Yangarra Resources Ltd. · TSX:YGR
Yangarra Resources — Investor Presentation (November 2016)
30 slides from Yangarra Resources's investor presentation, November 2016
Slide 1: Corporate Presentation November 2016
Corporate Presentation November 2016 TSX: TSX:YGR YGR
Slide 2: Corporate Snapshot
Corporate Snapshot Capitalization Reserves and Locations (2) Ticker TSX: YGR mmboe NPV10 ($mm) Shares Outstanding (mm) Proved Developed 5.6 $97.9 Basic 79.2 Total Proved 24.7 $315.9 Options (weighted avg. price $1.48) 6.9 2P 40.6 $499.5 Fully Diluted 86.1 Total Cardium Locations 462 Gross (270 Net)
Slide 3: Corporate Strategy
Corporate Strategy • Prepare for future growth • Acquire land at the low-end of the cycle • Consolidate partner interests • Secure infrastructure capacity • Prepare and drill (one-well) pad-drilling sites; leaving significant torque to add 3 wells on existing pads • Future growth opportunity • Curre
Slide 4: People
People Management Team Jim Evaskevich, President & CEO Randall Faminow, VP, Land • 30+ years extensive executive experience with strong • 30+ years of experience in all aspects of oil and gas land work, operations background including negotiation, acquisitions and divestments, contracts and mergers
Slide 5: Why Own Yangarra?
Why Own Yangarra? • Top Decile Full Cycle rates of return • Low-cost operator, high netbacks • Cash costs totaled $12.71/boe • Operating costs of $6.97boe • Transportation costs of $1.17/boe • Royalties of $1.14/boe (4% of revenue) • G&A costs of $1.58/boe • Finance and interest costs of $1.85/boe •
Slide 6: Full Cycle Returns
Full Cycle Returns • Capital allocation is determined based on narrowing the gap between half cycle and full cycle returns Half Cycle IRR ⁽¹⁾ Full Cycle IRR ⁽²⁾ Full Cycle with Duvernay 90% 80% 70% 60% 50% IRR 40% 79% 67% 65% 30% 20% 41% 44% 34% 31% 33% 31% 24% 26% 27% 10% 12% 0% 2010 2011 2012 2013
Slide 7: F&D and Recycle Ratios
F&D and Recycle Ratios Finding and Development Recycle Ratios $40.00 7.0x $35.00 6.0x $30.00 5.0x $25.00 4.0x $/boe $20.00 3.0x $15.00 2.0x $10.00 $5.00 1.0x $- 0.0x 2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2015 Proven F&D P+P F&D Proven Recycle P+P Recycle • Consistent improvement in,
Slide 8: Low-Cost Driller
Low-Cost Driller • Experienced drilling team • Pad drilling from existing locations • Long-term relationship with service providers • Cemented liners and sliding sleeves reduce costs significantly • Coil fracs without nitrogen require less horsepower on location resulting in reduced completion costs
Slide 9: Updated Completion Technology
Updated Completion Technology Sand Concentration • Cemented liners and sliding sleeve 1,200 • Tighter well frac spacing 1,000 • KG of Sand/M3 Increased ability to target fracs • 800 Better frac isolation • No longer losing energy to packers 600 • Improved initial rates 400 200 0 18 Stages 30 Stages
Slide 10: Impact of More Stages
Impact of More Stages 350 Cumulative Production 300 05-17 10.30 Mbbl 12-17 12.52 Mbbl 250 Daily Oil Rate (bbl/d) 200 20% Improvement in IRR 150 100 50 0 0 20 40 60 80 100 120 140 160 180 200 Days on Production 00/05-17-041-07W5 (1-mile, sleeves, 18 stage, 360T) 02/12-17-041-07W5 (1-mile, sleeves, 30
Slide 11: Impact of Extended Reach
Impact of Extended Reach 350 Cumulative Production 300 04-09 10.29 Mbbl 13-09 17.87 Mbbl 250 Daily Oil Rate (bbl/d) 200 33% Improvement in IRR 150 100 50 0 0 20 40 60 80 100 120 140 160 180 200 Days on Production 02/13-09-041-07W5 (2-mile, sleeves, 60 stage, 900T) 00/04-09-041-07W5 (1-mile, ball-dro
Slide 12: New Alberta Royalties
New Alberta Royalties For wells with TVD shallower than or equal to 2,000 metres C* ($) = 1,170*(TVD-249) + 800*TLL + 0.6*TVD*TPP For wells with TVD deeper than 2,000 metres C* ($) = 1,170*(TVD-249) + 3,120*(TVD-2,000) + 800*TLL + 0.6*TVD*TPP Cardium 1.0-Mile 1.5 Mile 2.0 Mile Duvernay TVD 2,150 2,1
Slide 13: Well Economics (with MRF)
Well Economics (with MRF) $40/bbl $50/bbl $60/bbl WTI (USD/bbl) WTI (USD/bbl) WTI (USD/bbl) IRR (%) Payout IRR (%) Payout IRR (%) Payout Willesden Green (yrs) (yrs) (yrs) 1-Mile ($2.5 million well cost) 18% 3.2 41% 1.6 70% 1.1 1.5-Mile ($3.0 million well cost) 36% 1.5 74% 1.1 121% 0.8 2-Mile ($3.5 m
