Yoho Resources Inc. Announces Fiscal Q3 Financial Results
Calgary, Alberta – August 21, 2013 - Yoho Resources Inc. (“Yoho” or the “Company”) has filed today on SEDAR the financial statements for the nine months ended June 30, 2013 and the related managements’ discussion and analysis ("MD&A"). Copies of these documents may be found on www.sedar.com.
Yoho’s production during fiscal Q3 2013 averaged 2,415 boe per day. Production for the quarter was negatively impacted for the entire month of May 2013 by a turn-around at the third party processing facility which handles the majority of the Company’s production from the Kaybob area. Approximately 1,000 boe per day was shut in during May 2013 at Kaybob (both Duvernay and other zones), including initial production from Yoho’s three new wells at Tony Creek (press release April 3, 2013).
Yoho generated funds from operations for fiscal Q3 2013 of $3.4 million ($0.07 per share basic and diluted). A substantial drop in sales price for the propane and butane portions of the Company’s NGL mix in the quarter contributed to reduced field netbacks for the Company.
Yoho anticipates improved natural gas liquids pricing in the upcoming quarter as it has temporarily secured capacity to a higher netback market.
Net exploration and development expenditures to date in fiscal 2013 were $25.6 million, with the Company participating in drilling 2 (1.5) net gas wells at Kaybob and constructing pipelines and surface facilities at both Nig and Kaybob.
Reduced capital expenditures during fiscal Q3 of $1.6 MM resulted in total net debt at June 30, 2013 of $33.1 million on a bank credit facility of $56 million.
Yoho’s current production at Kaybob continues to be restricted by an estimated 300 to 400 boe per day (net) due to extremely high line pressures on the Tony Creek lateral pipeline which connects to the SemCams KA gas plant. Yoho has started the process to install compression in the Tony Creek area to alleviate this situation. This compression installation is expected to be completed by December 2013. Despite the high pipeline pressures, the three Tony Creek Duvernay wells demonstrated strong performance and stable condensate rates, averaging 1,200 boe of gross production during April 2013 and June 2013 (with these wells being shut in during May 2013).
Core Area Updates
At Kaybob, Yoho has finalized delineation drilling in the Duvernay resource play. Plans for development of this resource are currently underway. The Company has participated in eight horizontal and two vertical wells drilled approximately equidistant from each other over the Company’s land base of almost 14,000 net acres (36,000 gross acres). All of the horizontal wells are currently producing, with the earliest wells having been on-stream for over two years. Yoho is extremely pleased with the results of our program to date and we expect that with further refinements in drilling and completion methods that future wells will, on average, have higher initial production rates and ultimate recoveries. Lower drilling and completion costs on a per well basis should also be attained with the practice of drilling multiple wells from a single surface location. The Kaybob area has seen a substantial increase in activity in the last year with over 80 wells drilled, drilling or licensed for Duvernay targets. Yoho has chosen to reduce near term capital expenditures in the Kaybob area, with plans to drill only key wells that are required for land tenure purposes. Currently, Yoho has two (0.58 net) wells planned for Kaybob in fiscal 2014. As more wells are drilled and completed in this area, refinements in completion methods will continue to emerge, reducing costs and resulting in higher ultimate recoveries on a per well basis. Current short-term restrictions in liquid handling facilities and transportation are also expected to be alleviated over the near-term with the growing activity in the area. The Company is currently exploring a variety of options to pursue an enhanced development plan for the property which will incorporate drilling multiple wells from the same surface location which has shown to reduce per well capital costs.
Nig, British Columbia
At Nig, Yoho has partially delineated the Montney asset, with four horizontal wells drilled into the Montney formation (three Upper Montney and one Lower Montney). The wells were geographically spread out over the previously held 50% land block of 39,480 gross (19,740 net) acres. In March 2013, the Company executed a swap with the former partner in the land block, whereby Yoho received a 100% working interest in the land and the associated two horizontal wells in the south block of land at Nig and the partner received a 100% working interest in the land and the associated two horizontal wells in the block to the north. As a result of this swap, Yoho currently has a 100% working interest in 20,445 acres of land. Yoho plans to drill an additional horizontal well at Nig in the Upper Montney this fall to finalize delineation of the Upper Montney liquids rich resource in the south west portion of Yoho’s landblock. In fiscal 2014, Yoho also intends to drill the first two well development pad on these lands in the Upper
Montney. Delineation of the Lower Montney resource at Nig is required and is expected to be initiated by Yoho in 2014.
