CALGARY, Jan. 29, 2019 /CNW/ - Yangarra
Resources Ltd. ("Yangarra" or the
"Company") (TSX:YGR) releases the results of the 2018 year
end oil and gas reserves evaluation.
In 2018, Yangarra drilled 36 wells with a continued emphasis on
developing new areas through (small "E") exploration and further
delineation of existing areas. Of the 36 wells drilled, 30 wells
were brought on production in 2018 with the remaining 6 wells put
on production in early 2019 as oil price differentials
improved.
As previously disclosed, Yangarra spent a significant amount of
infrastructure capital in 2018 and as a result expects a smoother
quarterly production growth profile going forward. This
infrastructure build also reduced year-over-year operating costs as
reflected in the 2018 Reserve Report.
The Company's PDP + PNP NAV grew by 119% to $3.28 per share.
Reserve Report Highlights:
The independent reserves report prepared by Deloitte LLP is
effective as of December 31, 2018
("2018 Reserve Report"). All reserves information contained
in this press release is based on the 2018 Reserve Report. Unless
specifically indicated, all financial and operational
information in this press release is based on estimates and is
unaudited and accordingly, such financial information is subject to
change based on the results of the Company's audit.
Proved Developed Producing ("PDP") Reserves
- 23.4 million boe (96% increase from 2017)
- Net present value before tax discounted at 10% ("NPV10") of
$393 million (93% increase from
2017), including abandonment capital for producing and
non-producing wells of $8
million
- Finding and development costs of $10.15/boe, resulting in a PDP recycle ratio of
2.7 times
- PDP net asset value per fully diluted common share ("NAV per FD
Share") of $2.75
- PDP additions replaced 434% of 2018 production
Proved Non-Producing ("PNP") Reserves
- 1.9 million boe
- NPV10 of $47 million
- The majority of the PNP value consists of the six wells that
were drilled before year-end but not completed. Four of these wells
are now producing and the remainder are expected to be brought
on-stream before the end of February.
Total Proved reserves ("1P")
- 75.5 million boe (35% increase from 2017)
- NPV10 of $1.12 billion (55%
increase from 2017)
- 1P future development costs of $393
million
- Finding and development costs of $6.63/boe resulting in a recycle ratio of 4.1
times
- 1P NAV per FD Share of $11.01
- 1P Reserve Life Index ("RLI") based on fourth quarter 2018
production of 17.0 years
- 1P additions replaced 672% of 2018 production
Proved plus probable reserves ("2P")
- 126.3 million boe (44% increase from 2017)
- NPV10 of $1.69 billion (64%
increase from 2017)
- 2P Future development costs of $607
million
- Finding and development costs of $4.90/boe resulting in a recycle ratio of 5.6
times
- 2P NAV per FD Share of $17.46
- 2P Reserve Life Index ("RLI") of 28.4 years
- 2P additions replaced 1,220% of 2018 production
Oil and Gas Reserves
The following tables summarize certain information contained in
the 2018 Reserve Report. The 2018 Reserve Report encompasses 100%
of Yangarra's oil and gas properties and was prepared in accordance
with definitions, standards and procedures contained in the
Canadian Oil and Gas Evaluation Handbook and National Instrument
51-101 - Standards of Disclosure for Oil and Gas Activities
("NI 51-101") by Deloitte.
Deloitte used their December 31,
2018 price forecasts of US$58.00/bbl WTI
and US$60.00/bbl WTI for light oil (CDN$65.80/bbl and CDN$71.05/bbl for Edmonton
Par) for 2019 and 2020, respectively, and $1.75/mcf
and $2.15/mcf for AECO natural gas in 2019 and 2020,
respectively.
