AGM Documents 3

Yoho Resources Inc. Announces Year End Financial Results and Pro-Forma Reserves Information as at September 30, 2015

Calgary, Alberta – January 14, 2016 -Yoho Resources Inc. (“Yoho” or the “Company”) has filed today on SEDAR the financial statements for the year ended September 30, 2015 and the related managements’ discussion and analysis ("MD&A").  Copies of these documents may be found on www.sedar.com

In December 2015, subsequent to its 2015 fiscal year end, Yoho closed a transaction to sell a portion of its Duvernay assets in the Kaybob area of Alberta for cash consideration of $50 million (prior to adjustments) (the "Transaction").  Yoho has retained approximately 25% of its net Kaybob Duvernay acreage consisting of 5.5 sections at 100% working interest and the Company’s recently completed Duvernay horizontal well at 16-12-59-19 W5.  

Highlights

  • Yoho’s production during fiscal 2015 averaged 1,714 boe per day (34% oil and natural gas liquids (“NGL”)), compared to fiscal 2014 production of 1,712 boe per day (29% oil and NGL).
    • Net exploration and development expenditures for fiscal 2015 were $31.6 million primarily for drilling and completions, including the drilling of 3 (1.0 net) wells. 
  • Subsequent to the Transaction, Yoho’s proved plus probable reserves (Company interest) as evaluated by GLJ as at September 30, 2015 were 13.2 MMboe and the Company’s proved reserves (Company interest) as at September 30, 2015 were 5.9 MMboe.  
  • Yoho generated funds from operations for fiscal 2015 of $4.6 million ($0.08 per share basic). 
  • Due to the ongoing low price commodity environment, the Company has recorded an impairment of $77.1 million on its property, plant and equipment during fiscal 2015, resulting in a net loss of $62.6 million for fiscal 2015.
 

Year ended
September 30, 2015

 

Year ended
September 30, 2014

Financial ($)      
Petroleum and natural gas sales 16,529,720   26,234,952
Funds from operations (1) 4,581,133   11,135,762
  per share - basic 0.08   0.22
  per share – diluted 0.08   0.21
Net income (loss) (62,563,607)   43,154,230
  per share - basic (1.13)   0.83
  per share – diluted (1.13)   0.82
       
Net exploration and development expenditures 34,539,821   31,721,969
Net acquisitions and dispositions (2,969,455)   (30,194,887)
Total assets 112,180,973   164,812,494
Total debt (including working capital deficiency) 27,977,846   16,225,061
Shareholders’ equity 59,640,259   114,110,071
       
Weighted average common shares outstanding      
  Basic 55,137,918   51,703,235
  Diluted 55,137,918   52,708,183
 

Year ended
September 30, 2015

 

Year ended
September 30, 2014

Operations      
Production      
  Natural gas (mcf/d) 6,762   7,292
  Oil and NGL (bbls/d) 587   497
  Combined (boe/d) 1,714   1,712
       
Realized sales prices      
  Natural gas ($/mcf) 2.56   4.47
  Oil and NGL ($/bbl) 47.69   78.96
       
Funds from operations per boe ($/boe)      
  Petroleum and natural gas sales 26.42   41.97
  Royalties (1.22)   (4.26)
  Operating expenses (12.95)   (12.59)
  Operating netback (2) 12.25   25.12
  General and administrative (3.25)   (4.74)
  Interest (1.76)   (1.05)
  Realized gain (loss) on financial derivative contracts 0.07   (1.51)
  Funds from operations (1) 7.31   17.82
       
Drilling activity      
  Total wells 3   7
  Working interest wells 1.0   4.3
       
Undeveloped land (net acres) 69,232   89,755

Notes:

  1. Funds from operations is calculated as cash provided by operating activities, adding the change in non-cash working capital and decommissioning obligation expenditures. Funds from operations is used to analyze the Company’s operating performance and leverage. Funds from operations does not have a standardized measure prescribed by IFRS and therefore may not be comparable with the calculations of similar measures for other companies. Yoho’s calculation of funds from operations is detailed in the MD&A for the years ended September 30, 2015 and 2014. 
  2. Operating netback equals petroleum and natural gas sales less royalties, operating costs and transportation costs calculated on a boe basis. Operating netback does not have a standardized measure prescribed by IFRS and therefore may not be comparable with the calculations of similar measures for other companies.

