Mr. Colin Watt reports

LYNDEN ENERGY REPORTS FISCAL 2014 FINANCIAL RESULTS AND OPERATIONS UPDATE

Lynden Energy Corp. has released its results for the fiscal year ended June 30, 2014. All monetary references in this news release are to United States dollars unless otherwise stated. Highlights for the current year, compared with the year ended June 30, 2013, include:

• Total production increased 150 per cent to 569,892 barrels of oil equivalent (1,561 barrels of oil equivalent per day).
• Gross revenues, net of royalties, increased 155 per cent to $29,114,075.
• The company sold 12 gross (4.7 net) Wolfberry project wells to BreitBurn Energy Partners LP for $19.3-million, effective Dec. 30, 2013.
• Net earnings were 10 cents per common share (prior year -- 10 cents).

Production for the current year totalled 569,982 barrels of oil equivalent (1,561 barrels of oil equivalent per day). Production for the three months ended June 30, 2014, totalled 168,280 barrels of oil equivalent (1,849 barrels of oil equivalent per day).

Financial results for the year and three months ended June 30, 2014

This news release should be read in conjunction with the company's consolidated financial statements for the year ended June 30, 2014, and the notes thereto, together with the management's discussion and analysis for the corresponding period, which will be available under the company's profile on SEDAR.

Results of operations

The company reported net earnings of $12,749,718 (prior year -- $11,284,214) and total comprehensive income of $12,397,116 (prior year -- $11,412,601) for the current year. Significant components of the current year's net earnings were revenues of $29,050,442; gain on disposition of property, plant and equipment of $10,219,755; depletion and depreciation of $9,626,948; and income tax expense of $10,606,023. The company's net earnings per common share for the current year were 10 cents (prior year -- 10 cents).

Petroleum and natural gas revenue

The company reported gross petroleum and natural gas revenues of $38,052,954 (prior year -- $24,760,482) for the current year, all from its Wolfberry wells. In conjunction with the gross revenues, the company reported royalties paid of $8,938,879 (prior year -- $6,034,069) and paid production and operating expenses of $4,949,932 (prior year -- $3,019,361) for the current year. The company also incurred $9,626,948 (prior year -- $9,478,330) of depletion and depreciation for the current year.

Average realized prices for the current year were $96 per barrel of oil and $4.92 per thousand cubic feet of natural gas, compared with $89 per barrel of oil and $4.80 per thousand cubic feet of natural gas for the prior year. The natural gas selling price is reflective of the thermal value of gas and associated products sold.

The company also reported gross petroleum and natural gas revenues of $9,745,579 for the three months ended June 30, 2014, compared with $7,418,919 for the three months ended March 31, 2014 (third-quarter 2014). In conjunction with the revenues, the company reported royalties paid of $2,324,405 (third-quarter 2014 -- $1,742,216) and paid production and operating expenses of $1,454,914 (third-quarter 2014 -- $1,346,208) for the three months ended June 30, 2014.

Average realized prices for the three months ended June 30, 2014, were $94 per barrel of oil and $4.45 per thousand cubic feet of natural gas, compared with $93 per barrel of oil and $6.46 per thousand cubic feet of natural gas for third-quarter 2014. The price of natural gas was significantly higher in third-quarter 2014 (Jan. 1 to March 31, 2014), primarily as a result of weather-driven demand.

Liquidity and capital budget

The company anticipates total capital expenditures in fiscal 2015 (July 1, 2014, to June 30, 2015) of approximately $34-million. Included in the capital budget is the company's participation in 15 Wolfberry wells, five Midland basin horizontal wells and four vertical wells on the Mitchell Ranch project. The company anticipates financing the majority of its capital expenditures through operating revenues, drawdowns on the line of credit and cash on hand at June 30, 2014, of approximately $14-million.

The company's capital budget is subject to change depending upon a number of factors, including economic and industry conditions at the time of drilling, prevailing and anticipated prices for oil and gas, the availability of sufficient capital resources for drilling prospects, the company's financial results, and the availability of lease extensions and renewals on reasonable terms.

