Mr. John Wright reports

LIGHTSTREAM ANNOUNCES 2014 FUNDS FLOW FROM OPERATIONS OF $572 MILLION

Lightstream Resources Ltd. has released its fourth quarter and year-end 2014 financial and operating results.

Highlights

In this press release, annual comparisons are 2014 compared with 2013 and quarterly comparisons are fourth quarter 2014 compared with fourth quarter 2013, unless otherwise noted. All references to well counts are on a net basis.

• The company's 2014 proved plus probable (2P) year-end reserve value has a net present value (before tax and discounted at 10 per cent) of $3.2-billion ($2.6-billion after tax) as determined by Sproule Associates Ltd., which significantly exceeded the company's $1.9-billion enterprise value (total debt plus equity market value) at Dec. 31, 2014.
• Average daily production for 2014 totalled 40,420 barrels of oil equivalent per day (boepd) (78 per cent light oil and liquids weighted) and 36,472 boepd (75 per cent light oil and liquids weighted) for fourth quarter 2014 reflecting dispositions of 6,315 boepd completed through the first three quarters in 2014.
• Two thousand fourteen funds flow was $572-million ($2.86 per basic share) a 15-per-cent decrease from 2013; fourth quarter funds flow was $89-million (45 cents per basic share), down 39 per cent from the prior year on lower commodity prices and lower production (primarily as a result of dispositions).
• The company's operating netback for 2014 was $49.45 per boe, 1 per cent below its operating netback in 2013, and for the fourth quarter was $33.15 per boe, down 27 per cent from the fourth quarter of 2013 reflecting a 25-per-cent drop in United States dollar WTI (West Texas Intermediate) prices over the same period.
• Capital expenditures (before acquisitions and divestitures (A&D)) were $472-million for 2014, 34 per cent below 2013 levels, and $121-million for the fourth quarter of 2014, a decrease of 22 per cent for the same period a year earlier.
• Dispositions of non-core assets totalled $729-million with net proceeds applied to debt.
• As a result of the company's disposition program and cash expenditures being 99 per cent of funds flow, total debt was reduced to $1.65-billion as at Dec. 31, 2014, a 28-per-cent decrease from the same time last year. The company expects to realize at least $30-million in annual cash interest savings going forward.
• For 2014, the company reported a net loss of $446-million as a result of a non-cash $700-million impairment charge to property, plant and equipment, primarily due to reduced forward pricing estimates compared with year-end 2013.

                                 SUMMARY OF RESULTS                                                          

                                     Three months ended                Year ended       
                                               Dec. 31,                  Dec. 31,
                                       2014        2013         2014         2013

Oil and natural gas revenue        $186,861    $287,727   $1,107,824   $1,250,491
Funds flow from operations           89,278     146,017      572,232      670,928
Per share -- basic ($)                 0.45        0.73         2.86         3.43
Adjusted net income (loss)          160,386    (45,598)      249,922     (42,608)
Per share --
basic ($) (loss)                       0.81      (0.23)         1.25       (0.22)
Capital expenditures net            121,124     155,933      471,820      715,913
Capital (expenditures)              123,194     154,487    (240,636)      719,101
Total debt                                                 1,646,862    2,274,122
Dividends per share ($)                0.10        0.20         0.46         0.91
Cash dividends per share
($)                                    0.10        0.17         0.46         0.67
Operating netback ($/boe)             33.15       45.43        49.45        50.00
Average daily production
(boe)                                36,472      45,521       40,420       46,438

Operating summary

Primarily reflecting non-core asset dispositions of 6,315 boepd, total average production in 2014 decreased 13 per cent to 40,420 boepd (78 per cent light oil and liquids weighted) from the company's average 2013 production of 46,438 boepd. The company's fourth quarter average production of 36,472 boepd (75 per cent light oil and liquids weighted) was 20 per cent lower than average production in the fourth quarter of 2013, due primarily to the sale of the company's conventional assets in southeast Saskatchewan.

