Yoho Resources Inc. Announces Fiscal Q1 2014 Financial Results
Calgary, Alberta – February 26, 2014 - Yoho Resources Inc. (“Yoho” or the “Company”) has filed today on SEDAR the financial statements for the three months ended December 31, 2013 and the related managements’ discussion and analysis ("MD&A"). Copies of these documents may be found on www.sedar.com.
- Subsequent to fiscal Q1 2014, Yoho completed a transaction to sell its assets at Nig, British Columbia to Storm Resources Ltd. (“Storm”) for a total consideration of $87.9 MM, consisting of $30 MM cash and 13.6 MM Storm shares. The $30 MM 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 MM.
- Yoho has scheduled its annual general and special meeting of the shareholders of Yoho on March 20, 2014. As part of the meeting, Yoho shareholders will be asked to vote upon a plan of arrangement which will provide, among other things, for a pro rata entitlement of the 13.6 MM Storm shares currently held by Yoho. Based on the 50.7 MM Yoho shares currently issued and outstanding (on a non-dilutedbasis), holders of Yoho shares will be entitled to receive 0.26864 of a Storm Share for each Yoho share held at the time the Arrangement is completed. The final exact allocation of the Storm shares will be determined at the time the Arrangement is completed based on the number of Yoho shares then issued and outstanding.
- Yoho’s production during fiscal Q1 2014 averaged 1,948 boe per day (30% oil and NGL), a 6% decreasefrom fiscal Q1 2013 production of 2,075 boe per day (25% oil and NGL). During fiscal Q1 2014 production at Kaybob, Alberta continued to be restricted by high line pressures on the Tony Creek lateral pipeline which connects to the SemCams KA gas plant. Yoho has completed construction of a compressor at Kaybob which is expected to alleviate the production restriction. Production during fiscal Q1 was also impacted by shut-in production in non-operated areas, most of which has been restored in January 2014.
- Yoho generated funds from operations for fiscal Q1 2014 of $2.8 million ($0.06 per share basic and diluted) compared to $2.9 MM for fiscal Q1 2013 ($0.06 per share basic and diluted). The higher proportion of high-liquid natural gas produced, particularly from the Company’s Duvernay property at Kaybob, has increased field net-backs and kept funds from operations consistent with the prior year despite slightly lower production volumes.
- Net exploration and development expenditures for fiscal Q1 2014 were $8.1 million, including the acquisition of one section of Duvernay mineral rights, which increased Yoho’s total Duvernay rights at Kaybob to 22.5 net sections. The total net debt was $36.5 million at December 31, 2013.
Fiscal Q1 2014 Capital Expenditures
Yoho has completed construction of a compressor facility at Kaybob to alleviate production restrictions due to high line pressures on the Tony Creek lateral pipeline which connects to the SemCams KA gas plant. The Company expects the compressor to be in service at the end of February 2014.
During the three months ended December 31, 2013, Yoho participated in drilling 2 (1.5 net) wells. One of the two wells was drilled in Nig area of Northeast British Columbia but was not completed. This well was subsequently disposed of as part of the disposition of the Company’s Nig area assets to Storm. On the other well drilled during fiscal Q1, operational issues were encountered while running production casing as part of the process to begin completion operations. Yoho's cost to date for the drilling of the well is approximately $2.5 million; however, the well operator is currently negotiating the recovery of all of these costs from the service company involved in the production casing issues. No benefit for these contingent recoveries has been recognized.
To date during fiscal Q2 2014, Yoho has participated in the drilling of one (0.33 net) horizontal well in the Kaybob area targeting the Duvernay formation. Completion operations on this well are expected to begin in the next few weeks.
For fiscal 2014, Yoho is currently planning a total capital program of between $40.0 and $42.0 million. Yoho is currently planning to drill 4 (1.5 net) wells at Kaybob and has completed installation of a compressor on the Tony Creek block. In addition, 2 (2.0 net) wells are planned to be drilled at Inga, British Columbia during fiscal 2014. Yoho estimates that overall production for fiscal 2014 will average approximately 2,100 to 2,200 boe per day with cash flow estimated between $16.5 and $17.0 million. Average production levels following the sale of the Nig assets are expected to be restored to original budget levels by the last quarter of calendar 2014 through the reallocation of capital (from Yoho's original capital plan) to the Kaybob Duvernay and Inga properties.
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.