Yangarra Resources Ltd. · TSX:YGR
Yangarra Resources — Investor Presentation (January 2014)
33 slides from Yangarra Resources's investor presentation, January 2014
Slide 1: Corporate Presentation January 2014
Corporate Presentation January 2014 TSX-V: YGR
Slide 2: 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 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 transition point: operational excellence and financial flexibility
• Proven operational track record, on a per share basis • Production per share growth of 146% since 2010 • Reserve per share growth of 62% since 2010 • Focus on improving economics and accelerating capital • CAPEX / well down 41% since 2011 drilling program • Cardium wells now offer 10-14 month payb
Slide 5: Publicly listed junior oil and gas company
Publicly listed junior oil and gas company TSX-V: YGR Shares Outstanding Basic 147 million Options/Warrants (weighted average $0.54) 12 million Fully Diluted 159 million Insider Ownership Basic 20% Fully Diluted 25% Market Capitalization (at $0.54/share) $86 million Forecast year-end Net Debt ($65 m
Slide 6: Third Quarter 2013 Production and netbacks
Third Quarter 2013 Production 2,238 boe /d Liquid Content 46% Sales Price $ 43.95 /boe Royalty income 0.95 / boe Royalty expense (3.42) /boe Production costs (5.45) / boe Transportation costs (1.47) / boe Operating netback $ 34.56 / boe G&A and other (excludes non-cash items) (1.76) / boe Finance ex
Slide 7: 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 8: Production and reserves per share growth
2,500 14,000 12,000 2,000 10,000 (boe/d) (mboe) 1,500 8,000 1,000 6,000 4,000 500 2,000 0 0 2010 2011 2012 Production Reserves Production per share growth Reserves per share growth 2010 3% 2010 0% 2011 55% 2011 13% 2012 52% 2012 38% 8
Slide 9: What Have We Learned About our Business?
What Have We Learned About our Business? 6000 25 41% reduction in Drilling Represents 70% average drilling costs of Corporate Costs 5000 since 2011 473 Staff count is down and 20 performance is up 4000 498 1,807 373 15 Equip 3000 Complete 1,792 1,376 273 Drill 10 Staff Count 2000 1,134 2,832 5 1000
Slide 10: 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 201310
Slide 11: IRR
100% 90% 80% 70% 60% IRR 50% 90% 40% 30% 67% 20% 41% 10% 24% 0% 2010 2011 2012 2013 Based on actual costs, production to date Based on actual costs and P+P reserves and type curves 11
Slide 12: 2014 CAPEX budget and guidance
CAPEX budget for 2014 $50.0 million Budget focused on Cardium Wells - Split between Farm-in locations and pre-existing locations - 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 f
Slide 13: Central Alberta
Central Alberta • Interest in 140 sections of land • 63 total wells drilled since 2010 (58 Horizontal wells) • Focus • Cardium and Glauc plays Pembina Edmonton Willesden Green • Light oil Ferrier Rocky Mountain House • High netback Red Deer • Quick payouts Calgary 13
Slide 14: 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 • 2013 capital budget Glauconitic will focus on the 20m Ellerslie Cardium & Glauconite 10m Rock Creek 15m Duvernay 14
Slide 15: Drilling inventory: gross and net locations
Gross Net Net Booked in Locations Locations 2012 reserve Inventory Type report Cardium Light Oil (includes 105 78 16 farm-in) Glauconite Liquids Rich 40 26 13 Total 145 104 29 • Yangarra has drilled 58 horizontal wells into our development resource plays • 8+ years of drilling inventory in Cardium a
Slide 16: Cardium
• Drilled or participated in 27 gross (13.6 net) HZ Cardium wells (21 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 17: Cardium farm-in at Willesden Green
• 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 18: 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 19: 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 19
Slide 20: Duvernay land
• Yangarra owns 60 Gross (60 net) sections of Duvernay land North Block • Three vertical strat test wells before October 2015 will continue all 60 sections until October 2020 • Estimated to contain 80-100 bcf Original Gas in Place (“OGIP”) per section with liquid content estimated to be greater than
Slide 21: Oil, gas and interest rate hedges
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: 4,000 GJ/d hedged at 3.31/GJ or 4.01/mcf* Interest Rate Swaps 4.70% Fixed rate on $10 million (June 2014-June 2018) 4.85% Fixed rate on $10 million (June 2014-June 2018) 21 * Assumes Yanga
Slide 22: Q3 2013 operating costs and G&A per boe vs peers
Q3 2013 Operating costs/boe Q3 2013 G&A/boe 35.00 10.00 30.00 8.00 25.00 20.00 6.00 15.00 4.00 10.00 2.00 5.00 0.00 0.00 YGR YGR • Management team with strong operations background • Maintain low operating costs through operational presence and control over infrastructure • Central Alberta land base
Slide 23: Q3 2013 Debt to Cash Flow and Debt/Equity vs peers
Q3 2013 Debt to Cash Flow Q3 2013 Debt/Equity 10.00 1.40 9.00 1.20 8.00 7.00 1.00 6.00 0.80 5.00 4.00 0.60 3.00 0.40 2.00 1.00 0.20 0.00 0.00 YGR YGR • Focus on reducing costs and maximizing profit • Lower natural gas prices, higher WTI to Edmonton par spreads and lower NGL prices have negatively af
Slide 24: Strategy
• Maximize netbacks in the current price environment by focusing on oil targets • Maintain top-tier drilling and completion costs • Maintain low operating costs through operational presence and cost efficiencies • Continue to grow drilling inventory through drilling, geology and strategic acquisitio
Slide 25: Appendix
Appendix 25
Slide 26: Reserve growth and value since 2010
P+P Reserves (mboe) Reserve Value PV10 ($ millions) 14,000 180 160 12,000 140 10,000 120 8,000 Oil 100 Oil NGL's 80 NGL's 6,000 Natural gas Natural gas 60 4,000 40 2,000 20 0 0 2010 2011 2012 2010 2011 2012 • 179% increase in reserves since 2010 • Replaced 2012 production by 546% (958% in 2011) • Fi
Slide 27: Hedging details for 2014 and 2015
2014 (1,200 bbl/d hedged) 2014 Natural Gas (4,000 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 28: Cash Flow Sustainability vs Debt / Cash Flow
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 29: Leverage to the Duvernay play in terms of acres to enterprise value
• Yangarra is highly leveraged to the Duvernay play in terms of acres to Enterprise Value 29
Slide 30: 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 31: North American cost of new gas supply
North ‘American C Cost OF SF New" GasjSupply OP al (ecte: fr er = 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
Slide 32: Peer comparison table
YGR PEY BNP BXE WCP DTX TVE YO TOU RMP NVS NGL Production 2,238 56,343 73,580 21,852 21,448 7,573 3,162 2,384 74,096 6,639 4,637 10,255 Gas Weighting 54% 89% 63% 72% 31% 20% 41% 69% 89% 49% 12% 42% Netback $34.56 $21.13 $21.55 $20.37 $50.58 $46.63 $45.84 $19.51 $18.80 $32.48 $44.50 $29.22 Op Costs $
Slide 33: Yangarra Resources Ltd. contact
Yangarra Resources Ltd. 1530, 715 – 5 Ave. SW Calgary, Alberta T2P 2X6 403-262-9558 33
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