Corporate Presentation February 2015

Transcription

1 TSX: YGR Corporate Presentation February 2015

2 Our job is to create shareholder value Integrity and ethical behavior are essential to success Sound ethics and shareholders interests are compatible It is okay to be wrong: own it, accept it, learn from it Embrace adversity, it is a difficult business Diversity of skill-sets within the team are critical to success Loyalty, performance and achievement are recognized Top decile performance in all categories is the goal Full cycle Corporate IRR is what measures our success TSX: YGR 2

3 Publicly listed junior oil and gas company Shares Outstanding Basic Options/Warrants (weighted average $1.90) Fully Diluted Insider Ownership Basic Fully Diluted Market Capitalization (at $1.20/share) Q4 Net Debt ($90 million in ATB credit facilities) (estimate) Enterprise Value TSX: YGR 57.7 million 4.1 million 61.8 million 15% 21% $69 million $58 million $127 million Q3/2014 net debt to annualized cash flow 1.4 : 1 Forecast 2014 net debt to 2014 cash flow 1.5 : 1 Proved plus Probable Dec 31, 2014 (Deloitte) 37.4 million boe Net Present 10% Dec 31, 2014 $395 million NAV / Share (with no undeveloped land Dec 31, 2014 $5.84 TSX: YGR 3

4 Management Team Jim Evaskevich, President & CEO 30+ years extensive executive experience with strong operations background Lorne Simpson B.Sc., C.E.T., VP, Operations 30+ years experience in the industry Supervisor, Drilling Ops with PetroBakken Energy Ltd. Engineered, drilled or completed 250 HZ Cardium wells, 200 HZ Bakken wells, 2 HZ Duvernay wells, 25 HZ Montney wells, and dozens of Blue Sky, Viking, SWS, Glauc, and Rock Creek HZ wells Randall Faminow, VP, Land 30+ years of experience in all aspects of oil and gas land work, including negotiation, acquisitions and divestments, contracts and mergers James Glessing, CA, CFO 15+ years oil and gas accounting experience Executive and financial experience as CFO with North Peace Energy Corp Controller at BlackRock Ventures, Canadian Natural Resources, Shell and Deloitte Board of Directors Gordon Bowerman Chairman President of Cove Resources Ltd Founder of several successful private and public oil and gas companies Robert Weir President of Weir Resource Management Ltd Jim Evaskevich President and CEO of Yangarra Resources Ltd Neil Mackenzie Director of various public companies, including Canyon Technical Services Currently a partner in Blackstone Fluids, an oil and gas drilling fluids company Ted Morton A former Canadian politician and cabinet minister in the Alberta government Has held various positions in the Alberta Government included Minister of Energy ( ), Minister of Finance and Enterprise ( ), and Minster of Sustainable Resources ( ) TSX: YGR 4

5 IRR 80% 70% 60% 50% 40% 30% 20% 10% 0% Half Cycle IRR (1) Full Cycle IRR (2) 67% 65% 41% 34% 24% 26% 31% 12% Half cycle IRR is based on actual drilling and completion costs, production to date and P+P reserves. 2. Full cycle IRR allocates all other capital costs to the wells (i.e. land, G&G, infrastructure) TSX: YGR 5

6 YGR MEI SRX RE TVE MQL RTK AEI ZAR GXE CJ SRX RE YGR RTK AEI CJ GXE TVE MQL MEI ZAR Drilling cost per meter Completion cost per stage $800 $250,000 $700 $600 $200,000 $500 $150,000 $400 $300 $100,000 $200 $100 $50,000 $ $ Q Operating costs/boe versus peers Q G&A/boe versus peers Average $ Average $3.21 TSX: YGR 6

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9 (Cashflow) (mboe) 50,000,000 40,000,000 30,000,000 20,000,000 10,000, Cashflow Production (est) Production per share Cash Flow per Share 4,000 3,000 2,000 1, TSX: YGR 9

10 40,000 P+P Reserves (mboe) 500 Reserve Value PV10 ($ millions) 30, ,000 10,000 Oil NGL's Natural gas ,000 30,000 20,000 10,000 0 P+P Reserves (mboe) PROB Replaced 2013 production by 1,887% (614% in 2012) Finding and development recycle ratio of 3.55 times on P+P reserves Finding and development costs of $11.92/boe on proved plus probable reserves Reserve life index of 34 years Future development costs of $297 million PUD PDNP PDP TSX: YGR Reserve Value PV10 ($ millions)

