the shareholders of Villanova.Holders of approximately 80% of the common shares of Villanova have entered into agreements with Legacy pursuant to which they have agreed to vote their shares in favour of the transaction and the board of directors of Villanova has unanimously approved the transaction and recommended that the shareholders of Villanova vote in favour of the transaction. The board of directors of Villanova has received a verbal opinion from National Bank Financial Inc. that the consideration to be received under the transaction is fair, from a financial point of view, to the Villanova shareholders.The Arrangement Agreement, among other things, provides for a mutual non-completion fee of up to $4,000,000 in the event the transaction is not completed in certain circumstances. Completion of the transaction is subject to customary conditions, including the receipt of all required regulatory approvals, including the approval of the TSX, the approval of the shareholders of Villanova and the approval of the Court of Queen's Bench of Alberta.The transaction is anticipated to close no later than July 8, 2010 in the event that Villanova is unable to obtain written shareholder approval and is required to convene a meeting of its shareholders, or earlier in the event that it receives written shareholder approval.FINANCIAL ADVISORSMacquarie Capital Markets Canada Ltd. and GMP Securities L.P. acted as financial advisors and FirstEnergy Capital Corp. acted as strategic advisor to Legacy with respect to the Acquisition.National Bank Financial Inc. is acting as exclusive financial advisor to Villanova, and has provided the Board of Directors of Villanova with its opinion that, the consideration to be received by Villanova shareholders under the Acquisition is fair, from a financial point of view, to Villanova shareholders.STRATEGIC RATIONALE AND INCREASED 2010 GUIDANCEThe Acquisition represents the successful continuation of Legacy's business plan to acquire high quality conventional light oil assets and strengthen its operating position within its core area. Villanova's lands and production provide an excellent operational fit with Legacy's current southeast Saskatchewan holdings, with a number of properties jointly owned by Legacy and Villanova. In addition, the Acquisition includes 9.1 gross sections of Bakken prospective land at Legacy's Taylorton property.The Acquisition increases Legacy's opportunity inventory in its light oil focus area of southeast Saskatchewan. Legacy has identified up to 161.0 (136.5 net) horizontal locations on the acquired lands, of which 67 percent are unbooked. Based on anticipated activity levels, this represents more than five years of drilling inventory on these assets. As a result of the transaction, Legacy will have proforma proved plus probable reserves of more than 20.6 MMBoe, more than 345,000 net acres of undeveloped land and a drilling inventory of over 545 gross development locations, all for high quality light oil (corporate average 37 degree API).The Acquisition is accretive to 2010 forecast reserves per share, production per share and cash flow per share. As a result of the Acquisition, and giving effect to production declines on the acquired assets, Legacy is increasing its guidance for 2010 average production to 6,850 Boe/d (98% oil) and increasing its guidance for 2010 exit rate production to 8,000 Boe/d (98% oil), representing a 40 percent increase over 2009 exit production guidance.Legacy is a uniquely positioned, well-capitalized junior oil and natural gas company with a proven management team committed to aggressive, cost-effective growth of light oil reserves and production in Saskatchewan and Manitoba. Legacy's common shares trade on the TSX Exchange under the symbol LEG.FORWARD LOOKING STATEMENTS: This press release contains forward-looking statements. More particularly, this press release contains statements concerning the anticipated date for the closing of the Acquisition, the potential exploration and development opportunities associated with the Acquisition, the anticipated accretive impact of the Acquisition on Legacy and Legacy's projected 2010 exit and average rates of production.The forward-looking statements contained in this document are based on certain key expectations and assumptions made by Legacy, including: (i) with respect to the anticipated closing date of the Acquisition, expectations and assumptions concerning timing of receipt of required shareholder, court and regulatory approvals and third party consents and the satisfaction of other conditions to the completion of the Acquisition and (ii) with respect to the remaining forward-looking statements, expectations and assumptions concerning the success of future drilling and development activities, the performance of existing wells, the performance of new wells, the successful application of technology and prevailing commodity prices.Although Legacy believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because Legacy can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, the failure to obtain necessary regulatory approvals or satisfy the conditions to closing the Acquisition, risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks), commodity price and exchange rate fluctuations and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. Certain of these risks are set out in more detail in Legacy's Annual Information Form which has been filed on SEDAR and can be accessed at www.sedar.com.The forward-looking statements contained in this document are made as of the date hereof and Legacy undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.Meaning of Boe: When used in this press release, Boe means a barrel of oil equivalent on the basis of 1 Boe to 6 thousand cubic feet of natural gas. Boe per day means a barrel of oil equivalent per day. Boe's may be misleading, particularly if used in isolation. A Boe conversion ratio of 1 Boe for 6 thousand cubic feet of natural gas is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.This press release shall not constitute an offer to sell, nor the solicitation of an offer to buy, any securities in the United States, nor shall there be any sale of securities mentioned in this press release in any state in the United States in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state.Neither the TSX Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Exchange) accepts responsibility for the adequacy or accuracy of this RELEASE.%SEDAR: 00023400EFor further information: Trent J. Yanko, P.Eng., President + CEO, Legacy Oil + Gas Inc., 3900, Bow Valley Square II, 205 - 5th Avenue S.W., Calgary, AB, T2P 2V7, Telephone: (403) 441-2300, Fax: (403) 441-2017; Matt Janisch, P.Eng., Vice-President, Finance + CFO, Legacy Oil + Gas Inc., 3900, Bow Valley Square II, 205 - 5th Avenue S.W., Calgary, AB, T2P 2V7, Telephone: (403) 441-2300, Fax: (403) 441-2017