The company's capital spending program for the year was $472-million, a 34-per-cent decrease from 2013 levels and a 50-per-cent decrease from 2012 levels. Capital expenditures in the fourth quarter were $121-million (before A&D), a decrease of 22 per cent from the $156-million invested in the fourth quarter of 2013, reflecting the company's reduced capital program and commitment in 2014 to spend within cash flow. Capital spending has decreased significantly over the last several years which is consistent with the company's maturing asset base.

Production expenses for the fourth quarter decreased by 15 per cent on a total basis compared with the same period in 2013 due primarily to lower variable production costs associated with decreased production levels and the disposition of the company's southeast Saskatchewan conventional assets. On a per boe basis, production expenses increased to $13.47 per boe for the quarter and $14.14 per boe for 2014 as a result of additional well workovers.

                                 AVERAGE DAILY PRODUCTION

                                Three months ended                             Year ended
                                     Dec. 31, 2014                          Dec. 31, 2014      
                  Oil and NGL        Gas     Total  Oil and NGL        Gas          Total
Business unit         (bbl/d)    (Mcf/d)   (boe/d)      (bbl/d)    (Mcf/d)        (boe/d)

Bakken (incl.
conventional)          12,912      6,467    13,990       16,632      7,148         17,823
Cardium                11,798     40,607    18,566       12,381     37,348         18,606
Alberta/B.C.            2,589      7,963     3,916        2,671      7,922          3,991
                       27,299     55,037    36,472       31,684     52,418         40,420

The Cardium business unit continues to be the company's most active area, followed by the Bakken business unit and finally Alberta/B.C., more specifically Swan Hills. During 2014, the company drilled 98 wells at a 100-per-cent success rate. The company brought 88 wells on production, leaving an inventory of 13 wells at Dec. 31, 2014, which the company expects to have on production by the end of second quarter 2015.

                     FOURTH QUARTER 2014 DRILLING ACTIVITY     
                                              
                           Drilled     Completed     On production inventory  
Business unit         Gross    Net  Gross    Net  Gross    Net  Gross    Net

Bakken (incl.                                                               
conventional)            21     13     24     15     21     12      8      6
Cardium                  18     15     19     15     17     13      9      7
Alberta/B.C.              2      1      2      1      2      1      -      -
Total                    41     29     45     31     40     26     17     13

                                                             
                              2014 DRILLING ACTIVITY       
                                               
                           Drilled     Completed     On production inventory  
Business unit         Gross    Net  Gross    Net  Gross    Net  Gross    Net

Bakken (incl.                                                               
conventional)            58     39     54     34     52     31      8      6
Cardium                  69     51     60     46     63     49      9      7
Alberta/B.C.              9      8      9      8      9      8      -      -
Total                   136     98    123     88    124     88     17     13

Southeast Saskatchewan

The company's Bakken business unit averaged 13,990 boepd of production during the fourth quarter of 2014, representing a 17-per-cent decrease from fourth quarter 2013 due to attenuation of investment in the area as the company continues to maximize the free cash flow generated from this resource play. In 2014, this business unit generated $282-million of net operating income yielding $164-million of free cash flow after capital expenditures of $118-million. Prior to selling the company's conventional business unit these assets generated $56-million in free cash flow.

As previously announced, the company is looking to monetize, at an appropriate valuation, all or part of its Bakken business unit over the next 12 to 24 months, which, if successful, would allow it to significantly transform its balance sheet and refocus Lightstream into an Alberta-based company with production of over 20,000 boepd (pro forma fourth quarter 2014 rates).

Cardium

Production in the Cardium business unit averaged 18,566 boepd during the fourth quarter of 2014, representing a 6-per-cent decrease from the same period last year. This was primarily driven by divestitures of 1,200 boepd in the first quarter of 2014. Prior to dispositions, Cardium production would have been largely unchanged with 26-per-cent-lower capital spending. As a result, free cash flow in this business unit improved to $85-million in 2014 from $32-million in 2013 and the company expects the Cardium to continue to be its largest producing business unit.

Alberta/B.C.

