AGM Documents 3

Yoho Resources Inc. Announces Corporate Reserves as at September 30, 2013

Yoho Resources Inc. Announces Corporate Reserves as at September 30, 2013

Calgary, Alberta – November 19, 2013 -Yoho Resources Inc. (“Yoho” or the “Company”) is pleased to announce the results of its independent reserve evaluation for the year ended September 30, 2013 as prepared by GLJ Petroleum Consultants Ltd. (“GLJ”).  The Company’s annual audit of its financial statements is not yet complete and accordingly all financial amounts referred to in this press release are estimates and are subject to revision.  Complete reserves disclosure will be included in Yoho’s Annual Information Form for its fiscal year ended September 30, 2013, which is expected to be filed in early December 2013.

Highlights

  • Yoho’s proved plus probable reserves (Company interest) as evaluated by GLJ as at September 30, 2013 increased 92% to 52.7 MMboe from 27.4 MMboe at September 30, 2012.  The Company’s proved reserves (Company interest) as at September 30, 2013 increased 9% to 11.8 MMboe from 10.8 MMboe. 
  • The net present value of Yoho’s estimated future net revenue before income taxes from proved plus probable reserves as at September 30, 2013 and utilizing GLJ’s October 1, 2013 price forecast and discounted at 10%, is $353.5 million and the net present value of total proved reserves as at September 30, 2013 is $90.5 million.
  • Net exploration and development expenditures for fiscal 2013 are estimated to be $26.9 million.  During the year ended September 30, 2013, Yoho drilled 2 (1.5 net) gas wells. 
  • Reserve replacement was 220% on proved reserves and 3,064% on proved plus probable reserves. 
  • For fiscal 2013, Yoho achieved an estimated all-in finding, development and acquisition costs of $9.54 per boe (including all technical revisions and changes in future development capital).  For the past three years, Yoho’s rolling average estimated finding, development and acquisition costs were $12.50 per boe (including all technical revisions and changes to future development capital).  Total future development capital for Yoho’s proved plus probable reserves at September 30, 2013 is $506.8 million scheduled over seven years.  Total future development capital for Yoho’s total proved reserves at September 30, 2013 is $129.7 million scheduled over five years.
  • Yoho’s net asset value per share as at September 30, 2013 is calculated at $8.12 per share (basic) including an internal land value of $87.4 million and $6.39 per share (basic) excluding land value.

OPERATIONS UPDATE

Kaybob Duvernay

Yoho is currently participating in the drilling of one (0.5 net) horizontal well in the Kaybob area targeting the Duvernay formation.  Current plans for Yoho are to drill a total of 4 (1.5 net) horizontal wells in the Duvernay shale play in fiscal 2014.

Nig Montney

At Nig, Yoho is currently waiting on license approval to drill a horizontal well targeting the Upper Montney formation at c-29-A/94-H-4.  This well will be the final well in the delineation phase of the Company’s Upper Montney program. 

LAND HOLDINGS

The Company internally estimated the fair market value of its net undeveloped land holdings as at September 30, 2013 to be $87.4 million.  This evaluation was completed principally using industry activity levels, third party transactions and land acquisitions that occurred in proximity to Yoho’s undeveloped lands during the previous 12 months. 

A summary of the Company’s land holdings at September 30, 2013 is outlined below:

 

Developed Acres

Undeveloped Acres

Total Acres

Location

Gross (1)

Net (2)

Gross (1)

Net (2)

Gross (1)

Net (2)

             

Alberta

60,440

22,938

93,209

49,050

153,649

71,988

British Columbia

35,956

16,071

71,856

61,269

107,812

77,340

Other

324

117

-

-

324

117

Total

96,720

39,127

165,065

110,319

261,785

149,446

 Notes:

  1.  “Gross” means the total area of properties in which the Company has an interest.
  2. “Net” means the total area in which the Company has an interest multiplied by the working interest owned by the Company.

CORPORATE RESERVES

The reserves data set forth below is based upon an independent reserve assessment and evaluation prepared by GLJ with an effective date of September 30, 2013 (the “GLJ Report”).  The following presentation summarizes the Company’s crude oil, natural gas liquids and natural gas reserves and the net present values before income taxes of future net revenue for the Company’s reserves using forecast prices and costs based on the GLJ Report.  The GLJ Report has been prepared in accordance with the standards contained in the Canadian Oil and Gas Evaluation Handbook (the "COGE Handbook") and the reserve definitions contained in National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities (“NI 51-101”).