The company has a $100-million reducing revolving line of credit. As at June 30, 2014, the line of credit provided a borrowing base of $32-million, of which $17.75-million had been drawn. There is currently $23.3-million drawn on the line of credit. The company anticipates continuing to seek upward revisions of the borrowing base.

Operations highlights

Midland basin, West Texas

The company continues to carry out a rapid oil and gas vertical well development program on its Midland basin acreage and the company now has 97 gross Wolfberry (39.71 net) wells tied in and producing.

The gross cost of a Wolfberry well is currently approximately $2.1-million. The company's current plans call for 15 gross (6.26 net) Wolfberry wells to be spudded in fiscal 2015 at an estimated cost to the company of approximately $15.0-million. Pursuant to the terms of its Midland basin participation agreement, the company's financing amount for the 6.26 net wells is equivalent to 7.15 wells.

The company's Midland basin acreage also has potential to be developed with horizontal wells. Numerous industry participants are actively testing various formations within the Wolfberry interval for their development potential.

CrownQuest Operating LLC, the operator of the vast majority of the company's acreage, has begun to create an initial horizontal development plan for the acreage. Two initial CrownQuest-operated horizontal wells are scheduled for the first half of calendar 2015 in Glasscock county. The company anticipates a gross cost of a horizontal well to be approximately $9.0-million, for an estimated cost to the company pursuant to the terms of the Midland basin participation agreement of approximately $4.5-million per well.

On May 1, 2014, the company reported that its first horizontal well, the Wolcott 253-1H, had been spudded on a 1,127-acre lease in northern Martin county, West Texas. The 1,127 lease (the Wolcott lease) is operated by a separate company based in Midland, Tex. The well, which has a lateral length of approximately 6,200 feet, was drilled in the upper Wolfcamp B horizon and was fracture stimulated in late July. Initial production volumes of oil and natural gas from the well have been below expectations; however, the short production history and lack of nearby analogous horizontal wells make it difficult to draw definitive conclusions on the long-term productivity of this well or on the potential of the Wolfcamp B horizon on the Wolcott lease. Production from the Wolcott 253-1H will be monitored with a view to continue development of the Wolfcamp B horizon on the lease.

In order to continue with development of the Wolcott lease, a second horizontal well on the lease was spudded in early October and has reached its targeted total depth. The second horizontal well is targeting the Lower Spraberry horizon and has a lateral length of approximately 6,200 feet. Completion operations on the well have not yet begun. The company is financing 24.375 per cent of the cost of the wells on the Wolcott lease and will have a 20-per-cent working interest in the wells. Subject to proposals made by the operator, the company currently anticipates three horizontal wells will be spudded on the lease in fiscal 2015. The gross cost of a horizontal well is estimated to be approximately $8.5-million, for an estimated cost to the company of approximately $2.1-million per well.

Production of oil and gas at the wellhead from the company's Midland basin wells over the past 14 days has averaged approximately 1,250 barrels of oil equivalent net to the company (after royalties).

Mitchell Ranch project

The company's Mitchell Ranch project, located on the Easter shelf, covers approximately 104,000 acres of petroleum and natural gas leases located primarily in Mitchell county, West Texas, where the company has a 50-per-cent working interest.

The company currently has one (0.5 net) producing test well on the Mitchell Ranch, the Spade 17 No. 1, where several rounds of completions have been carried out to determine a development plan for the project. The most recent completion was carried out in mid-February, 2014.

A four-new-well program is currently under way, with the first three wells now drilled and the fourth well currently drilling. The wells are in general proximity to the company's Spade 17 No. 1 well. The new well program is incorporating the results of a recent 3-D seismic program that has identified multiple pay opportunities in the Ellenburger, Mississippian chert, Pennsylvanian limestone, Cline shale and Wolfcamp. In contrast to the Wolfberry well completion approach, where all stimulation stages are flowed back simultaneously, each stimulation stage in the new wells will be flow tested to obtain as much information as possible about the productive potential of that zone prior to moving uphole. As of the date of this report, only the lowermost zone in the first of the four proposed wells has been tested.

We seek Safe Harbor.