Mr. Colin Watt reports

LYNDEN ENERGY REPORTS FINANCIAL RESULTS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2014

Lynden Energy Corp. has released its first-quarter fiscal 2015 results. All monetary references in this news release are to U.S. dollars unless otherwise stated. Highlights for the three months ended Sept. 30, 2014, compared with the three months ended Sept. 30, 2013, include:

• Total production increased 11 per cent to 170,787 barrels of oil equivalent (1,857 boe per day).
• Revenues (net of royalties) decreased 11 per cent to $7,880,187.
• Average realized oil price decreased from $101 per barrel to $86 per barrel.

Production (before royalties) of 170,787 boe (1,857 boe/d) for the three months ended Sept. 30, 2014, is a 1.5-per-cent increase over production in the three months ended June 30, 2014.

Financial results for the three months ended Sept. 30, 2014

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

Results of operations

The company reported net earnings of $1,696,738 (prior period: $2,994,437), and total comprehensive income of $1,159,511 (prior period: $3,007,505) for the current period. Significant components of the current period's net earnings were revenues (net of royalties) of $7,880,187, depletion and depreciation of $3,231,985, and income tax expense of $1,319,000 (prior period: $1,862,900). The company's net earnings per common share for the current period is one cent (prior period: three cents).

Petroleum and natural gas (P&NG) revenue

The company reported gross P&NG revenues of $10,387,275 (prior period: $11,583,019) for the current period, all from its Midland basin wells. In conjunction with the gross revenues, the company reported royalties paid of $2,507,088 (prior period: $2,697,354), and paid production and operating expenses of $1,270,105 (prior period: $994,679) for the current period.

Average realized prices for the current period were $86 per barrel of oil, $4.03 per thousand cubic feet of natural gas and $33.11 per barrel of natural gas liquids, compared with $101 per barrel of oil, $3.24 per thousand cubic feet of natural gas and $32.11 per barrel of natural gas liquids for the prior period.

Liquidity

The company has a $100-million reducing revolving line of credit with Texas Capital Bank. As at Sept. 30, 2014, the line of credit provided a borrowing base of $32-million. There is currently $26.3-million drawn on the line of credit. Subsequent to Sept. 30, 2014, the borrowing base was increased to $40-million.

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 Sept. 30, 2014, of approximately $13.5-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.

Operations highlights

Midland basin, West Texas

The company continues to carry out the Wolfberry vertical well development program on its Midland basin acreage, and the company now has 100 gross Wolfberry (41.33 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 spud in fiscal 2015 (July 1, 2014, to June 30, 2015) at an estimated cost to the company of approximately $15.0-million. Pursuant to the terms of the Midland basin participation agreement, the company's financing amount for the 6.26 net wells is equivalent to 7.15 wells.

The 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, 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 the Wolcott lease, a lease operated by a separate operator based in Midland, Tex., a second horizontal well was spudded in early October and has been drilled with a lateral length of approximately 6,200 feet. The second horizontal well is targeting the Lower Spraberry horizon and has recently been fracture stimulated, with flowback expected to begin shortly.

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

Mitchell Ranch project

The company's Mitchell Ranch project covers approximately 104,000 acres of P&NG leases located primarily in Mitchell county, West Texas, where the company has a 50-per-cent working interest.

A four-new-well program began in the fourth quarter of 2014. All four wells, the Spade 17 No. 3, 1 No. 1, 5 No. 1 and 18 No. 1, have now been drilled in an area in general proximity to the company's original 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 general Wolfberry well completion approach, where all stimulation stages are flowed back simultaneously, individual or a smaller number of stimulation stages in the new wells will be separately flow tested to obtain as much information as possible about the productive potential of the zones stimulated prior to moving uphole. As of the date of this report, the only new well to be fracture stimulated is the Spade 17 No. 3 well where a three-stage stimulation was carried out in the lower targeted zones.

We seek Safe Harbor.