All evaluations and reviews of future net cash flows are stated prior to any provisions for interest costs or general and administrative costs and after the deduction of estimated future capital expenditures for wells to which reserves have been assigned.  It should not be assumed that the estimates of future net revenues presented in the tables below and in the “Highlights” section above represent the fair market value of the reserves.  There is no assurance that the forecast prices and cost assumptions will be attained and variances from these assumptions could be material.  The recovery and reserve estimates of our crude oil, natural gas liquids and natural gas reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered.  Actual crude oil, natural gas and natural gas liquids reserves may be greater than or less than the estimates provided herein.

Reserves Summary

The Company’s total proved plus probable reserves increased by 92% in fiscal 2013 to 52,742 Mboe.  Proved reserves increased by 9% to 11,849 Mboe and comprised 22% of the Company’s total proved plus probable reserves.  Proved undeveloped reserves are 62% of the total proved reserves.  The future capital in the GLJ Report (undiscounted) is $506.8 million for the proved and probable reserves and is $129.7 million for total proved reserves.  The future capital is programmed over a seven year time period for proved plus probable reserves and five year time period for proved reserves.

The following table provides summary reserve information based upon the GLJ Report and using the published GLJ (October 1, 2013) price forecast.

 

Light and Medium Oil

 

Heavy Oil

 

Natural Gas Liquids

 
 

Company Interest (1)

Net (2)

 

Company Interest (1)

Net(2)

 

Company Interest (1)

Net (2)

 
 

(Mbbl)

(Mbbl)

 

(Mbbl)

(Mbbl)

 

(Mbbl)

(Mbbl)

 

Proved

                 

  Proved producing

225

180

 

119

103

 

848

639

 

  Non-producing

1

1

 

6

6

 

4

3

 

  Undeveloped

125

103

 

-

-

 

2,240

1,785

 

Total proved

351

284

 

126

109

 

3,092

2,427

 

Probable

458

384

 

39

34

 

10,210

7,936

 

Total proved & probable (4)

809

668

 

164

143

 

13,301

10,363

 
                     

 

   

Natural Gas

 

Total Barrels of Oil Equivalent (3)

 
   

Company Interest (1)

Net (2)

 

Company Interest (1)

Net (2)

 
   

(Mmcf)

(Mmcf)

 

(Mboe)

(Mboe)

 

Proved

             

  Proved producing

 

19,191

17,434

 

4,391

3,828

  Non-producing

 

546

491

 

102

91

  Undeveloped

 

29,950

26,765

 

7,356

6,349

Total proved

 

49,687

44,689

 

11,849

10,268

Probable

 

181,113

154,449

 

40,892

34,096

Total proved & probable (4)

 

230,801

199,138

 

52,742

44,364

                     

Notes:

  1. “Company Interest” reserves means Yoho’s working interest (operating and non-operating) share before deduction of royalties and including any royalty interest of the Company.
  2. “Net” reserves means Yoho’s working interest (operated and non-operated) share after deduction of royalty obligations, plus Yoho’s royalty interest in reserves.
  3. Barrels of oil equivalent amounts have been calculated using a conversion rate of six thousand cubic feet of natural gas to one barrel of oil. BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of six thousand cubic feet of natural gas to one barrel of oil 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.
  4. May not add due to rounding.

Reserves Values

The estimated before tax net present value of future net revenues associated with Yoho’s reserves effective September 30, 2013 and based on the published GLJ (October 1, 2013) future price forecast are summarized in the following table:

 

Discounted at

 

Undiscounted

 

5%

 

10%

 

15%

 

20%

(M$)

                   

Proved

                   

  Proved producing

 

96,182

 

75,276

 

62,334

 

53,588

 

47,285

  Non-producing

 

597

 

528

 

470

 

422

 

381

  Undeveloped

 

114,712

 

57,767

 

27,729

 

10,386

 

(316)

Total proved

 

211,491

 

133,571

 

90,533

 

64,395

 

47,349

Probable

 

1,003,480

 

479,371

 

262,938

 

156,340

 

97,120

Total proved plus probable

 

1,214,971

 

612,942

 

353,471

 

220,735

 

144,469

Notes:

  1. The estimated future net revenues are stated before deducting future estimated site restoration costs and are reduced for estimated future abandonment costs and estimated capital for future development associated with the reserves.
  2. The net present value of future revenues does not represent fair market value.
  3. May not add due to rounding.

The following table sets forth development costs deducted in the estimation of the future net revenue attributable to the reserve categories noted above.