11 TSX: YGR 11 Pembina Willesden Green Ferrier Edmonton Rocky Mountain House Red Deer Calgary Central Alberta Interest in 140 sections of land 85 + horizontal wells drilled since 2010 Focus Cardium and Glauc plays Light oil High netback Quick payouts

12 T45 T45 T45 T44 T44 T44 R UPP WE LO T43 ER Y CAR OIL SS M IU RD CA GA T43 T43 M DIU T42 W LO W IL E R T42 LE SD EN T42 R A C G R M IU D T41 C A R D IU M PROSPECT IVE UPPER FI EL D Z IU D H R A C T41 EE N T41 M LOWER IL O PROSPECTIVE CARDIUM HZ OIL T40 GAS T40 T40 RI R FE PE CT L H Z T39 D EL FI PROSPECTIVE HZ GAS Working M T39 cardium wtr inj cardium gas cardium oil IU IL O E V TI Wells T38 RD CA IV E OI EC SP Legend O PR HZ ER PR OS T39 Legend Wells cardium wtr inj cardium gas cardium oil PROSPECTIVE HZ yangarra land Farmin land OIL T38 T38 Working yangarra land Farmin land T37 Cardium Show Map cardium pool outlines T37 T37 By : Poruchny Scale = 1:85000 Cardium Show Map cardium pool outlines Date : 2013/12/04 Project : cardium show map By : Poruchny Scale = 1:85000 R9 TSX: TSX:YGR YGR R8 R7 R6 Date : 2013/12/04 Project : cardium show map R5W5 12

13 T42 T42 T43 T43 T43 T41 T41 D T42 T42 Y LE A O H Y LE A B R D any cut amount T41 T41 LA IS T39 IE O H CHANNEL D N T40 A B D A T41 R T42 I R R T40 R ER N LA IS T39 LA T40 T38 T38 T40 CHANNEL any cut amount Y LE T39 any cut amount T37 H T37 R R IS T40 D A O CHANNEL B A R IE D N T39 T39 T38 R9 R8 R7 R6 R5 R4 R3W5 Legend Wells Glauconite Show Map Porosity Trends glauc pens HZ glauc liquid rich gas All Glauc liquid rich gas Working T38 T38 T37 CHANNEL Yangarra land R4 By : Poruchny Scale = 1:85000 any cut amount Date : 2013/12/04 Project : glauc show map2 R3W5 Glauconite Show Map Porosity Trends By : Poruchny Scale = 1:85000 T37 T37 Date : 2013/12/04 Project : glauc show map2 R9 R8 R7 R6 R5 R4 R3W5 Legend Wells TSX: YGR glauc pens HZ glauc liquid rich gas Glauconite Show Map Porosity Trends 13

14 Let industry de-risk the play Continue land-base to 2020 with strat test wells Larger players are migrating to the Duvernay which may provide opportunities in plays like the Cardium and Glauc in Central Alberta Continue to collect data and further de-risk Yangarra s acreage The Duvernay represents option value that is not reflected in the current share price TSX: YGR 14

15 Early production rates show initial liquids yields up to 200 bbl/mmcf Duvernay operators are still establishing Best Practices for Drilling and Completion Production data supports the emergence of an economically attractive liquids fairway Geological parameters (mineralogy, thickness, HC potential, TOC, fractures, brittleness, net pay, etc.) are generally known from industry activity/results, public data/analysis and YGR proprietary work Reservoir Characteristics evolving Local variations in rock properties/well performance can be expected with further drilling YGR Acreage TSX: YGR 15

16 Very Active Areas with high capital investment currently by majors and large independents North Block primarily in liquids window with new horizontal drilling by Vermillion/Black Swan immediately offsetting (2 miles) YGR land YGR NORTH BLOCK South Block surrounded by drilling activity (Shell, Encana, Talisman, Black Swan Swan/Paramount) YGR SOUTH BLOCK TSX: YGR 16

17 Significant amounts of oil have been produced over the past 30 years from vertical wells 10 to 20 million barrels of Original Oil in Place (OOIP) per section Accumulated 45 gross (35 net) sections Yangarra has 3 horizontal wells and 2 vertical wells in the SWS formation Yangarra Land TSX: YGR 17

18 Appendix TSX: YGR 18

19 Cardium 5m Colorado Group 650m thick Second White Specks Viking 30m 5m Vertical production exists in all zones All zones meet the criteria for horizontal drilling Glauconitic Ellerslie Rock Creek 15m 20m 10m Duvernay TSX: YGR 19

