Slide 1: Corporate Presentation August 2014
Corporate Presentation August 2014 TSX: TSX:YGR YGR
Slide 2: Our job is to create shareholder value
• 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 3: Publicly listed junior oil and gas company
Publicly listed junior oil and gas company TSX: YGR Shares Outstanding Basic 57.7 million Options/Warrants (weighted average $1.87) 4.9 million Fully Diluted 62.6 million Insider Ownership Basic 15% Fully Diluted 21% Market Capitalization (at $3.50/share) $202 million Q2 Net Debt ($90 million in ATB
Slide 4: 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 5: 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 6: Drilling, completion and operating costs versus peers
Drilling cost per meter Completion cost per stage $800 $250,000 $700 $200,000 $600 $500 $150,000 $400 $300 $100,000 $200 $50,000 $100 $0 $0 2010 2011 2012 2013 2010 2011 2012 2013 Q1 2014 Operating costs/boe versus peers Q1 2014 G&A/boe versus peers 35.00 10.00 30.00 8.00 25.00 20.00 6.00 Average $1
Slide 7: Cashflow and Production
50,000,000 3,500 45,000,000 3,000 40,000,000 35,000,000 2,500 30,000,000 (Cashflow) 2,000 25,000,000 (mboe) 1,500 20,000,000 15,000,000 1,000 10,000,000 500 5,000,000 0 0 2010 2011 2012 2013 2014 (est) Cashflow Production TSX: YGR 7
Slide 8: P+P Reserves and Reserve Value PV10
P+P Reserves (mboe) Reserve Value PV10 ($ millions) 20,000 300 15,000 250 200 Oil 10,000 150 NGL's 100 5,000 Natural gas 50 0 0 2010 2011 2012 2013 2010 2011 2012 2013 P+P Reserves (mboe) Reserve Value PV10 ($ millions) 20,000 300 250 15,000 200 PROB 150 10,000 PUD 100 5,000 PDNP 50 PDP 0 0 2010 201
Slide 9: Increased stage count in laterals and completion improvements
• Increased stage count in laterals from 10 to 24 • Gone from 250 tonnes of sand/well to 540 tonnes of sand/well • Full mile laterals on all wells with longer reach wells in inventory • Resin-coated sand tailed in to prevent crushing • Premium casing reduces friction when pumping fracs, minimizes ca
Slide 10: 2014 CAPEX Budget and Guidance
CAPEX budget for 2014 $75.0 million • Budget focused on Central Alberta • Includes $5 million of Duvernay spending • Funded with cash flow and the existing credit facilities 2014 Guidance Production (boe/d) Annual Average 3,300 boe/d Cash flow from operations $47 million Debt to Annualized Q4 cash f
Slide 11: Central Alberta
Central Alberta • Interest in 140 sections of land • 70 + horizontal wells drilled since 2010 • Focus Pembina • Cardium and Glauc plays Edmonton Willesden Green • Light oil Ferrier Rocky Mountain House Red Deer • High netback • Quick payouts Calgary TSX: TSX:YGR YGR 11
Slide 12: 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 TSX: TSX:YGR YGR 12
Slide 13: Total Cardium & Glauc Locations
Cardium (1) Present value of future cash-flow, discounted at 10%, net of Drill, Complete and Equipping costs. Future Drilling Locations 147 gross (107 net) Locations booked in 2013 Reserve Report 35 gross (29 net) Drill, Complete and Equip $2.7 million – $3.2 million Average: $2.9 million NPV10 ($90
Slide 14: Cardium Show Map
T45 T45 T45 T44 T44 T44 LO WE UPP T43 R GA CA ER RD SS IU OIL Y M CAR T43 T43 DIU M T42 W IL LO LE W E SD R T42 EN T42 G R EE C A N R D C IU A M R T41 D IU PROSPECT M IVE UPPER FI EL C D A R H T41 T41 D IU Z M O PROSPECTIVE IL LOWER CARDIUM HZ OIL T40 GAS T40 T40 FE PR OS R RI HZ PE CT IV ER OI T39
Slide 15: Glauconite Show Map
T42 T42 T43 T43 T43 T41 T41 D N LA T42 IS T42 T42 IER R R T40 T40 A B Y LE D T41 A O D CHANNEL any cut amount H N T41 T41 LA T39 T39 IS IE R D R N R LA T40 A B IS Y R LE IE D R A R T38 T38 T40 T40 O CHANNEL A H any cut amount B Y LE T39 D A O T37 CHANNEL any cut amount T37 H T39 T39 T38 R9 R8 R7 R6
Slide 16: Significant oil produced over 30 years from vertical wells
• 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: YG
Slide 17: The Duvernay represents option value not reflected in share price
• 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 • Our first strat test well is planned for 2014 • Continue to collect data and furt