For fiscal 2014, Yoho is currently planning a total capital program of between $31.0 and $32.0 million weighted towards drilling of two unconventional plays at Kaybob and Nig. Yoho’s fiscal 2014 budget assumes an oil price of $85.00 per barrel at Edmonton and a posted gas price of $3.40 per gigajoule at AECO. Yoho estimates that overall production for fiscal 2014 will average approximately 2,750 to 2,800 boe per day (a 20% increase from fiscal 2013) with cash flow estimated between $18.0 and $19.0 million (a 35% increase from fiscal 2013). During fiscal 2014, the Company expects to continue to replace drier natural gas production with high-liquid natural gas production, primarily from the Duvernay formation at Kaybob, Alberta.
Yoho Resources Inc. is a Calgary based junior oil and natural gas company with operations focusing in West Central Alberta and northeast British Columbia. The common shares of Yoho are listed on the TSX Venture Exchange under the symbol “YO”.
For more information please contact:Wendy S. Woolsey, CAVice President, Finance and CFOYoho Resources Inc.Phone: 403-537-1771www.yohoresources.ca
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Special Note Regarding Forward-Looking Information
In the interest of providing readers with information regarding Yoho, including management's assessment of the future plans and operations of Yoho, certain statements contained in this news release constitute forward-looking statements or information (collectively "forward-looking statements") within the meaning of applicable securities legislation. Forwardlooking statements are typically identified by words such as "anticipate", "continue", "estimate", "expect", "forecast", "may", "will", "project", "could", "plan", "intend", "should", "believe", "outlook", "potential", "target" and similar words suggesting future events or future performance. In particular, this news release contains, without limitation, forward-looking statements pertaining to: the Company’s intentions in respect of enhanced development operations at Kaybob, Yoho's planned capital expenditure program for the remainder of fiscal 2013, including the estimated budget and the allocation of capital to the Kaybob Duvernay area and the Nig area in fiscal 2014; Yoho's estimated average production levels for fiscal 2013 and estimated average production volumes for fiscal Q3 2013; Yoho's drilling plans for the remainder of calendar 2013 and fiscal 2014; and the sufficiency of funds, including cash flows and bank debt, to fund Yoho's anticipated capital program and other matters set forth in the “Outlook” section of this news release. Readers are cautioned that assumptions used in the preparation of such information may prove to be incorrect.
With respect to forward-looking statements contained in this document, Yoho has made a number of assumptions. The key assumptions underlying the aforementioned forward-looking statements include assumptions that: capital and skilled personnel will continue to be available at the level Yoho has enjoyed to date; Yoho will be able to obtain equipment in a timely manner to carry out exploration, development and exploitation activities; production rates for fiscal 2013 will be in line with the Company's estimates and type curves; Yoho will have sufficient financial resources (including cash flows and bank debt) with which to conduct its anticipated capital program; the current tax and regulatory regime will remain substantially unchanged; future commodity prices will be consistent with the Company's current pricing assumptions; pipeline, processing and other third party facility issues will not persist for time periods which may have an adverse affect on the Company’s plans as forecast; that Yoho will continue to conduct its operations in a manner consistent with past operations; the impact of increasing competition; and the ability of Yoho to add production and reserves through development and exploitation activities. Although Yoho believes that the expectations reflected in the forward-looking statements
contained in this news release, and the assumptions on which such forward-looking statements are made, are reasonable, there can be no assurance that such expectations will prove to be correct. Readers are cautioned not to place undue reliance on forward-looking statements included in this news release, as there can be no assurance that the plans, intentions or expectations upon which the forward-looking statements are based will occur.
By their nature, forward looking statements involve numerous risks and uncertainties that contribute to the possibility that predictions, forecasts, projections and other forward-looking statements will not occur, which may cause Yoho's actual performance and financial results in future periods to differ materially from any estimates or projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, without limitation: risks associated with oil and gas exploration, development, exploitation, production, marketing and
transportation; loss of markets; volatility of commodity prices; environmental risks; the inability to access credit and other debt facilities; inability to obtain drilling rigs or other services; capital expenditure costs, including drilling, completion and facility costs; unexpected decline rates in wells; wells not performing as expected; delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources; the impact of general economic conditions in Canada, the United States and overseas; industry conditions; changes in laws and regulations (including the adoption of new environmental laws and regulations) and changes in how they are interpreted and enforced; increased competition; the lack of availability of qualified personnel or management; fluctuations in foreign exchange or interest rates; stock market volatility; and market valuations of companies with respect to announced transactions and the final valuations thereof. Readers are cautioned that the foregoing list of factors is not exhaustive.
Yoho's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forwardlooking statements will transpire or occur, or if any of them do so, what benefits, including the amount of proceeds, that the Company will derive therefrom. All subsequent forward-looking statements, whether written or oral, attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. Additional information on these and other factors that could affect Yoho’s operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com) or Yoho’s website (www.yohoresources.ca).
The forward-looking statements contained in this document are made as at the date of this news release and Yoho does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.
Barrel of oil equivalents or BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf: 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6 mcf: 1 bbl, utilizing a conversion ratio of 6 mcf: 1 bbl may be a misleading indication of value.