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Lightstream Keeping Sharp Capital Discipline

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Lightstream Resources Ltd. has announced our first quarter financial and operating results.

First Quarter Financial & Operating Highlights

• First quarter production averaged 35,179 boepd (76% light oil and liquids), a 4% decrease from fourth quarter 2014 production, attributable to our reduced 2015 capital and drilling programs.
• strong>Capital expenditures of $60 million (before acquisitions and dispositions (A&D)) in first quarter 2015 were 50% lower than fourth quarter 2014 and 70% lower than first quarter 2014. This is consistent with our reduced capital program in the current economic environment and our commitment to spend within cash flow in 2015.
• In the first quarter of 2015, we funded capital expenditures through funds flow from operations and a $12.4 million asset disposition.
• We continue to be proactive in managing our debt and are in the advanced stages of negotiating the debt terms of our credit facility. We are currently in compliance with all covenants under the existing credit facility.
• We expect to generate funds flow well above our capital spending in 2015, with all excess net cash being applied to debt.

Operating Results

• Our first quarter average production of 35,179 boepd (76% light oil and liquids) was 20% below first quarter 2014 average production due primarily to the disposition of assets representing 6,315 boepd of production and our decision to reduce capital spending in response to lower commodity prices. Cardium production decreased 7%, Bakken production decreased 12% and Alberta/BC production decreased 14% from first quarter 2014 levels.

Average Daily Production

• Production expenses decreased from $13.90/boe in Q1 2014 to $12.48/boe in the first quarter 2015, largely due to the disposition of relatively higher cost production in our southeast Saskatchewan Conventional business unit in the third quarter of 2014. On a total dollar basis, total production expenses for the first quarter in 2015 have decreased by almost 30% from the first quarter 2014, attributable to lower variable production costs associated with decreased production levels.
• With a reduced capital expenditure program, we drilled 14 wells in the first quarter of 2015 compared to 50 wells during the same period last year and brought 20 wells on production compared to 25 a year ago.
• strong>At the end of the quarter, there were seven wells waiting to be completed and/or brought on production, five of which are expected to be brought on-stream during the second quarter of 2015, including two high impact Falher gas wells. The remaining two wells are planned to be brought on in the third quarter of the year.

Financial Results and Liquidity

• First quarter 2015 production of 35,179 boepd and an operating netback of $20.87/boe resulted in funds flow from operations of $52 million ($0.26 per basic share), a 70% decrease from the first quarter of 2014 largely due to lower commodity prices. As a result of our hedging program, Lightstream realized gains of $28 million on crude oil contracts during the first quarter of 2015. We continue to expect full year 2015 funds flow to exceed capital expenditures with the excess being directed toward reducing debt.
• Our adjusted net loss for the first quarter was $127 million (-$0.64 per basic share) compared to net income for the first quarter of 2014. The net loss is attributable to lower realized prices, lower sales volumes and a larger non-cash foreign exchange loss, partially offset by lower royalties, a larger gain on risk management contracts, and lower depletion and depreciation.
• strong>First quarter 2015 is expected to be our highest spending quarter, with capital expenditures of $60 million representing over half of anticipated spending for the year. This spending was funded though funds flow from operations and a $12.4 million asset disposition, which closed early in the quarter. Capital spending will be significantly lower during the second half of the year as we do not intend to invest in an operated, new well drilling program at current commodity prices. We continue to monitor the commodity price environment with flexibility to increase capital spending should prices improve. To provide greater certainty over future cash flows, we have also increased our 2015 hedge position and continue to monitor the futures market to augment our hedge portfolio.
• We are in advanced stages of renegotiating debt terms with our credit facility lenders. As of March 31, 2015, we had $638 million of debt drawn on our credit facility compared to $1.07 billion as of March 31, 2014. We are currently in compliance with all covenants under the existing credit facility and expect to successfully renegotiate terms to maintain financial flexibility through the downside of this commodity cycle.