Significant Increase in Independent Resource Estimates in Sidi Moktar Operated Licence

LONGREACH OIL AND GAS LIMITED (TSX-V: LOI) (“Longreach”), an independent oil and gas company holding exploration licences in Morocco, is pleased to announce that an updated independent assessment of the Company’s prospective resources on the Sidi Moktar licence has been completed by Gaffney, Cline & Associates (“Gaffney, Cline”, or “GCA”). Longreach operates and holds a 50% working interest in the Sidi Moktar Licence. The independent assessment was carried out in accordance with the standards established by the Canadian Securities Administrators in National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities using the Canadian Oil and Gas Evaluation Handbook. The following two tables have been prepared for the convenience of readers by Longreach, detailing prospective hydrocarbon resources by prospects and leads and with the associated geological chance of success (“GCoS”):

UNRISKED GROSS PROSPECTIVE RESOURCES (PROSPECTS), AS AT 28TH FEBRUARY, 2013

Prospect

Potentially Recoverable Gas (Bscf)

Potentially Recoverable Condensate (MMBbl)

GCoS

Low

Best

High

Low

Best

High

Koba

148

349

674

9

21

41

22%

Kamar

31

78

156

2

5

9

18%

 

Notes:
1. Prospects are features that have been sufficiently well defined, on the basis of geological and geophysical data, to the point that they are considered viable drilling targets.
2. “Gross Unrisked Prospective Resources” are 100% of the volumes estimated to be recoverable from the field.
3. The GCoS reported here represents an indicative estimate of the probability that drilling this Prospect would result in a discovery, which would warrant the re-classification of that volume as a Contingent Resource. The GCoS value for Contingent Resource is, by definition, unity. These GCoS values have not been arithmetically applied to the designated volumes within this assessment. Thus the volumes are “Unrisked”.
4. It is inappropriate to aggregate Prospective Resources without due consideration of the different levels of risk associated with each Prospect/Lead and the potential dependencies between them. Similarly, it is inappropriate to aggregate Prospective Resource with Reserves or Contingent Resources.
5. The above table represents the expected outcomes for a gas condensate discovery based on the nearest analogue being the Meskala gas condensate field. There is, however, a chance of the discovery being just dry gas, as is found in the overlying Kechoula field. The dry gas case is not stated above.

UNRISKED GROSS PROSPECTIVE RESOURCES (LEADS), AS AT 28TH FEBRUARY, 2013

Lead

Potentially Recoverable Gas (Bscf)

Potentially Recoverable Condensate (MMBbl)

GC

Best Estimate

Best Estimate

Kawkab

59

5%

Kawi

58

4%

Ksar

15

11%

Kalaa

166

10.0

6%

Kabeer

144

8.6

10%

Kawthar

57

3.4

11%

Kadeem

4

0.3

13%

Kahena

20

1.2

6%

Kashaf

35

2.1

5%

Kenza

3

0.2

9%

Notes:
1. Leads are features that are not sufficiently well defined to be drillable, and need further work and/or data. In general, Leads are significantly more risky than Prospects and therefore volumetrics estimates for Leads are only indicative of relative size.
2. “Gross Unrisked Prospective Resources” are 100% of the volumes estimated to be recoverable from the field.
3. The GCoS reported here represents an indicative estimate of the probability that drilling this Prospect would result in a discovery, which would warrant the re-classification of that volume as a Contingent Resource. The GCoS value for Contingent Resource is, by definition, unity. These GCoS values have not been arithmetically applied to the designated volumes within this assessment. Thus the volumes “Unrisked”.
4.It is inappropriate to aggregate Prospective Resources without due consideration of the different levels of risk associated with each Prospect/Lead and the potential dependencies between them. Similarly, it is inappropriate to aggregate Prospective Resource with Reserves or Contingent Resources.
5.Kawkab, Kawi and Ksar Leads are considered to be dry gas opportunities. Kalaa, Kabeer, Kawthar, Kadeem, Kahena, Kashaf and Kenza are considered to be condensate opportunities.

Commenting, Andrew Benitz, CEO of Longreach, said: 

“Gaffney, Cline’s independent assessment confirms and augments the enormous resource potential of the Sidi Moktar licence, our Moroccan onshore operated acreage.  I am pleased that the investment to date in the exploration programme has yielded these results showing a considerable increase in the prospective resources assigned to our drillable prospects and a growing number of leads which Longreach is in the process of high-grading to prospect status.  With a multi well drill programme planned across our licences, we expect the next 18 months to be transformational for Longreach.”
It should be noted that these estimates do not include any of the Company’s other four non-operated licence areas, onshore and offshore Morocco.

Gaffney, Cline confirms that Longreach’s thorough reinterpretation of the seismic and other data has resulted in a new model for the structural evolution of the Sidi Moktar area and concurs with Longreach’s interpretation that the anticlines are more likely formed by inversion of Permo-Triassic half grabens and that there is potential for hydrocarbon bearing clastic reservoirs to be found below the historical hydrocarbon discoveries.

Longreach completed recently its 2D seismic programme on the Sidi Moktar Licence. 520 km of seismic data were acquired. Priority lines, over Longreach’s drill-ready targets, Koba and Kamar, have been processed by Key Seismic Solutions Ltd. in Calgary using the processing sequence and parameters determined by Longreach during the extensive reprocessing project completed in 2012. The priority lines have been incorporated into the Company’s interpretation to finalise the well locations for the 2013 drilling programme.