20 $6,000 $5,000 $4,000 41% reduction in average drilling costs since ,807 Drilling Represents 70% of Corporate Costs Staff count is down and performance is up 373 Equip $3,000 $2,000 1,792 1, ,134 Complete Drill $1,000 2,088 2,832 2,134 1,563 $0 TSX: YGR

21 Acreage within the liquids/volatile oil fairway YGR NORTH BLOCK YGR SOUTH BLOCK South Block (Willesden Green) 7 Net Sections Net Pay ~ 36 m OGIP ranges from 70 to 100 BCF/sec North Block (Pembina) 54 Net Sections Net Pay ~ 20 to 24 m OGIP ranges from 40 to 50 BCF/sec* *OGIP estimated internally using geochemical, petrophysical and geomechanical analyses of offset wells and proprietary reservoir studies TSX: YGR 21

22 YGR acreage is optimal with high average porosity > 6% YGR Acreage TSX: YGR 22

23 T43 T42 T41 T40 T39 R9 R8 ECA HZ WILLGR TALISMAN 02 HZ WILLGR ECA HZ FERRIER ECA 104 WILLGR SCL SCL HZ HZ 102 FERRIER ECA HZ FERRIER ECA HZ WILLGR TALISMAN 02 HZ WILLGR ECA 102 HZ WILLGR TALISMAN 03 HZ WILLGR ECA HZ FERRIER SCL SCL HZ HZ 103 FERRIER SCL HZ FERRIER SECURE FERRIER SCL HZ 102 FERRIER ECA HZ FERRIER SCL HZ FERRIER SCL FERRIER SCL HZ FERRIER SCL HZ FERRIER SCL HZ 102 FERRIER SCL HZ FERRIER R7 ECA HZ WILLGR SCL HZ FERRIER SCL HZ 102 FERRIER SCL HZ FERRIER YANGARRA HZ FERRIER SCL HZ FERRIER SCL 102 HZ FERRIER ECA HZ WILLGR ECA HZ WILLGR SCL HZ FERRIER SCL HZ FERRIER R6 ECA 102 HZ WILLGR ECA WILLGR ECA HZ WILLGR ECA HZ WILLGR TALISMAN HZ WILLGR ECA 102 WILLGR SCL HZ FERRIER WILLGR SCL 102 HZ FERRIER WILLGR R5 TALISMAN HZ WILLGR TALISMAN HZ WILLGR TALISMAN 02 HZ WILLGR SCL HZ 102/ WILLGR SCL HZ WILLGR PARA WILLGR TALISMAN HZ WILLGR PARA HZ WILLGR MOSAIC WILSONCK 1 PARA HZ 103 MEDRIV R4W5 T43 T42 T41 T40 T39 Very active Duvernay area within proven liquids window Majors and Independents are investing heavily in the play Shell, Talisman, Black Swan/Paramount are executing multi-well horizontal drilling programs immediately adjacent to YGR acreage TALISMAN 03 HZ WILLGR PARA HZ 103 MEDRIV TALISMAN HZ WILLGR T38 Yangarra Resources Ltd DUVERNAY SOUTH TALISMAN HZ WILLGR TALISMAN HZ WILLGR T38 Licensed to : Yangarra Resources Ltd By : Date : 2014/09/18 Scale = 1: Project : Duvernay (NAD83) TALISMAN HZ WILLGR R9 R8 R7 R6 R5 R4W5 TSX: YGR 23

24 T40 T39 M R7 R6 SCL HZ 102 FERRIER SCL HZ FERRIER R5W5 PARA WILLGR T40 T39 Net Pay (YGR South Block) ~36 m Southern Block is derisked by adjacent wells Continuous Duvernay formation Talisman W5 T NUTECH WELL TALISMAN HZ FERRIER R7 Shell 3-21 & R6 M ' R5W5 T38 Yangarra South Block Paramount Offset Hz well at W5 Analogous to W5 (SL: W5) M M TSX: YGR 24

25 Vermillion/Black Swan and Sinopec/Daylight have drilled vertical and horizontal test wells adjacent to YGR lands TSX: YGR 25

26 A W5 Vermillion Strat Test W5 Vermillion HZ Offset at W W5 (1977) Flowed 400 bbls W W5 Sinopec HZ Producer 100/ W5/00 <= m=> 100/ W5/00 <= m=> 100/ W5/00 <= m=> 100/ W5/00 <= m=> 100/ W5/00 A ?? Dbvhl_lkB Dbvrhl_lk Dbvrhl_lk Approximate Hz well path Dbvrhl_lk 3150 Dbvrhl_lk Dbvrhl_lk A Net Pay Net Pay Net Pay Net Pay Net Pay A Duvernay Net Pay on YGR acreage ~20-24 m De-risking is underway TSX: YGR 26

