Mr. Jim Evaskevich reports
YANGARRA ANNOUNCES 2017 YEAR END CORPORATE RESERVES INFORMATION
Yangarra Resources Ltd. has released the results of its 2017 year-end oil and gas reserves evaluation.
Reserve report highlights
The independent reserves report prepared by Deloitte LLP is effective as of Dec. 31, 2017. All reserves information contained in this press release is based on the 2017 reserve report. Unless specifically indicated, all financial and operational information in this press release is based on estimates and are unaudited.
Proved developed producing reserves (PDP):
- 12.0 million barrels of oil equivalent (52-per-cent increase from 2016);
- Net present value before tax discounted at 10 per cent (NPV10) of $204-million (46-per-cent increase from 2016);
- Finding and development costs of $13.36 per barrel of oil equivalent, resulting in a PDP recycle ratio of 2.10 times;
-
PDP additions replaced 296 per cent of 2017 production.
Proved non-producing reserves (PNP):
- 700,000 barrels of oil equivalent;
- NPV10 of $11-million;
-
The majority of the PNP value consists of the two wells that were being drilled over year-end, both wells were brought on line in early January, 2018.
Total proved reserves (1P):
-
55.9 million barrels of oil equivalent (53-per-cent increase from 2016);
-
NPV10 of $722-million (47-per-cent increase from 2016);
-
1P future development costs of $391-million;
-
Finding and development costs of $10.41 per barrel of oil equivalent, resulting in a recycle ratio of 2.69 times;
-
1P net asset value per fully diluted common share (NAV per FD share) of $7.19;
-
1P reserve life index (RLI) based on December, 2017, production of 20.4 years;
-
1P additions replaced 1,025 per cent of 2017 production.
Proved plus probable reserves (2P):
-
87.9 million barrels of oil equivalent (45-per-cent increase from 2016);
-
NPV10 of $1.03-billion (40-per-cent increase from 2016);
-
2P future development costs of $553-million;
-
Finding and development costs of $9.18 per barrel of oil equivalent, resulting in a recycle ratio of 3.05 times;
-
2P NAV per FD share of $10.60;
-
2P reserve life index of 32.1 years;
-
2P additions replaced 1,398 per cent of 2017 production.
Internal rates of return (IRR):
- Wells drilled in 2017 resulted in a corporate half-cycle IRR of 105 per cent and a full-cycle IRR of 86 per cent.
Oil and gas reserves
The attached tables summarize certain information contained in the 2017 reserve report. The 2017 reserve report was prepared in accordance with definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook and National Instrument 51-101, Standards of Disclosure for Oil and Gas Activities by Deloitte.
Deloitte is using a price forecast of $55 (U.S.) per barrel WTI (West Texas Intermediate) and $58.65 (U.S.) per barrel WTI for light oil for 2018 and 2019, respectively, and $2 per thousand cubic feet and $2.30 per thousand cubic feet for AECO natural gas in 2018 and 2019, respectively.
SUMMARY OF OIL AND GAS RESERVES
(company-share gross volumes based on forecast price and costs)
Reserves category Light and Natural gas Natural Total boe Total boe
medium oil liquids gas 2017 2016
(mbbl) (mbbl) (mmcf) (mboe) (mboe)
Proved developed
producing 3,102 2,478 38,314 11,965 7,851
Proved developed
non-producing 172 105 2,440 684 641
Proved undeveloped 12,829 8,562 130,960 43,217 27,969
------ ------ ------- ------ ------
Total proved 16,102 11,144 171,714 55,866 36,462
Probable 8,866 6,504 99,919 32,023 24,178
------ ------ ------- ------ ------
Total proved
plus probable 24,969 17,648 271,633 87,889 60,640
------ ------ ------- ------ ------
Notes to table:
(1) Total values may not add due to rounding.
(2) Barrels of oil equivalent are derived by converting gas to oil
equivalent in the ratio of 6,000 cubic feet of gas to one barrel of oil.
(3) Company share gross reserves are the company's working interest
(operating or non-operating) share and before deducting royalty
obligations but including any royalty interests of the company.
SUMMARY OF NET PRESENT VALUES OF FUTURE NET REVENUE (BEFORE TAX)
(based on forecast price and costs)
As at
As at Dec. 31, 2017 (2) Dec. 31, 2016 (3)
Reserves category 0% 5% 10% 15% 20% 10%
(M$) (M$) (M$) (M$) (M$) (M$)
Proved developed
producing 311,177 245,008 203,513 175,465 155,362 139,094
Proved developed 16,842 13,309 10,993 9,381 8,202 8,734
non-producing
Proved undeveloped 1,014,758 698,030 507,455 384,233 299,927 341,751
--------- --------- --------- ------- ------- -------
Total proved 1,342,776 956,347 721,962 569,079 463,491 489,580
Probable 1,028,655 525,409 304,626 192,675 129,409 244,894
--------- --------- --------- ------- ------- -------
Total proved
plus probable 2,371,432 1,481,756 1,026,588 761,754 592,900 734,474
--------- --------- --------- ------- ------- -------
Notes to table:
(1) Total values may not add due to rounding.
