AGM Documents 3

Yoho Resources Inc. Announces The Sale Of Certain Duvernay Assets For $50 Million

Calgary, Alberta – December 7, 2015 - Yoho Resources Inc. ("Yoho" or the "Company") (TSXV:YO) announced today that it has entered into a definitive agreement to sell a portion of its Duvernay assets in the Kaybob area of Alberta (the "Subject Assets") for cash consideration of $50 million (prior to adjustments) (the "Transaction"). Yoho will retain approximately 25% of its net Kaybob Duvernay acreage consisting of 5.5 sections at 100% working interest and Yoho’s recently completed well at 16-12-59-19 W5.

The Subject Assets are predominantly non-operated and consist of 10,290 net acres with an average working interest of 39%. Average production (net to Yoho) from the Subject Assets was approximately 890 Boe per day for the first nine months of fiscal 2015. The reserves attributable to the Subject Assets, based on Yoho’s reserves evaluation completed by its independent reserves evaluator, GLJ Petroleum Consultants Ltd. effective September 30, 2014, are as follows:

  Reserves
Proved producing 1,374
Total proved 8,085 Mboe with required future development capital of $139.2 million
Total proved and probable 22,562 Mboe with required future development capital of $336 million

After closing of the Transaction, the Company expects to be undrawn on its bank credit facilities and will have estimated positive working capital of $16 to $17 million. The annual review of Yoho’s bank credit facilities is expected to be finalized on the closing of the Transaction. Shortly after closing of the Transaction, Yoho will make an offer to the holders of its outstanding $11.8 million aggregate principal amount of secured subordinated convertible debentures (the "Debentures") to purchase such Debentures in accordance with their terms. Further details regarding such offer to will be available after closing of the Transaction.

Yoho’s annual financial statements and other year-end disclosures are expected to be released in early January 2016.

On completion of Transaction, Yoho will hold the following assets:

  • 27 net sections (average working interest 90%) in the greater Inga area of British Columbia where the Company has a multi-zoned Triassic play, currently focused on the Montney Formation. Recent industry activity in close proximity to Yoho’s acreage confirmed excellent potential for a horizontal liquids rich Montney resource development play on these lands.
  • 5.5 sections (100% working interest) of contiguous Duvernay land in Kaybob which will be continued by the recently completed well at 16-12-59-19 W5. The well was completed with 11 stages during October 2015 at a cost of $5.2 million. At the end of a 124 hour clean up flow period, the well was flowing at a restricted rate of 2.4 MMcf per day with approximately 80 barrels per MMcf of associated field condensate. Yoho is currently reviewing tie-in options for this well. Under full development, this land block could accommodate 25 to 30 horizontal wells.
  • Other conventional assets with current estimated production of approximately 600 boe per day consisting of 2.5 MMcf per day of natural gas and 170 barrels per day of oil and natural gas liquids, with an additional 100 boe per day of gas production currently shut in due to pipeline restrictions.

The Transaction has an effective date of December 1, 2015 and is expected to be completed on or before December 17, 2015 and is subject to customary conditions, including receipt of all applicable regulatory approvals. BMO Capital Markets acted as financial advisor to Yoho with respect to the Transaction. Details respecting Yoho’s fiscal 2016 capital program will be made available following closing of the Transaction.

FOR FURTHER INFORMATION PLEASE CONTACT:

Brian McLachlan
President and Chief Executive Officer
403-537-1771 x103

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.

READER ADVISORY

Certain information regarding Yoho set forth in this news release, including (among other things): the sale of the Subject Assets and the expected timing for closing the Transaction; the expected use of proceeds from the Transaction; the effect of the Transaction on the Company’s debt and working capital position; expected timing for a review of the Company’s bank credit facilities; the Company's intention to make an offer to redeem its Debentures (including timing for further details in respect of the same); production estimates for the Subject Assets and the Company's other assets; the actual production rates from the Company's recently completed Duvernay well and expected intention to tie-in such well; the continuation of the Company’s 5.5 section land block at Kaybob; and the Company's intention to release certain annual disclosure documents in January 2016, may constitute forward-looking statements under applicable securities laws and necessarily involve substantial known and unknown risks and uncertainties. In addition, information relating to reserves is deemed to be forward-looking information, as it involves the implied assessment, based on certain estimates and assumptions, that the reserves described can be economically produced in the future. These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond Yoho's control, including without limitation, the risk that closing of the Transaction on the terms and timing set forth herein may change (or may not be completed at all); 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 third party and regulatory approvals, 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.