In Alberta/B.C., fourth quarter production averaged 3,916 boepd, which represents a 7-per-cent decrease from fourth quarter 2013 which can be largely attributed to 500 boepd of production that was sold during the first quarter 2014. This was partially offset by new well activity where the company brought seven operated Swan Hills wells on production in second quarter 2014 and participated in two (one net) non-operated wells in fourth quarter 2014.

Financial results

In 2014 the company successfully executed its planned non-core asset divestiture program generating total gross proceeds of $729-million at attractive metrics. These proceeds were used to reduce overall corporate debt levels by 28 per cent to $1.65-billion and, as a result of this reduction, the company also expects to realize at least $30-million in annual cash interest savings going forward. The company exceeded its goal to be cash flow neutral with 2014 capital expenditures (before A&D) plus dividend payments being 99 per cent of funds flow from operations.

Funds flow from operations was $572-million ($2.86 per basic share) for 2014, a 15-per-cent decrease from 2013 driven mostly by lower annual production, primarily due to asset sales. The company's average operating netback in 2014 was $49.45 per boe, a decrease of 1 per cent, as higher oil and natural gas prices were offset by higher royalties and production expenses. For 2014 the company's average realized liquids price was $88 per barrel (bbl) (WTI price was $93 (U.S.) per bbl). The company's fourth quarter operating netback was $33.15 per boe, a 27-per-cent decrease from the same period last year primarily due to lower oil prices and slightly higher production expenses, partially offset by lower royalties.

In 2014, the company recorded a net loss of $446-million compared with a net loss of $1,384-million in 2013. The loss in 2014 is the result of a non-cash impairment charge to property, plant and equipment of $700-million recognized in the fourth quarter, due to reduced forward commodity pricing estimates and negative probable reserve revisions.

In response to the rapid decline in world oil prices, the company decreased its monthly dividend effective December, 2014, and ultimately suspended its dividend effective January, 2015. The company continues to monitor oil price trends and will adjust its capital spending forecasts and dividend policy accordingly.

2015 guidance

The company's revised guidance reflects a lower commodity price forecast. In the current commodity price and service cost environment, the company does not intend to invest in operated, new well drilling programs in the second half of 2015. This is reflected in a 45-per-cent decrease in planned capital expenditures for the year compared with previous 2015 guidance, which has not impacted annual average production but is expected to reduce exit production. The company continues to expect to realize excess funds flow relative to its capital program with any and all excess cash being applied to its debt. As previously stated, the company is renegotiating debt terms with its credit facility lenders to manage its financial covenants and maintain financial flexibility.

                             2015 GUIDANCE
                  (In thousands, except where noted)
                                                        2015 guidance
                                    2015 guidance   (initial Dec. 15,
                          (revised March 6, 2015)               2014)
Production (annual
average)
Total (boe/d)                    30,500 -- 32,500    30,000 -- 32,000
Natural gas weighting                         26%                 23%
Exit production (boe/d)          26,500 -- 28,500    30,000 -- 32,000
EBITDA                         255,000 -- 275,000  330,000 -- 350,000
Funds flow from
operations                     145,000 -- 165,000  225,000 -- 245,000
Funds flow per share                 0.74 -- 0.84        1.14 -- 1.24
Dividends per share                          0.00                0.48
Capital expenditures           100,000 -- 120,000  190,000 -- 210,000
Pricing assumptions
Crude oil -- WTI
(US$/bbl)                                   52.50               65.00
Crude oil -- WTI
(Cdn$/bbl)                                  65.63               74.71
Corporate oil
differential (%)                               15                  10
Natural gas -- AECO
(Cdn$/mcf)                                   3.00                4.00
Exchange rate
(US$/Cdn$)                                   0.80                0.87

2014 fourth quarter and year-end financial results conference call

Lightstream management will be hosting a conference call for investors, financial analysts, media and any interested persons on March 6, 2015, at 9 a.m. (Mountain Time) (11 a.m. Eastern Time) to discuss Lightstream's 2014 fourth quarter and annual financial and operating results.

The investor conference call details are as follows:

Live call dial-in numbers:  1-416-340-2216/1-800-355-4959

Replay dial-in numbers:  1-905-694-9451/1-800-408-3053

Pass code:  8559370

We seek Safe Harbor.