The last independent resources study, completed for Longreach in March 2011 by AJM Petroleum Consultants, Calgary, Canada, covering five existing fields within Sidi Moktar, attributed undiscovered gas initially in place of approximately 111 (low), 292 (best) and 776 (high) Bcf for Silurian sourced Triassic targets.

-ENDS-

For additional information, please contact:

Andrew Benitz Chief Executive Officer +44 20 3137 7756

Pelham Bell Pottinger

Mark Antelme / Philip Dennis / Rollo Crichton-Stuart +44 207 861 3232

Additional information on Longreach Oil and Gas Limited can be found atwww.longreachoilandgas.com or through Longreach’s investor relations agent.

Additional information on Longreach Oil and Gas Limited can also be found at www.sedar.com.

Special Note Regarding Analogous Information

Although the Company believes that production on the Meskala field, which is adjacent to the Sidi Moktar licences, may indicate that production is possible from the Koba structure, no assurance can be given by the Company that commercial production on any of the Sidi Moktar exploration licences will be achieved, or as to the levels of production that may be possible on any of the Sidi Moktar exploration licences if production is achieved.

Special Note Regarding Estimates 

The unrisked prospective resources described above have been estimated using probabilistic methods and are dependent on a petroleum discovery being made.

Prospective resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective resources have both an associated chance of discovery and a chance of development.  Prospective resources are further subdivided in accordance with the level of certainty associated with recoverable estimates assuming their discovery and development and may be sub-classified based on project maturity. The prospective gas and condensate resources in the GCA report indicate exploration opportunities and quantify the development potential in the event a commercial discovery is made and should not be construed as reserves or contingent resources. The prospective resources set out in the tables above are those undiscovered, highly speculative gas and condensate resources estimated beyond gas and condensate reserves or contingent gas and condensate resources where geological and geophysical data suggest the potential for discovery of petroleum but where the level of proof is insufficient for classification as reserves or contingent resources. The unrisked prospective gas and condensate resources are the range of volumes that GCA estimates could reasonably be expected to be recovered in the event of discovery and development of these resources.

Definitions

The following terminology, consistent with the COGE Handbook and guidance from Canadian securities regulatory authorities, was used to prepare the disclosure relating to the prospective gas and condensate resources above.

Best Estimate” (Best) is considered to be the best estimate of the quantity of resources that will actually be recovered. It is equally likely that the actual remaining quantities recovered will be greater or less than the best estimate. Those resources that fall within the best estimate have a 50% confidence level that the actual quantities recovered will equal or exceed the estimate.

Low Estimate” (Low) is considered to be a conservative estimate of the quantity of resources that will actually be recovered. It is likely that the actual remaining quantities recovered will exceed the low estimate. Those resources at the low end of the estimate range have the highest degree of certainty – a 90% confidence level – that the actual quantities recovered will equal or exceed the estimate.

High Estimate” (High) is considered to be an optimistic estimate of the quantity of resources that will actually be recovered. It is unlikely that the actual remaining quantities of resources recovered will meet or exceed the high estimate. Those resources at the high end of the estimate range have a lower degree of certainty – a 10% confidence level – that the actual quantities recovered will equal or exceed the estimate.

Special Note Regarding Forwarding Looking Statements

This press release contains forward-looking statements. These statements relate to future events or the Company’s future performance. All statements other than statements of historical fact are forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as “may”, “will”, “should”, “expect”, “plan”, “anticipate”, “believe”, “estimate”, “predict”, “project”, “potential”, “targeting”, “intend”, “could”, “might”, “continue” or the negative of these terms or other similar terms. Forward-looking statements in this press release include, but are not limited to, statements with respect to the completion of the farm-in agreement, the performance characteristics of the Company’s oil and gas properties, capital expenditure programs, supply and demand for oil, gas and commodities, prices for oil and gas, drilling plans, and realization of the anticipated benefits of acquisitions.

Forward-looking statements are only predictions. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. Some of the risks and other factors which could cause results to differ materially from those expressed in the forward-looking statements contained in this press release include, but are not limited to: general economic conditions in Canada, the Kingdom of Morocco and globally; industry conditions, including fluctuations in the price of oil and gas, governmental regulation of the oil and gas industry, including environmental regulation; fluctuation in foreign exchange or interest rates; risks inherent in oil and gas operations; political risk, the need to obtain consents and approvals from industry partners, regulatory authorities and other third-parties; stock market volatility and market valuations; competition for, among other things, capital, acquisitions of reserves, undeveloped land and skilled personnel; incorrect assessments of the value of acquisitions or resource estimates; any future inability to obtain additional funding, when required, on acceptable terms or at all; credit risk; changes in legislation; any unanticipated disputes or deficiencies related to title matters; and risks associated with operating in and being part of a joint venture.

Although the forward-looking statements contained in this press release are based upon assumptions which management of the Company believes to be reasonable, the Company cannot assure that actual results will be consistent with its expectations and assumptions. Undue reliance should not be placed on the forward-looking statements contained in this news release as there can be no assurance that the plans, intentions or expectations upon which they are based will occur. These statements speak only as of the date of this press release, and the Company does not undertake any obligation to publicly update or revise any forward-looking statements except as expressly required by applicable securities laws.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.