Summary of Oil and Gas Reserves (1)(2)
(Company Share Gross volumes based on forecast price and
costs)
Reserves
Category
|
|
|
|
|
Light
and
Medium
Oil
(Mbbl)
|
Natural
Gas
Liquids
(Mbbl)
|
Natural
Gas
(MMcf)
|
Total
BOE
2018
(Mboe)
|
|
Total
BOE
2017
(Mboe)
|
Proved Developed
Producing
|
5,211
|
5,028
|
79,043
|
23,412
|
|
11,965
|
Proved Developed
Non-Producing
|
730
|
327
|
5,157
|
1,917
|
|
684
|
Proved
Undeveloped
|
13,624
|
10,278
|
157,656
|
50,178
|
|
43,217
|
Total
Proved
|
19,565
|
15,632
|
241,856
|
75,507
|
|
55,866
|
Probable
|
13,051
|
10,739
|
162,049
|
50,799
|
|
32,023
|
Total Proved Plus
Probable
|
32,617
|
26,371
|
403,905
|
126,305
|
|
87,889
|
|
|
Notes to
table:
|
(1)
|
Total values may not
add due to rounding.
|
(2)
|
BOEs are derived by
converting gas to oil equivalent in the ratio of six thousand cubic
feet of gas to one barrel of oil (6 Mcf:1 bbl).
|
Summary of Net Present Values of Future Net Revenue (Before Tax)
(1)(4)
(based on forecast price and costs)
|
As At December 31,
2018(2)
|
|
As
At
December 31,
2017 (3)
|
Reserves
Category
|
0.0%
(M$)
|
5.0%
(M$)
|
10.0%
(M$)
|
15.0%
(M$)
|
20.0%
(M$)
|
|
10.0%
(M$)
|
Proved Developed
Producing
|
599,868
|
473,024
|
393,103
|
338,640
|
299,286
|
|
203,513
|
Proved Developed
Non-Producing
|
68,895
|
55,691
|
47,202
|
41,331
|
37,036
|
|
10,993
|
Proved
Undeveloped
|
1,361,923
|
936,893
|
678,893
|
510,805
|
395,185
|
|
507,455
|
Total
Proved
|
2,030,686
|
1,465,608
|
1,119,198
|
890,776
|
731,506
|
|
721,962
|
Probable
|
1,731,291
|
925,108
|
566,699
|
380,463
|
272,280
|
|
304,626
|
Total Proved Plus
Probable
|
3,761,978
|
2,390,716
|
1,685,897
|
1,271,239
|
1,003,786
|
|
1,026,588
|
|
Notes to
table:
|
(1)
|
Total values may not
add due to rounding.
|
(2)
|
Forecast pricing used is based on Deloitte
published price forecasts effective December
31, 2018.
|
(3)
|
Forecast pricing used is based on Deloitte
published price forecasts effective December
31, 2017.
|
(4)
|
Cash flows include
the effects of the current Alberta Royalty Framework. The estimated
future net reserves are stated before deducting future estimated
site restoration costs and are reduced for future abandonment costs
and estimated capital for future development associated with the
reserves.
|
|
Reserve
Definitions:
|
(a)
|
"Proved" reserves are
those reserves that can be estimated with a high degree of
certainty to be recoverable. It is likely that the actual remaining
quantities recovered will exceed the estimated proved
reserves.
|
(b)
|
"Probable" reserves
are those additional reserves that are less certain to be recovered
than proved reserves. It is equally likely that the actual
remaining quantities recovered will be greater or less than the sum
of the estimated proved plus probable reserves.
|
(c)
|
"Developed" reserves
are those reserves that are expected to be recovered from existing
wells and installed facilities or, if facilities have not been
installed, that would involve a low expenditure (e.g. when compared
to the cost of drilling a well) to put the reserves on
production.
|
(d)
|
"Developed Producing"
reserves are those reserves that are expected to be recovered from
completion intervals open at the time of the estimate. These
reserves may be currently producing or, if shut-in, they must have
previously been on production, and the date of resumption of
production must be known with reasonable certainty.
|
(e)
|
"Developed
Non-Producing" reserves are those reserves that either have not
been on production, or have previously been on production, but are
shut in, and the date of resumption of production is
unknown.
|
(f)
|
"Undeveloped"
reserves are those reserves expected to be recovered from known
accumulations where a significant expenditure (for example, when
compared to the cost of drilling a well) is required to render them
capable of production. They must fully meet the requirements of the
reserves classification (proved, probable, possible) to which they
are assigned.
|
Finding and Development Costs ("F&D")
Yangarra's F&D costs for 2018, 2017 and the three-year
average are presented in the tables below. The costs used in the
F&D calculation are the capital costs related to: land
acquisition and retention; drilling; completions; tangible well
site; tie-ins; and facilities, plus the change in estimated future
development costs as per the independent reserve report.
