Yangarra Resources Ltd. · TSX:YGR
Yangarra Resources — Investor Presentation (April 2014)
35 slides from Yangarra Resources's investor presentation, April 2014
Slide 1: Corporate Presentation April 2014
Yangarra was recognized as a TSX Venture 50® company in 2014. TSX Venture 50 is a trade-mark of TSX Inc. and is used under license Corporate Presentation April 2014 TSX-V: YGR
Slide 2: Forward-looking information
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 unce
Slide 3: Boe conversion and 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 represent a value eq
Slide 4: Corporate philosophy and values
• 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
Slide 5: Corporate transition point: operational excellence and running room
• Proven operational track record, on a per share basis • Production per share growth of 134% since 2010 • Reserve per share growth of 86% since 2010 • Focus on improving economics and accelerating capital • CAPEX / well down 41% since 2011 drilling program • 2013 wells with IRRs of 65% half-cycle a
Slide 6: Publicly listed junior oil and gas company
Publicly listed junior oil and gas company TSX-V: YGR Shares Outstanding Basic 148 million Options/Warrants (weighted average $0.57) 13 million Fully Diluted 161 million Insider Ownership Basic 18% Fully Diluted 25% Market Capitalization (at $0.97/share) $144 million Year-end Net Debt ($65 million i
Slide 7: Fourth Quarter 2013 production and netback
Fourth Quarter 2013 Production 2,764 boe /d Liquid Content 46% Sales Price $ 44.67 /boe Royalty income 0.70 / boe Royalty expense (2.19) /boe Production costs (6.20) / boe Transportation costs (1.27) / boe Operating netback $ 35.70 / boe G&A and other (excludes non-cash items) (2.07) / boe Finance e
Slide 8: Management Team and Board of Directors
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 Lorne S
Slide 9: Cash flow and reserves per share growth
30,000,000 20,000 25,000,000 15,000 (Cashflow) 20,000,000 (mboe) 15,000,000 10,000 10,000,000 5,000 5,000,000 0 0 2010 2011 2012 2013 Cashflow Reserves Cashflow per share growth Reserves per share growth 2011 278% 2011 13% 2012 0% 2012 38% 2013 45% 2013 15% 9
Slide 10: 41% reduction in average drilling costs since 2011
6000 25 41% reduction in Drilling Represents 70% average drilling costs of Corporate Costs since 2011 5000 Staff count is down and 473 20 performance is up 4000 498 1,807 373 15 Equip Complete 3000 1,792 1,376 273 Drill 10 Staff Count 2000 1,134 2,832 5 1000 2,088 2,134 1,563 0 0 10 2010 2011 2012 2
Slide 11: Drilling cost per meter and completion cost per stage
Drilling cost per meter Completion cost per stage 800 250,000 700 200,000 600 500 150,000 400 Cost per meter 300 100,000 Cost per 200 stage 50,000 100 0 0 2010 2011 2012 2013 2010 2011 2012 2013 11
Slide 12: Half cycle and full cycle IRR
Half Cycle IRR (1) Full Cycle IRR (2) 80% 70% 60% 50% IRR 40% 67% 65% 30% 20% 41% 34% 31% 10% 24% 26% 12% 0% 2010 2011 2012 2013 1. 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 (
Slide 13: P+P reserves and reserve value growth
P+P Reserves (mboe) Reserve Value PV10 ($ millions) 20,000 300 18,000 250 16,000 14,000 200 12,000 Oil Oil 10,000 150 NGL's NGL's 8,000 Natural gas Natural gas 100 6,000 4,000 50 2,000 0 0 2010 2011 2012 2013 2010 2011 2012 2013 • 298% increase in reserves since 2010 (86% per share) • Replaced 2013
Slide 14: 2014 CAPEX budget and guidance
CAPEX budget for 2014 $50.0 million • Budget focused on Cardium Wells • Includes one Duvernay vertical test well • Funded with cash flow and the existing credit facilities 2014 Guidance Production (boe/d) Annual Average 3,200 boe/d Cash flow from operations $40 million Annual debt to cash flow 1.2 :
Slide 15: Central Alberta
Central Alberta • Interest in 140 sections of land • 70 total horizontal wells drilled since 2010 • Focus • Cardium and Glauc plays Pembina Edmonton Willesden Green • Light oil Ferrier Rocky Mountain House • High netback Red Deer • Quick payouts Calgary 15
Slide 16: Vertical production exists in all zones
Colorado Group Cardium 650m thick 5m Second White Specks • Vertical production 30m exists in all zones Viking 5m • All zones meet the criteria for horizontal drilling Glauconitic 20m Ellerslie 10m Rock Creek 15m Duvernay 16
Slide 17: 8+ years of drilling inventory
Gross Net Net Booked in Locations Locations 2013 reserve Inventory Type report Cardium Light Oil (includes 105 78 35 farm-in) Glauconite Liquids Rich 40 26 11 Total 145 104 46 • 8+ years of drilling inventory in Cardium and Glauconite • Significant un-booked upside • Additional locations in the SWS
Slide 18: Cardium