Slide 18: Duvernay early production and reservoir characteristics
• 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 pot
Slide 19: Very active areas with high capital investment
• Very Active Areas with high capital investment currently by majors and large independents • North Block primarily in liquids window with new YGR horizontal drilling by NORTH BLOCK Vermillion/Black Swan immediately offsetting (2 miles) YGR land • South Block surrounded by drilling activity (Shell,
Slide 20: Duvernay North and South Blocks
• Acreage within the liquids/volatile oil fairway • South Block (Willesden Green) YGR • 7 Net Sections NORTH • Net Pay ~ 36 m BLOCK • OGIP ranges from 70 to 100 BCF/sec • North Block (Pembina) • 54 Net Sections YGR • Net Pay ~ 20 to 24 m SOUTH BLOCK • OGIP ranges from 40 to 50 BCF/sec* *OGIP estimat
Slide 21: YGR acreage is optimal with high average porosity
YGR acreage is optimal with high average porosity > 6% YGR Acreage TSX: YGR 21
Slide 22: Very active Duvernay area
• 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 TSX: YGR 22
Slide 23: Net pay and Southern Block de-risked by adjacent wells
R7 R6 R5W5 Talisman 3-28-38-6W5 M SCL HZ 102 FERRIER 4-21-40-7 SCL HZ FERRIER 3-21-40-7 • Net Pay (YGR South T40 T40 Block) ~36 m • Southern Block is de- PARA WILLGR 9-25-39-6 risked by adjacent wells T39 T39 • Continuous Duvernay formation NUTECH WELL TALISMAN HZ FERRIER 3-28-38-6 T38 T38 HAN 14-9-
Slide 24: Vermillion/Black Swan and Sinopec test wells adjacent to YGR lands
• Vermillion/Black Swan and Sinopec/Daylight have drilled vertical and horizontal test wells adjacent to YGR lands Vermillion/Black Swan Horizontal (completed) PennWest 10-28-48-12W5 Vertical Strat Test Well (Drilling) 7-9-48-9W5 Sinopec Vertical Strat Test Well 12-9-47-10W5 Amoco 1977 Vertical Well
Slide 25: Licenses in primary terms and adjacent
• Licenses in their primary terms • Licenses are adjacent to one another • This provides optimal flexibility in terms of validating wells and allocating earned sections (‘banked ‘sections ) in any of these 3 licenses TSX: YGR 25
Slide 26: Duvernay net pay cross section on YGR acreage
15-18-49-13W5 7-4 - 49-12W5 7-3-47-11W5 7-1-48-10W5 8-32-46-9W5 100/15-18-049-13W5/00 <=13639.6m=> 100/07-04-049-12W5/00 <=22487.4m=> 100/07-03-047-11W5/00 <=16426.6m=> 100/07-01-048-10W5/00 <=12376.5m=> 100/08-32-046-09W5/00 Vermillion Strat Test Vermillion HZ Offset (1977) Sinopec HZ Producer A at
Slide 27: Appendix
Appendix TSX: YGR 27
Slide 28: Hedges
Oil Hedges 2014: 1,200 bbl/d hedged at $95.02/bbl 2015: 1,100 bbl/d hedged at $93.65/bbl Natural Gas Hedges 2014: 5,000 GJ/d hedged at $3.39/GJ or $4.20/mcf* 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 o
Slide 29: Peer comparison
YGR PEY BNP BXE WCP DTX TVE BNE TOU RMP Production 2,606 55,636 74,309 36,342 30,575 10,744 5,203 13,911 109,953 12,437 Gas Weighting 50% 86% 67% 65% 29% 20% 39% 29% 85% 43% Field Netback $47.04 $33.69 $32.41 $29.25 $55.04 $51.20 $45.55 $55.85 $25.80 $45.87 Op Costs $8.80 $3.83 $10.47 $8.72 $14.45 $
Slide 30: 41% reduction in average drilling costs since 2011
$6,000 41% reduction in Drilling Represents 70% average drilling costs of Corporate Costs $5,000 since 2011 473 Staff count is down and performance is up $4,000 498 1,807 373 Equip $3,000 1,792 Complete 1,376 273 Drill $2,000 1,134 2,832 $1,000 2,088 2,134 1,563 $0 2010 2011 2012 2013 TSX: YGR 30
Slide 31: Second Quarter 2014 Production and netback
Second Quarter 2014 Production 2,606 boe /d Liquid Content 51% Sales Price $ 58.53 /boe Royalty income 0.97 / boe Royalty expense (3.66) / boe Production costs (6.92 / boe Transportation costs (1.87) / boe Field Operating netback $ 47.04 / boe Commodity contract settlement (8.81) / boe Operating net
Slide 32: 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 33: 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 34: Yangarra Resources Ltd.
Yangarra Resources Ltd. 1530, 715 – 5 Ave. SW Calgary, Alberta T2P 2X6 403-262-9558 TSX: YGR 34