Yangarra Resources Ltd. · TSX:YGR
Yangarra Resources — Investor Presentation (January 2017)
32 slides from Yangarra Resources's investor presentation, January 2017
Slide 1: Corporate Presentation January 2017
Corporate Presentation January 2017 TSX: TSX:YGR YGR
Slide 2: Corporate Snapshot
Corporate Snapshot Capitalization Reserves and Locations (2) Ticker TSX: YGR December 31, 2015 mmboe NPV10 ($mm) Shares Outstanding (mm) Proved Developed 5.6 $97.9 Basic 79.8 Total Proved 24.7 $315.9 Options (weighted avg. price $1.50) 7.9 2P 40.6 $499.5 Fully Diluted 87.7 Total Cardium Locations 69
Slide 3: Corporate Strategy
Corporate Strategy 2016 – 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 2017 – Focus on Growth • 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: 2017 Capital Plan
2017 Capital Plan CAPEX budget for 2017 $50.0 million Budget focused on Cardium Wells -5 wells in the first quarter and 10 wells in the second half Funded with cash flow and the existing credit facilities 2017 Guidance Production (boe/d) Annual Average 4,500 – 5,000 boe/d Cash flow from operations $
Slide 8: 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 $35,000,000 $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
Slide 9: 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 9
Slide 10: Cardium Formation
Cardium Formation 108 (78 net) Sections of Cardium TSX: TSX:YGR YGR 10
Slide 11: Cardium 2016 Initial Production
Cardium 2016 Initial Production Well Rate (liquids) (Stages 103/04-07-41-5W5 (1.5 mile) IP 90 480 boe/d 82% liquids (71 stages & 1,070 tons of sand) 100/01-14-41-6W5 (2.0 mile) IP 60 120 boe/d 94% liquids (74 stages & 1,120 tons of sand) 104/14-19-41-5W5 (1.5 mile) IP 60 506 boe/d 82% liquids (69 st
Slide 12: Cardium Drilling Inventory
Cardium Drilling Inventory (1) Drilling Locations (1-mile laterals) Proportionate (gross locations) 800 700 130 North Willesden 600 Green 236 Ferrier Locations Locations 500 Locations 400 300 200 324 Willesden Green 100 Locations 0 2010 2011 2012 2013 2014 2015 2016 Net Gross • 690 gross (430 net) f
Slide 13: 2015 F&D and Recycle Ratios
2015 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 improvemen
Slide 14: Deeper Drill Path
Deeper Drill Path Conglomerate/Upper Cardium Upper Cardium Bioturbated New Well Path Old Well Path Upper Cardium Bioturbated Zone Lower Cardium Old Frac Plane New Frac Plane Upper Cardium (5-15% Porosity) 2.5-4.0m Bioturbated Zone (20-80% Sand) 3.0-7.0m 14
Slide 15: Impact of Deeper Drill Path
Impact of Deeper Drill Path 600 Drilling into the Bioturbated Zone/Lower Cardium 500 400 Production Rate (boe/d) 300 200 100 0 30 60 90 120 150 180 100/1-26-41-8W5 (30% Liquids) 103/04-07-41-5w5 (82% Liquids) 104/14-19-41-5w5 (82% Liquids) TSX: YGR 15
Slide 16: 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 17: 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 18: 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 19: 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 20: 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 21: 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 22: Duvernay Formation
Duvernay Formation 15-19-39-6W5 (1.5 Mile) IP 20 - 700 boe/d 52% liquids (81 stages & 1,744 tons of sand) TSX: YGR 22
Slide 23: Risk Management Program
Risk Management Program Oil Hedges 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 200 bbl/d at C$71.00 WTI/bbl Feb – Jun 2017 2018 Sold Call on 200 bbl/d at US$70.00 WTI/bbl Natural Gas 2017 2,000 GJ/d a
Slide 24: Analyst Coverage
Analyst Coverage Acumen Capital Finance Partners Limited Paradigm Capital Inc. Trevor Reynolds Ken Lin, CFA Oil and Gas Research Analyst Oil and Gas Analyst treynolds@acumencapital.com kenl@paradigmcap.com (403) 410-6842 (403) 513-1042 AltaCorp Capital Inc. PI Financial Corp. Thomas Matthews, P.Eng,
Slide 25: Appendix
on Itd. Appendix TSX: YGR 25
Slide 26: 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 27: 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 27
Slide 28: Sustainability Analysis
Sustainability Analysis Production Run Rate Production boe/d 3,000 3,500 Decline Rate % 20% 20% Annual Production Decline boe/d 600 700 Maintenance Capex Production Replacement boe/d 600 700 Capital Efficiency $/boe/d 20,000 20,000 Maintenance Capex $ 12,000,000 14,000,000 Cash Flow $40 WTI USD/bbl
Slide 29: Sustainability Analysis
Sustainability Analysis Production Run Rate Production boe/d 3,000 3,500 Decline Rate % 20% 20% Annual Production Decline boe/d 600 700 Maintenance Capex Production Replacement boe/d 600 700 Capital Efficiency $/boe/d 20,000 20,000 Maintenance Capex $ 12,000,000 14,000,000 Cash Flow $40 WTI USD/bbl
Slide 30: 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 31: 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 32: Yangarra Resources Ltd.
Yangarra Resources Ltd. 1530, 715 – 5 Ave. SW Calgary, Alberta T2P 2X6 403-262-9558 TSX: YGR 32
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