With respect to forward-looking statements contained in this news release, 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 continued ability of Yoho to market its production in a timely and efficient manner; the timely receipt of any required third party and regulatory approvals; the ability of the Company to obtain qualified staff, equipment and services in a timely and cost efficient manner; drilling results; the timing of drilling plans and completion operations; 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; the continued availability of Yoho's credit facilities and other borrowing sources; 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 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.

Analogous Information

Certain information contained herein is considered "analogous information" as defined in National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities ("NI 51-101"). Such analogous information has not been prepared in accordance with NI 51-101 and the Canadian Oil and Gas Evaluation Handbook and Yoho is unable to confirm whether such estimates have been prepared by a qualified reserves evaluator. In particular, this news release describes the potential for a liquids rich horizontal drilling opportunity on certain of Yoho's lands in the Inga area of British Columbia based on results from other industry participants in close proximity to Yoho's lands. Such information is not intended to be an estimate of Yoho' resources or projections of future results. In addition, such positive analogous information may not be applicable to Yoho or its properties. Such information has been presented to show the potential for enhanced recovery in certain of Yoho' areas of interest or areas analogous to Yoho' areas of interest. Such information is based on independent public data and public information received from other producers and Yoho has no way of verifying the accuracy of such information. Such information has been presented to help demonstrate the basis for Yoho' business plans and strategies. There is no certainty that such results will be achieved by Yoho and such information should not be construed as an estimate of future recovery rates or reserves or resources or future production levels.

Initial Production Rates

Any references herein to production rates, test rates, clean-up flow rates or initial production rates are useful in confirming the presence of hydrocarbons, however, such rates are not determinative of the rates at which such wells will continue production and decline thereafter. While encouraging, readers are cautioned not to place reliance on such rates in calculating the aggregate production for Yoho. Initial production or test rates may be estimated based on other third party estimates or limited data available at this time. Well-flow test result data should be considered to be preliminary until a pressure transient analysis and/or well-test interpretation has been carried out. In all cases herein, initial production or test results (including clean-up flow rates) are not necessarily indicative of long-term performance of the relevant well or fields or of ultimate recovery of hydrocarbons.

Drilling Locations

This news release discloses drilling locations in three categories: (i) proved locations; (ii) probable locations; and (iii) unbooked locations. Proved locations and probable locations are derived from the report prepared by GLJ Petroleum Consultants Ltd. effective and effective September 30, 2014 evaluating the crude oil, natural gas liquids and natural gas and future net production revenues attributable to the properties of Yoho and account for drilling locations that have associated proved and/or probable reserves, as applicable. Unbooked locations are internal estimates based on Yoho' prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal review. Unbooked locations do not have attributed reserves. Of the drilling locations identified herein nil are proved locations, 3 are probable locations and 22 to 27 are unbooked locations. Unbooked locations have been identified by management as an estimation of our multi-year drilling activities based on evaluation of applicable geologic, seismic, engineering, production and reserves information. There is no certainty that Yoho will drill all unbooked drilling locations and if drilled there is no certainty that such locations will result in additional oil and gas reserves or production. The drilling locations on which we actually drill wells will ultimately depend upon the availability of capital, regulatory approvals, seasonal restrictions, oil and natural gas prices, costs, actual drilling results, additional reservoir information that is obtained and other factors. While certain of the unbooked drilling locations have been derisked by drilling existing wells in relative close proximity to such unbooked drilling locations, some of other unbooked drilling locations are farther away from existing wells where management has less information about the characteristics of the reservoir and therefore there is more uncertainty whether wells will be drilled in such locations and if drilled there is more uncertainty that such wells will result in additional oil and gas reserves or production.

Selected Definitions

bbl means barrel
boe means barrel of oil equivalent of natural gas and crude oil on the basis of 1 boe for 6 Mcf of natural gas (this conversion factor is an industry accepted norm and is not based on either energy content or current prices)
Mboe means thousand barrels of oil equivalent
Mcf means thousand cubic feet
MMcf means million cubic feet