 

 

Development Costs

Forecast Prices and Costs

 

Proved Reserves

Proved Plus Probable Reserves

Year

(M$)

(M$)

Q4 2013

7,057

7,057

2014

34,614

43,794

2015

53,175

97,709

2016

25,151

115,431

2017

9,741

117,930

2018

-

88,436

2019

-

36,274

2020

-

-

2021

-

38

2022

-

-

Remainder

-

171

Total Undiscounted (all years)

129,738

506,840

Total discounted 10%

110,371

379,006

Price Forecast

The GLJ October 1, 2013 price forecast is summarized as follows:

 

$US/$Cdn

WTI @

Edmonton

Hardisty Heavy

Natural gas

Westcoast

Year

Exchange

Cushing

light crude oil

12 API

at AECO-C

Station 2

 

Rate

     

spot

 
   

(US$/bbl)

(C$/bbl)

($Cdn/bbl)

(C$/MMbtu)

(C$/MMbtu)

2013 Q4

0.97

102.50

100.52

75.54

3.09

3.29

2014

0.97

97.50

97.94

73.58

3.71

3.56

2015

0.97

97.50

97.94

73.58

4.10

3.95

2016

0.97

97.50

99.48

75.35

4.48

4.33

2017

0.97

97.50

99.48

75.95

4.87

4.72

2018

0.97

97.50

99.48

75.95

5.12

4.97

2019

0.97

98.54

100.56

76.78

5.22

5.07

2020

0.97

100.51

102.59

78.35

5.33

5.18

2021

0.97

102.52

104.66

79.95

5.44

5.29

2022

0.97

104.57

107.77

81.59

5.55

5.40

 Thereafter

-

+2.0%/yr

+2.0%/yr

+2.0%/yr

+2.0%/yr

+2.0%/yr

 Note:

  1. Inflation is accounted for at 2.0% per year

 Capital Program Efficiency

The efficiency of the Company’s capital program for the fiscal year ended September 30, 2013 and other prior periods is summarized below.

 

2013 (1)

2012

Three Year Average

2011 - 2013

   

Proved

 

Proved

 

Proved

   

plus

 

plus

 

plus

 

Proved

Probable

Proved

Probable

Proved

Probable

Exploration and development expenditures

   

($ thousands) 

30,438

30,438

33,615

33,615

99,278

99,278

Net acquisitions ($ thousands) (3)  

(3,525)

(3,525)

593

593

(3,742)

(3,742)

Change in future development capital - exploration and development ($thousands)

30,229

222,505

57,431

197,606

119,327

481,841

Total

57,142

249,418

91,639

231,814

214,863

577,377

Reserves additions after revisions (Mboe) (5)

     

     - Exploration and development

2,152

26,222

3,780

14,025

8,848

46,352

     - Revisions

17

479

110

116

111

318

     - Net acquisitions

(288)

(556)

25

82

(281)

(497)

     - Total reserve additions after revisions

1,881

26,146

3,915

14,223

8,678

46,173

Finding & Development Costs ($/boe) (2)

27.97

9.47

23.40

16.35

24.40

12.45

Finding, Development & Acquisition Costs ($/boe) (4)

30.38

9.54

23.41

16.30

24.76

12.50

Reserves Replacement Ratio

220%

3,064%

484%

1,760%

338%

1,801%

                                       

 

Notes:

  1. The fiscal 2013 amounts include information based on unaudited financial results that may change on the completion of the audited financial statements.
  2. 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.
  3. Acquisition costs related to corporate acquisitions reflects the consideration paid for the shares acquired plus the net debt assumed, both valued at closing and does not reflect the fair market value allocated to the acquired oil and gas assets under IFRS.
  4. This calculation includes reserve revisions and changes in future development costs.  Yoho also calculates finding, development and acquisition ("FD&A") costs which incorporate both the costs and associated reserve additions related to acquisitions net of any dispositions during the year. Since acquisitions can have a significant impact on Yoho's annual reserve replacement costs, the Company believes that FD&A costs provide a more meaningful representation of Yoho's cost structure than finding and development costs alone.
  5. Oil equivalent amounts have been calculated using a conversion rate of six thousand cubic feet of natural gas to one barrel of oil. BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of six thousand cubic feet of natural gas to one barrel of oil 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.

Net Asset Value

The following table provides a calculation of Yoho’s estimated net asset value and net asset value per share as at September 30, 2013 based on the estimated future net revenues associated with Yoho’s proved plus probable reserves discounted at 10% as presented in the GLJ Report. 

Forecast Prices and Costs before tax

($ thousands)

Proved plus probable reserves – discounted at 10%

353,471

Undeveloped land (1)

87,400

Bank debt and working capital deficiency as at September 30, 2013 (2)(3)

(31,136)

Net asset value

409,735

Common shares outstanding at September 30, 2013 (thousands) - Basic

50,457

Net asset value per share - basic

$     8.12

Net asset value per share  - basic (excluding land value)

$     6.39

Notes:

  1. Internally estimated value (see “Land Holdings”).
  2. Fiscal 2013 figures include information based on estimated unaudited financial results that may change on the completion of the audited financial statements.
  3. Working capital deficiency includes an estimate of the Company’s accounts receivable and future tax less accounts payable and accrued liabilities and derivatives as at September 30, 2013.