27 Oil Hedges 2015: 1,100 bbl/d hedged at $93.32/bbl Natural Gas Hedges 2015: 2,000 GJ/d hedged at $4.11/GJ or $5.10/mcf* Interest Rate Swaps 4.70% Fixed rate on $10 million (June 2014-June 2018) 4.85% Fixed rate on $10 million (June 2014-June 2018) * Assumes Yangarra specific heat value TSX: YGR 27

28 Third Quarter 2014 Production 3,039 boe /d Liquid Content 48% Sales Price $ /boe Royalty income Royalty expense Production costs Transportation costs 0.90 / boe (3.40) / boe (6.45) / boe (1.52) / boe Field Operating netback $ / boe Commodity contract settlement (5.13) / boe Operating netback $ / boe G&A and other (excludes non-cash items) Finance expenses (2.23) / boe (1.42) / boe Cash flow netback $ / boe TSX: YGR 28

29 Statements in this presentation may contain forward-looking information including expectations of future production and components of cash flow and earnings. Forward looking statements or information are based on current expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by the Company and described in the forward looking statements or information. These risks and uncertainties which may cause actual results to differ materially from the forward looking statements or information include, among other things: general economic and business conditions; the risk of instability affecting the jurisdictions in which the Company operates; the risks of the oil and natural gas industry, such as operational risks in exploring for, developing and producing crude oil and natural gas and market demand; the possibility that government policies or laws may change or governmental approvals may be delayed or withheld; risks and uncertainties involving geology of oil and natural gas deposits; the uncertainty of reserves estimates and reserves life; the ability of the Company to add production and reserves through acquisition, development and exploration activities; the Company s ability to enter into or renew leases; potential delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of estimates and projections relating to production (including decline rates), costs and expenses; fluctuations in oil and natural gas prices, foreign currency exchange rates and interest rates; risks inherent in the Company s marketing operations, including credit risk; health, safety and environmental risks; and uncertainties as to the availability and cost of financing. Readers are cautioned that the foregoing list is not exhaustive of all possible risks and uncertainties. The reader is cautioned not to place undue reliance on this forward-looking information. The forward looking statements or information contained in this presentation are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward looking statements or information, whether as a result of new information, future events or otherwise unless required by applicable securities laws. The forward looking statements or information contained in this presentation are expressly qualified by this cautionary statement. TSX: YGR 29

30 Natural gas has been converted to a barrel of oil equivalent (Boe) using 6,000 cubic feet (6 Mcf) of natural gas equal to one barrel of oil (6:1), unless otherwise stated. The Boe conversion ratio of 6 Mcf to 1 Bbl is based on an energy equivalency conversion method and does not represent a value equivalency; therefore Boe's may be misleading if used in isolation. References to natural gas liquids ("NGLs") in this news release include condensate, propane, butane and ethane and one barrel of NGLs is considered to be equivalent to one barrel of crude oil equivalent (Boe). One ("BCF") equals one billion cubic feet of natural gas. One ("Mmcf") equals one million cubic feet of natural gas. Reserve Definitions: (a) "Proved" reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves. (b) "Probable" reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves. (c) "Developed" reserves are those reserves that are expected to be recovered from existing wells and installed facilities or, if facilities have not been installed, that would involve a low expenditure (e.g. when compared to the cost of drilling a well) to put the reserves on production. (d) "Developed Producing" reserves are those reserves that are expected to be recovered from completion intervals open at the time of the estimate. These reserves may be currently producing or, if shut-in, they must have previously been on production, and the date of resumption of production must be known with reasonable certainty. (e) "Developed Non-Producing" reserves are those reserves that either have not been on production, or have previously been on production, but are shut in, and the date of resumption of production is unknown. (f) "Undeveloped" reserves are those reserves expected to be recovered from know accumulations where a significant expenditure (for example, when compared to the cost of drilling a well) is required to render them capable of production. They must fully meet the requirements of the reserves classification (proved, probable, possible) to which they are assigned. (g) The Net Present Value (NPV) is based on Deloitte AJM Forecast Pricing and costs. The estimated NPV does not necessarily represent the fair market value of our reserves. There is no assurance that forecast prices and costs assumed in the Deloitte AJM evaluations will be attained, and variances could be material. TSX: YGR 30

31 Yangarra Resources Ltd. 1530, Ave. SW Calgary, Alberta T2P 2X TSX: YGR 31