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Legacy Increases Production 28 Percent Over Year

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Legacy Oil + Gas Inc. has announced it has filed on SEDAR its interim financial statements and related Management's Discussion and Analysis for the three and nine months ended September 30, 2014.

Highlights

• Drilled 59 gross (51.6 net) light oil wells in the third quarter of 2014, with a 100 percent success rate
• Strong production results continued in the third quarter from activity in the Midale , Turner Valley and Spearfish
• Increased average production from 19,489 Boe per day in the third quarter of 2013 and 20,224 Boe per day in the second quarter of 2014 to a record 25,004 Boe per day in the third quarter of 2014 (28 percent and 24 percent increase, respectively)
• Increased funds generated by operations of $80.0 million in the third quarter of 2013 and $75.2 million in the second quarter of 2014 to a record $95.2 million in the third quarter of 2014 (19 percent and 27 percent increase, respectively)
• Increased net income from a net loss of $1.9 million ( $0.01 per share) in the third quarter of 2013 to net income of $13.7 million ( $0.07 per share) in the third quarter of 2014 (835 percent increase on an absolute basis and 800 percent on a per share basis)
• Closed the acquisition of Corinthian Exploration Corp., comprised of 2,800 Boe per day (86 percent high netback light oil), for total consideration of 20.1 million Legacy common shares and assumed net debt of approximately $37.8 million (including the fair value of unrealized derivatives)

Operations Overview

In the third quarter of 2014, the Company drilled 59 gross (51.6 net) oil wells, with a 100 percent success rate. Activity in the third quarter included the drilling of 15 gross (14.2 net) Midale horizontal wells in the Company's Pinto and Steelman areas and 20 gross (17.7 net) Spearfish horizontal wells in the Company's Pierson and North Dakota areas.

Production averaged a record 25,004 Boe per day in the third quarter despite the persistent heavy rainfall in portions of southeast Saskatchewan , Manitoba and North Dakota . The Company was successful in navigating the wet lease conditions while delivering expected production growth and improved capital efficiencies.

Legacy has recently exceeded its 2014 exit rate guidance of 27,350 Boe per day and is positioned to be on track to meet its full year production and capital expenditure guidance.

Bakken

The Company drilled 4 (3.4 net) Bakken wells in the third quarter of 2014. The two extended reach horizontal wells drilled at Taylorton have average 30 day initial production of 225 Boe per day per well, while exhibiting minimal production decline in the first two months of production.

At Star Valley, the two wells brought on production met type curve with average 30 day initial production of 185 Boe per day per well.

Additional source water has been tied-in at Taylorton, enabling waterflood expansion to occur at a more rapid pace in 2015, as all Taylorton produced Bakken water is currently being injected through the existing water injection wells.

Midale

Legacy had an active quarter developing the Midale Formation with the drilling of 15 (14.2 net) wells in the Taylorton, Pinto and Steelman areas. This drilling included successful development, step out and exploration wells. Production results have continued to exceed the Company's type curve. Overall, the average 30 day initial production rates from the 19 wells with 30 days of production history was 250 Boe per day per well. Well costs have been reduced over the course of 2014 by $150,000 per well and additional cost savings are anticipated.

The Steelman waterflood pilot continues to show positive response, as the two wells offsetting the injector have shown a 500 percent increase in oil production. Additionally, wells outside the initial pilot area have demonstrated increasing oil production. The Company has commenced water injection in two other Midale waterflood pilot projects at Steelman .

Legacy was the first mover in the Midale play more than three years ago and has utilized its leading horizontal completion expertise to generate these tremendous results.

Turner Valley

At Turner Valley , Legacy has continued to evolve drilling and completion practices to both optimize production rate and reduce capital costs. Through the application of unique logging while drilling (LWD) tools, longer laterals in the best pay, integration of the 3D seismic interpretation and selective completion techniques, the last 14 wells drilled by Legacy have demonstrated a significant step-change in initial oil rate and water cut.

Legacy drilled 3 (2.5 net) wells in the third quarter 2014: Hartell # 9, Iceton #1 and Hartell #10. The Lansdell #2, Hartell #9 and Iceton #1 wells, brought on production in the third quarter, had an average 30 day initial production rate of 275 Boe per day per well. The Iceton #1 well has continued to dramatically improve, having recently achieved peak production rates in excess of 800 Boe per day, making it the most prolific well drilled in Turner Valley since the 1940's. The Hartell #10 well was brought on production in early November, after swabbing strong quantities of low water cut light oil.

Spearfish - Pierson and Bottineau

The Company drilled 20 (17.7 net) Spearfish wells in the third quarter of 2014. The six wells brought on production at Pierson continue to meet type curve with average 30 day initial production of 95 Bbls of oil per day per well. The 10 wells brought on production at Bottineau continue to meet type curve with average 30 day initial production of 90 Bbls of oil per day per well, even though these wells were lower capital cost short lateral horizontals.

The last number of long (1,400 m lateral) wells drilled have demonstrated drill, complete, equip and tie-in costs of less than $1.5 million and the short (700 m lateral) wells are approximately $1.2 million . The Company is moving to drill proportionately more short lateral horizontal wells in the Spearfish as the strong initial rates and lower capital costs have resulted in robust economic returns.

Events After the Reporting Period

Legacy's banking syndicate increased the borrowing base from the previous $700 million to $800 million , resulting in total borrowing capacity in excess of $1 Billion. The increase is a result of the Company's high netback light oil reserves, long reserve life and increased production over the past year and continues to provide Legacy with significant financial flexibility with which to conduct its operations. The borrowing base continues to be subject to semi-annual review, next scheduled to occur in April 2015.

Outlook

Legacy is well on its way to demonstrating another successful year of operational and financial results. Strong production rates continue to be achieved in all plays while capital costs remain in-line with budget. Furthermore, Legacy has exceeded its 2014 exit rate guidance of 27,350 Boe per day.

Operating expenses have been reduced, with sequential operating expense reductions occurring since the first quarter of 2014 (6 percent reduction year to date) and expectations of this trend continuing in the fourth quarter of 2014 and into 2015.

At the beginning of 2014, Legacy set the goal of reducing the 2014 year end net debt to year end annualized funds flow from operations to 1.5 times. This goal was achieved in June 2014 , based on the then prevailing strip prices, through the completion of two under levered corporate acquisitions and organic funds flow growth. This was a solid first step; however, the Company continues to pursue additional initiatives to enhance the balance sheet, including budgeting annual capital spending equal to or less than annual cash flow.

In the fourth quarter of 2014, Legacy plans to direct approximately 60 percent of funds flow from operations to capital expenditures. The resulting free cash flow, when combined with proceeds from the anticipated sale of the non-core Elmworth property, will reduce Legacy's estimated 2014 year end net debt to estimated fourth quarter 2014 annualized funds flow from operations to approximately 1.9 times, based on current strip prices (approximately US$80 per Bbl WTI). Any and all initiatives are under consideration to further improve the Company's financial position.

An enhanced balance sheet and the demonstrated strong production growth improves the visibility of the significant value potential on Legacy's substantial, high netback light oil development and waterflood inventory. Legacy's track record of technical innovation and execution excellence, when combined with its high quality asset base, reinforces the optionality for surfacing value in the near term and differentiates the Company from its peers.