Yoho Resources Inc. Moves Forward on Duvernay Play with Active Drilling Program in Q2 and Announces Fiscal Q2 2014 Financial Results
Calgary, Alberta – May 28, 2014 - Yoho Resources Inc. (“Yoho” or the “Company”) has filed today on SEDAR the financial statements for the six months ended March 31, 2014 and the related managements’ discussion and analysis ("MD&A"). Copies of these documents may be found on www.sedar.com.
- During fiscal Q2 2014, Yoho completed a transaction to sell its assets (the “Asset Sale”) at Nig, British Columbia to Storm Resources Ltd. (“Storm”) for total consideration of $86.9 million, consisting of $30 million cash and 13.6 million common shares of Storm (the “Storm Shares”). The $30 million cash component of the transaction price was used to eliminate Yoho’s outstanding bank debt. Subsequent to the transaction, the Company’s credit facilities were revised to total $50 million. Following the Asset Sale, Yoho’s Duvernay production as a percentage of total production will increase, with a corresponding increase natural gas liquids production and higher field netbacks.
- At the annual general and special meeting of the shareholders of Yoho held on March 20, 2014, Yoho shareholders approved a plan of arrangement which provided, among other things, for Yoho shareholders to receive a pro rata entitlement of the 13.6 million Storm Shares received on the Asset Sale. Yoho shareholders received 0.2591 of a Storm Share for each common share of Yoho held.
- Yoho’s production during fiscal Q2 2014 averaged 1,790 boe per day (30% oil and natural gas liquids (“NGLs”)). The decrease in production from fiscal Q1 2014 was due to the sale of the Asset Sale during fiscal Q2 2014.
- Yoho generated funds from operations for fiscal Q2 2014 of $3.5 million ($0.07 per share basic and diluted) compared to $4.1 million for fiscal Q2 2013 ($0.08 per share basic and diluted). Higher liquids and NGL production and improved commodity prices during fiscal Q2 2014 were offset by lower production due to the Asset Sale. Operating netbacks for fiscal Q2 2014 increased 37.7% to $31.18 per boe compared to operating netbacks of $22.64 per boe for fiscal Q2 2013.
- Total exploration and development expenditures for the first six months of fiscal 2014 were $16.2 million, including the acquisition of two sections of Duvernay mineral rights, which increased Yoho’s total Duvernay rights at Kaybob to 23.5 net sections. Total net debt was $10.5 million at March 31, 2014.
Fiscal Q2 2014 Capital Expenditures
During the six months ended March 31, 2014, Yoho has participated in drilling 5 (2.8 net) gas wells. A well at Nig, British Columbia (100% working interest (“WI”)) was drilled but not completed before it was included in the disposition of the Company’s Nig area assets. At Kaybob, three wells have been drilled into the Duvernay formation and are all awaiting completion operations. One additional non-operated Duvernay well at Kaybob encountered operational issues and will not be completed. Yoho has also completed construction of a compressor facility at Kaybob which was placed into service in March 2014.
Yoho as operator (50% WI) has drilled and cased a 4,740 meter horizontal well in the Duvernay Formation at 16-04-62-21 W5 (rig released April 11, 2014). This well has a horizontal section of approximately 1,300 metersin the Duvernay. Completion operations on this well are underway with 20 frac stages utilizing the latest plug and perf technology with tighter stage spacing and diversion. This well is scheduled to come on stream immediately following completion operations as the pipeline has already been tied-in to the gathering system and only requires installation of the surface facilities before production commences.
Yoho has also participated in the drilling of three additional non-operated Duvernay wells at Kaybob. At 2-25- 62-22 W5, Yoho participated (50% WI) in a horizontal well that was drilled, cased and rig released on March 15, 2014. This well has a horizontal section of 1,300 meters and will also be completed following the breakup season.
A third well at Kaybob (33.33% WI) was also drilled and cased (rig released February 5, 2014) at 16-02-60-19 W5, with a horizontal section of approximately 1,400 meters in the Duvernay. Completion operations on this well are scheduled to begin in summer 2014.
A fourth Duvernay horizontal well at 04-31-60-20 W5 (33.33% WI) was spudded immediately before breakup and is the first well of a planned two well pad and will be followed by the drilling of a second well at 13-07-61-20 W5 (33.33% WI). Continued operations on these wells will require winter drilling conditions. Projected horizontal lengths for both of these wells will be approximately 2,000 meters.
Inga, British Columbia
At Inga, British Columbia, Yoho has licensed two 100% WI horizontal wells (A1-19-87-23 W6 and B1-19-87-23
W6) which will be drilled from one pad. The first well at A1-19 is projected to have a 1,500 meter horizontal leg
in the Montney, with the second well currently planned to have a 1,300 meter horizontal leg, also in the Montney.
Drilling operations for these wells are expected to commence in late summer 2014 with both wells expected to
be drilled and cased by calendar year end.
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
Certain information regarding Yoho set forth in this document, including estimates of the quantities of the Company's reserves, the Company's expectation that it will replace drier natural gas production with high-liquids gas production in fiscal 2014, the Company's plans to drill 4 (1.5 net) horizontal wells in the Duvernay shale in fiscal 2014, 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, volatility in production rates, 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. Statements relating to "reserves" are deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions that the reserves described can be profitably produced in the future. 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.
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.
Future Oriented Financial Information
This press release, in particular the information in respect of anticipated cash flows, may contain Future Oriented Financial Information ("FOFI") within the meaning of applicable Canadian securities laws. The FOFI has been prepared by management of Yoho to provide an outlook of Yoho's activities and results. The FOFI has been prepared based on a number of assumptions including the assumptions discussed under the heading "Special Note Regarding Forward-Looking Statements" and assumptions with respect to production rates and commodity prices. The actual results of operations of the Yoho and the resulting financial results may vary from the amounts set forth herein, and such variation may be material. Yoho and its management believe that the FOFI has been prepared on a reasonable basis, reflecting management's best estimates and judgments.