OUTLOOK

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 with cash flow estimated between $18.0 and $19.0 million.

About Yoho

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”.

This press release shall not constitute an offer to sell or a solicitation of an offer to buy the securities in any jurisdiction.  The common shares of Yoho will not be and have not been registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States, or to a U.S. person, absent registration or applicable exemption therefrom.

For more information please contact:

Wendy S. Woolsey, CA

Vice President, Finance and CFO

Yoho Resources Inc.

Phone:  (403) 537-1771

www.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.

Cautionary Statements

Unaudited financial information

Certain financial and operating information included in this press release for the year ended September 30, 2013, such as finding and development costs, production information, and net asset value, are based on estimated unaudited financial results for the quarter and year then ended, and are subject to the same limitations as discussed under Forward Looking Information set out below.  These estimated amounts may change upon the completion of audited financial statements for the year ended September 30, 2013 and changes could be material.

Special Note Regarding Forward-Looking Information

Certain information regarding Yoho set forth in this document, including estimates of the quantities of the Company's reserves, expected operating activities in the Kaybob – Duvernay and Nig Montney areas and those matters set forth under the heading "Outlook", may constitute forward-looking statements under applicable securities laws and necessarily involve substantial known and unknown risks and uncertainties. These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond Yoho's control, including without limitation, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, volatility of commodity prices, environmental risks, 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, and the uncertainty of estimates and projections of production, costs and expenses. The recovery and reserve estimates of Yoho's reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered.

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 regarding (among other things): the impact of increasing competition; the general stability of the economic and political environment in which the Company operates; the timely receipt of any required regulatory approvals; the ability of the Company to obtain qualified staff, equipment and services in a timely and cost efficient manner; drilling results; the ability of the operator of the projects which the Company has an interest in operating the field in a safe, efficient and effective manner; the ability of the Company to obtain financing on acceptable terms; field production rates and decline rates; the ability to replace and expand oil and natural gas reserves through acquisition, development of exploration; the timing and costs of pipeline, storage and facility construction and expansion and the ability of the Company to secure adequate product transportation; future commodity prices; currency, exchange and interest rates; the regulatory framework regarding royalties, taxes and environmental matters in the jurisdictions in which the Company operates; and the ability of the Company to successfully market its oil and natural gas production.  Certain or all of the forgoing assumptions may prove to be untrue.

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 forward-looking 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.

BOE Equivalency

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.

Internal estimates

Certain information contained herein, such as the estimated fair value of the Company’s land holdings, are based on estimated values the Company believes to be reasonable and are subject to the same limitations as discussed under “Special Note Regarding Forward-looking Information” above.

Oil and Gas Advisory

The reserves information contained in this press release has been prepared in accordance with NI 51-101.  Complete NI 51- 101 reserves disclosure will be included in our Annual Information Form for the year ended September 30, 2013which is expected to be filed in early December 2013.   Listed below are cautionary statements applicable to our reserves information that are specifically required by NI 51-101:

  • Individual properties may not reflect the same confidence level as estimates of reserves for all properties due to the effects of aggregation.
  • With respect to finding and development 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.
  • This press release contains estimates of the net present value of our future net revenue from our reserves. Such amounts do not represent the fair market value of our reserves.
  • Reserves included herein are stated on a company interest basis (before royalty burdens and including royalty interests) unless noted otherwise as well as on a gross and net basis as defined in NI 51-101. "Company interest" is not a term defined by NI 51-101 and as such the estimates of Company interest reserves herein may not be comparable to estimates of “gross” reserves prepared in accordance with NI 51-101 or to other issuers' estimates of company interest reserves.

Selected Definitions

The following terms used in this press release have the meanings set forth below:

"AECO" refers to a natural gas storage facility located at Suffield, Alberta

"API" means American Petroleum Institute

"bbl"  means barrel

"boe" means barrel of oil equivalent of natural gas and crude oil on the basis of 1 boe for six thousand cubic feet of natural gas (this conversion factor is and industry accepted norm and is not based on either energy content or current prices)

"Mbbl" means thousand barrels

"Mboe"  means 1,000 barrels of oil equivalent

"Mcf" means one thousand cubic feet

"Mmcf" means one million cubic feet

"MMbtu" means million British Thermal Units

"$M"  means thousands of dollars