• Drilled or participated in 38 gross (24.6 net) HZ Cardium wells (32 operated) • Reservoir is characterized by 60-85% oil and liquid weighting • Currently being developed with four wells per section • Yangarra owns a 15 % override on 11 sections • Map indicates extent of prospective lower permeabil
Slide 19: Cardium farm-in
• 47 gross (29 net) sections in the Willesden Green area that offset existing Yangarra land holdings • 61 gross (37 net) Cardium locations indentified • Pay 100% to earn 75%, earn one section per earning well • 7 net earning wells over a two year period • Rolling option until December 2016 • Drillin
Slide 20: Hoadley Glauconite Barrier Island Complex
Hoadley Glauconite Barrier Island Complex: • Development of our Glauconite lands commenced in March 2010 with the drilling of our first horizontal (“HZ”) well • Drilled or participated in 22 gross HZ (13.3 net) wells to date into the formation (12 operated) • Accumulated 45 gross (24.0 net) sections
Slide 21: Second White Specks
• 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 21
Slide 22: Duvernay land
• Yangarra owns 60 Gross North Block (60 net) sections of Duvernay land South Block Yangarra Land 22
Slide 23: Duvernay option value
• Let industry de-risk the play • Continue land-base to 2020 with three vertical strat test wells • Larger players are migrating to the Duvernay which may provide opportunities in plays like the Cardium and Glauc in Central Alberta • Our first vertical strat test well is planned for late 2014 • The
Slide 24: Hedges and interest rate swaps
Oil Hedges 2014: 1,200 bbl/d hedged at $95.02/bbl 2015: 900 bbl/d hedged at $90.59/bbl Natural Gas Hedges 2014: 5,000 GJ/d hedged at $3.39/GJ or $4.20/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) 24 * Assumes Yan
Slide 25: Peer comparison
YGR PEY BNP BXE WCP DTX TVE YO TOU RMP Production 2,205 59,313 73,465 23,968 19,769 7,184 3,276 2,337 74,796 6,872 Gas Weighting 54% 89% 63% 68% 31% 23% 42% 71% 89% 47% Netback $35.70 $21.89 $21.03 $19.32 $44.09 $40.50 $39.45 $20.55 $19.28 $35.92 Op Costs $7.56 $2.84 $10.29 $8.77 $12.36 $11.99 $13.1
Slide 26: Operating costs and G&A versus peers
2013 Operating costs/boe 2013 G&A/boe 35.00 8.00 30.00 7.00 25.00 6.00 5.00 20.00 4.00 15.00 3.00 10.00 2.00 5.00 1.00 0.00 0.00 YGR YGR • Management team with strong operations background • Maintain low operating costs through operational presence and control over infrastructure • Central Alberta l
Slide 27: Debt to cash flow and debt/equity versus peers
2013 Debt to Cash Flow 2013 Debt/Equity 10.00 1.60 9.00 1.40 8.00 1.20 7.00 6.00 1.00 5.00 0.80 4.00 0.60 3.00 0.40 2.00 1.00 0.20 0.00 0.00 YGR YGR • Focus on reducing costs and maximizing profit • Lower natural gas prices, higher WTI to Edmonton par spreads and lower NGL prices have negatively aff
Slide 28: Strategy
• Maximize netbacks in the current price environment by focusing on oil targets • Maintain top-tier drilling and completion costs • Maintain low operating costs through operational presence and cost efficiencies • Continue to grow drilling inventory through drilling, geology and strategic acquisitio
Slide 29: Appendix
Appendix 29
Slide 30: Hedging detail
2014 (1,200 bbl/d hedged) 2014 Natural Gas (5,000 GJ/d hedged) • 100 bbl/d @ $98.30 WTI/CAD for 2014 • 1,000 GJ/d at $3.11/GJ for Jan – Dec 2014 • 100 bbl/d @ $100.00 WTI/CAD for 2014 • 1,000 GJ/d at $3.05/GJ for Jan – Dec 2014 • 100 bbl/d @ $91.40 WTI/CAD for 2014 • 1,000 GJ/d at $3.54/GJ for Jan –
Slide 31: Cash flow sustainability ratio
Cash Flow Sustainability Ratio (2013) vs. Debt / Cash Flow >$500 EV Liquids 225% >$500 EV Gas PPY <$500 EV Liquids TOG YO NVA 200% <$500 EV Gas PXX RE TOL Cash Flow Sustainability ((CAPEX + Divs )/ CashFlow 175% CQE PGF RTK SOG LPR ARX DEE MQL 150% ZAR DTX BTE NGL CPG CTA PXL MEI PBN RRX SGY PWT RMP
Slide 32: Leverage to the Duvernay play
• Yangarra is highly leveraged to the Duvernay play in terms of acres to Enterprise Value 32
Slide 33: Texas Water Demand
Texas Water Demand Irrigation 55.9% Municipal 26.9% Manufacturing 9.6% Steam Electric 4.1% Livestock 1.8% Mining (including oil and gas) 1.6% “The amount of water required to drill all 2916 of the Marcellus wells permitted in Pennsylvania in the first 11 months of 2010 would equal the amount of drin
Slide 34: North American cost of new gas supply
A North ‘American Cést ‘OF New" aS Supply 2012 Market Deliverability Dry gas development is required to offset annual production declines Gas production required to offset Supply Cost* $/MMBtu decline from December 2011 >$6.00 $5.50 - 6.00 $5.00 - 5.50 ' $4.50 - 5.00 I $4.00 - 4.50 ’ $3.50 - 4.00 !
Slide 35: Yangarra Resources Ltd. contact details
Yangarra Resources Ltd. 1530, 715 – 5 Ave. SW Calgary, Alberta T2P 2X6 403-262-9558 35
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