Slide 14: Free Cash Flow Sensitivity
Free Cash Flow Sensitivity 2017 Free Cash Flow 2017 Free Cash Flow ($2.50/mcf Gas) ($3.00/mcf Gas) $30,000,000 $30,000,000 $25,000,000 $25,000,000 $20,000,000 $20,000,000 $15,000,000 $15,000,000 $10,000,000 $10,000,000 $5,000,000 $5,000,000 $0 $0 $40.00 $50.00 $60.00 $40.00 $50.00 $60.00 WTI Prices
Slide 15: Production Potential
Production Potential 10,000 9,000 8,000 7,000 6,000 Boe/d 5,000 4,000 3,000 2,000 1,000 0 Year 1 Year 2 Year 3 1-Rig 2-Rigs 3-Rigs TSX: YGR 15
Slide 16: Cardium Formation
Cardium Formation TSX: TSX:YGR YGR 16
Slide 17: Cardium Drilling Inventory
Cardium Drilling Inventory (1) Drilling Locations (1-mile laterals) Proportionate (gross locations) 500 450 115 North 78 Ferrier 400 Locations Willesden 350 Green 84 2-mile Locations Locations 212 1-mile Locations 300 Locations 250 200 269 150 Willesden Green 100 Locations 38 1.5-mile 50 Locations 0
Slide 18: Duvernay Formation
Duvernay Formation 62 Hour flow test • Gas rates ranged from 3.2 mmcf/d to 3.5 mmcf/d with a final rate of 3.4 mmcf/d • Free condensate (~60○ API) rate of 50 – 100 bbl/mmcf with an average of 77 bbl/mmcf • Water flow-back rate was 75 bbl/h at the start of flow test declining to 21.5 bbl/h at the end
Slide 19: Risk Management Program
Risk Management Program Oil Hedges 2016 400 bbl/d collar C$73.45 WTI/bbl and a ceiling of C$85.00 WTI/bbl 200 bbl/d at C$64.45 WTI/bbl Oct – Dec 2016 2017 200 bbl/d collar C$65.00 WTI/bbl and a ceiling of C$75.00 WTI/bbl 100 bbl/d at C$70.00 WTI/bbl 200 bbl/d at C$64.45 WTI/bbl Jan – Mar 2017 2018 S
Slide 20: Analyst Coverage
Analyst Coverage Acumen Capital Finance Partners Limited Industrial Alliance Securities Inc. Trevor Reynolds Michael Charlton Oil and Gas Research Analyst Research Analyst - Oil & Gas treynolds@acumencapital.com mcharlton@mgisecurities.com (403) 410-6842 (403) 705-4978 AltaCorp Capital Inc. Paradigm
Slide 21: Appendix
on Itd. Appendix TSX: YGR 21
Slide 22: Interest Consolidation
Interest Consolidation ConocoPhillips 3rd Party PennWest Farm-in 3rd Party Farm-in Relentless TSX: YGR 22
Slide 23: Glauconite Formation
Glauconite Formation 35 36 31 32 33 34 35 36 31 32 33 34 35 36 31 32 33 34 35 36 31 32 33 34 35 36 31 32 33 34 35 36 31 32 33 34 35 36 31 32 33 34 6 5 4 3 2 26 25 30 29 28 27 26 25 30 29 28 27 26 25 30 29 28 27 26 25 30 29 28 27 26 25 30 29 28 27 26 25 30 29 28 27 26 25 30 29 28 27 24 19 20 21 22 23
Slide 24: Creating Shareholder Value
Creating Shareholder Value 500 450 400 350 300 250 200 150 100 50 0 2010 2011 2012 2013 2014 2015 Share Capital 2P NPV10 (less debt) TSX: YGR 24
Slide 25: Well Economics
Well Economics IRR - Well Cost Sensitivity Payout (yrs) - Well Cost Sensitivity 160% 1.8 140% 1.6 1.4 120% 1.2 100% 1.0 80% 0.8 60% 0.6 40% 0.4 20% 0.2 $3.0 Million $2.7 Million $2.4 Million $2.1 Million $3.0 Million $2.7 Million $2.4 Million $2.1 Million 0% 0.0 0% -10% -20% -30% 0% -10% -20% -30% A
Slide 26: Sustainability Analysis
Sustainability Analysis Production Run Rate Production boe/d 3,000 3,500 Decline Rate % 30% 30% Annual Production Decline boe/d 900 1,050 Maintenance Capex Production Replacement boe/d 900 1,050 Capital Efficiency $/boe/d 20,000 20,000 Maintenance Capex $ 18,000,000 21,000,000 Cash Flow $40 WTI USD/
Slide 27: Sustainability Analysis
Sustainability Analysis Production Run Rate Production boe/d 3,000 3,500 Decline Rate % 30% 30% Annual Production Decline boe/d 900 1,050 Maintenance Capex Production Replacement boe/d 900 1,050 Capital Efficiency $/boe/d 20,000 20,000 Maintenance Capex $ 18,000,000 21,000,000 Cash Flow $40 WTI USD/
Slide 28: Forward-looking Statements
Forward-looking Statements 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
Slide 29: Reserve Definitions
Reserve Definitions 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
Slide 30: Yangarra Resources Ltd. contact details
Yangarra Resources Ltd. 1530, 715 – 5 Ave. SW Calgary, Alberta T2P 2X6 403-262-9558 TSX: YGR 30
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