(2) Forecast pricing used is based on Deloitte-published price forecasts,
effective Dec. 31, 2017.
(3) Forecast pricing used is based on Deloitte-published price forecasts,
effective Dec. 31, 2016.
(4) Cash flows include the effects of the current Alberta royalty framework.
The estimated future net reserves are stated before deducting future
estimated site restoration costs and are reduced for future abandonment
costs and estimated capital for future development associated with the reserves.
(5) Net present values of future net revenues estimated by Deloitte do not
represent fair market value of the reserves. There is no assurance that the
forecast price and cost assumptions will be attained and variances could be material.
Finding and development costs (F&D)
Yangarra's F&D costs for 2017, 2016 and the three-year average are presented in the attached tables. The costs used in the F&D calculation are the capital costs related to: land acquisition and retention; drilling; completions; tangible well site; tie-ins; and facilities, plus the change in estimated future development costs as per the independent reserve report. Acquisition costs are net of any proceeds from dispositions of properties. Due to the timing of capital costs and the subjectivity in the estimation of future costs, the aggregate of the exploration and development costs incurred in the most recent financial year and the change during that year in estimated future development costs generally will not reflect total finding and development costs related to reserve additions for that year. The reserves used in this calculation are company net reserve additions, including revisions.
PROVED DEVELOPED PRODUCING FINDING AND DEVELOPMENT COSTS
(in millions of dollars)
2017 2016 2015 to 2017
Capital expenditures $ 83 $ 31 $ 156
Reserve additions,
net production (mboe) 6,213 3,304 10,170
Proved developed producing
F&D costs -- including future
capital ($/boe) $ 13.36 $ 9.38 $ 15.34
Proved recycle ratio
($28/boe operating netback) 2.1 2.1
PROVED FINDING AND DEVELOPMENT COSTS
(in millions of dollars)
2017 2016 2015 to 2017
Capital expenditures $ 83 $ 31 $ 156
Change in future capital $ 140.8 $ 55.6 $ 189.4
Total capital for F&D $ 223.8 $ 86.6 $ 345.4
Reserve additions,
net production (mboe) 21,504 12,819 39,455
Proved F&D costs -- including
future capital ($/boe) $ 10.41 $ 6.75 $ 8.75
Proved F&D costs -- excluding
future capital ($/boe) $ 3.86 $ 2.42 $ 3.95
Proved recycle ratio
($28/boe operating netback)
Including future capital 2.69 2.92
Excluding future capital 7.25 8.16
PROVED PLUS PROBABLE FINDING AND DEVELOPMENT COSTS
(in millions of dollars)
2017 2016 2015 to 2017
Capital expenditures $ 83 $ 31 $ 156
Change in future capital $ 186.3 $ 99.4 $ 255.3
Total capital for F&D $ 269.3 $ 130.4 $ 411.3
Reserve additions,
net production (mboe) 29,349 21,102 54,139
Proved plus probable F&D
costs -- including future
capital ($/boe) $ 9.18 $ 6.18 $ 7.6
Proved plus probable F&D
costs -- excluding future
capital ($/boe) $ 2.86 $ 1.47 $ 2.88
Proved plus probable recycle ratio
($28/boe operating netback)
Including future capital 3.05 3.19
Excluding future capital 9.9 13.43
NET ASSET VALUE (NAV)
As at Dec. 31, 2017 PDP Total Proved plus
proved probable
Present value reserves,
before tax (discounted
at 10 per cent) ($ millions) $203.5 $ 722 $1,026.60
Total net debt ($ millions)
(unaudited) $ (95) $ (95) $ (95)
Proceeds from the
exercise of options (2) $ 14.5 $ 14.5 $ 14.5
Net asset value $123.1 $641.5 $ 946.1
Fully diluted common shares
outstanding (millions) 89.2 89.2 89.2
Net asset value per share $ 1.38 $ 7.19 $ $10.60
Notes to tables:
(1) The preceding table shows what is customarily referred
to as a produce-out net asset value calculation, under which
the current value of Yangarra's reserves would be produced
at the Deloitte forecast future prices and costs. The value
is a snapshot in time as at Dec. 31, 2017, and is based on
various assumptions, including commodity prices and foreign
exchange rates that vary over time. In this analysis, the
present value of the proved and probable reserves is
calculated at a before-tax, 10-per-cent discount rate.
(2) The calculation of proceeds from exercise of stock
options and the diluted number of common shares outstanding
only include stock options that are in the money based on
the closing price of Yangarra of $4.97 and $1.92 per
common share, respectively, as at Dec. 31, 2017, and 2016.
(3) Net debt or adjusted working capital (deficit), which
represents current assets less current liabilities,
excluding current derivative financial instruments,
is used to assess efficiency, liquidity and the general
financial strength of the company. There is no IFRS
(international financial reporting standards) measure
that is reasonably comparable with net debt or adjusted
working capital (deficit).Year-end disclosure
The financial statements for the year-ended Dec. 31, 2017, will be released on March 8, 2018.
Additional reserve information as required under NI 51-101 will be included in the company's annual information form, which will be filed on SEDAR.
We seek Safe Harbor.
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