CORPORATE RESERVES POST TRANSACTION

 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, 2015 (the “GLJ Report”) and excludes the reserves related to the Duvernay assets sold in the Transaction.  A full summary of the Company's reserves as at September 30, 2015 (including those that were subject to the Transaction), will be included in the Company's Annual Information Form for the year ended September 30, 2015, which will be available shortly on SEDAR at www.sedar.com.  The following 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 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 the 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 Post -Transaction

The following table provides summary reserve information based upon the GLJ Report and using the published GLJ (October 1, 2015) price forecast, after giving effect to the Transaction.

  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 136 120   83 72   141 103  
  Non-producing 10 10   24 22   375 284  
  Undeveloped 132 112   - -   813 675  
Total proved 278 242   108 94   1,329 1,062  
Probable 215 182   29 24   2,334 1,871  
Total proved & probable (4) 493 424   137 118   3,663 2,933  
    Total 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   8,471 7,933   1,773 1,617
  Non-producing   4,799 4,424   1,209 1,053
  Undeveloped   11,689 10,942   2,893 2,611
Total proved   24,959 23,299   5,875 5,281
Probable   28,466 26,214   7,322 6,447
Total proved & probable (4)   53,425 49,513   13,197 11,727

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, or BOE, 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 Post-Transaction

The estimated before tax net present value of future net revenues, after giving effect to the Transaction, associated with Yoho’s reserves effective September 30, 2015 and based on the published GLJ (October 1, 2015) future price forecast are summarized in the following table:

  Discounted at
  Undiscounted   5%   10%   15%   20%
(M$)                    
Proved                    
  Proved producing   12,232   10,928   9,384   8,130   7,158
  Non-producing   22,267   14,282   10,213   7,780   6,154
  Undeveloped   46,069   26,276   16,310   10,691   7,247
Total proved   80,569   51,485   35,907   26,601   20,559
Probable   171,973   87,501   52,276   34,500   24,292
Total proved plus probable (3)   252,542   138,987   88,184   61,100   44,851

Notes:

  1. The estimated future net revenues are reduced for estimated future abandonment and reclamation 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.

Future Development Costs Post Transaction

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

 

Development Costs
Forecast Prices and Costs

 
Proved Reserves
Proved Plus Probable Reserves
Year
(M$)
(M$)
Q4 2015 13,520 16,820
2016 208 18,404
2017 9,269 9,518
2018 249 4,515
2019 14,429 14,450
2020 88 14,717
Remainder
675
16,170
Total Undiscounted (all years)
38,438
94,594
Total Discounted 10%
31,991
73,734

Price Forecast

The GLJ October 1, 2015 price forecast is summarized as follows:

Calendar Year 2015 Q4 2016 2017 2018 2019 2020 2021 2022 2023 2024
Edmonton ($Cdn/bbl) 56.00 61.33 64.52 68.75 72.73 76.47 82.35 88.24 94.12 98.41
Heavy crude (12°API) at Hardisty ($Cdn/bbl) 36.69 42.30 46.23 50.22 54.13 57.96 63.56 69.32 75.24 78.71
Alberta Plant Gate ($Cdn/mmbtu) 2.74 3.20 3.38 3.48 3.57 3.66 3.86 4.06 4.26 4.53
British Columbia Plant Gate ($Cdn/mmbtu) 1.99 2.84 3.23 3.33 3.42 3.51 3.71 3.91 4.10 4.38

Note:

  1. Inflation is accounted for at 2.0% per year

OUTLOOK

Yoho’s current initial fiscal 2016 plan includes a capital program of $7 to $8 million with average production of 900 to 1,000 boe per day.  Completion operations on Yoho’s 100% Duvernay well in Kaybob were finished during fiscal Q1 2016.  Operations to equip and tie-in this well are expected to commence in fiscal Q3 2016 with initial production from this well expected in fiscal Q4 2016. 

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”.

For more information please contact:

Brian McLachlan
President and CEO
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

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 and the 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, 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.

Oil and Gas Advisory

The reserves information contained in this press release has been prepared in accordance with NI 51-101.  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:

"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
“MMboe” means one million 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