Acquisition costs are net of any proceeds from dispositions of
properties. Due to the timing of capital costs and the
subjectivity in the estimation of future 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. The
reserves used in this calculation are Company net reserve
additions, including revisions.
Proved Developed
Producing Finding & Development Costs ($
millions)
|
|
2018
|
2017
|
2016 -
2018
|
Capital
expenditures
|
151.0
|
83.0
|
265.0
|
|
|
|
|
Reserve additions,
net production (Mboe)
|
14,878
|
6,213
|
24,395
|
|
|
|
|
Proved Developed
Producing F&D costs – including future capital
($/boe)
|
10.15
|
13.36
|
10.86
|
|
|
|
|
Proved Recycle
Ratio ($27.30/boe operating netback)
|
2.69
|
2.10
|
|
Proved Finding
& Development Costs ($ millions)
|
|
2018
|
2017
|
2016 -
2018
|
Capital
expenditures
|
151.0
|
83.0
|
265.0
|
Change in future
capital
|
1.9
|
140.8
|
198.3
|
Total capital for
F&D
|
152.9
|
223.8
|
463.3
|
|
|
|
|
Reserve additions,
net production (Mboe)
|
23,072
|
21,504
|
57,404
|
|
|
|
|
Proved F&D costs
– including future capital ($/boe)
|
6.63
|
10.41
|
8.07
|
Proved F&D costs
– excluding future capital ($/boe)
|
6.54
|
3.86
|
4.62
|
|
|
|
|
Proved Recycle
Ratio ($27.30/boe operating netback)
|
|
|
|
Including future
capital
|
4.12
|
2.69
|
|
Excluding future
capital
|
4.17
|
7.25
|
|
Proved plus
Probable Finding & Development Costs ($
millions)
|
|
2018
|
2017
|
2016 -
2018
|
Capital
expenditures
|
151.0
|
83.0
|
265.0
|
Change in future
capital
|
54.2
|
186.3
|
339.9
|
Total capital for
F&D
|
205.2
|
269.3
|
604.9
|
|
|
|
|
Reserve additions,
net production (Mboe)
|
41,847
|
29,349
|
92,307
|
|
|
|
|
Proved plus Probable
F&D costs – including future capital ($/boe)
|
4.90
|
9.18
|
6.55
|
Proved plus Probable
F&D costs – excluding future capital ($/boe)
|
3.61
|
2.86
|
2.87
|
|
|
|
|
Proved plus
Probable Recycle Ratio ($27.30/boe operating
netback)
|
|
|
|
Including future
capital
|
5.57
|
3.05
|
|
Excluding future
capital
|
7.57
|
9.90
|
|
Net Asset Value ("NAV")
As at December 31,
2018
|
PDP
|
Total
Proved
|
Proved +
Probable
|
|
|
|
|
Present Value
Reserves, before tax (discounted at 10%) ($ million)
|
393.0
|
1,119.2
|
1,685.9
|
Total Net Debt ($
million) (unaudited)
|
(155.0)
|
(155.0)
|
(155.0)
|
Proceeds from the
exercise of options (2)
|
3.4
|
3.4
|
3.4
|
Net Asset
Value
|
241.4
|
967.6
|
1,534.3
|
|
|
|
|
Fully diluted common
shares outstanding (million)
|
87.9
|
87.9
|
87.9
|
Net asset value
per share
|
$2.75
|
$11.01
|
$17.46
|
Notes to
tables:
|
(1)
|
The preceding table
shows what is customarily referred to as a "produce out" net asset
value calculation under which the current value of Yangarra's
reserves would be produced at the Deloitte forecast future prices
and costs. The value is a snapshot in time as at December 31,
2018 and is based on various assumptions including commodity prices
and foreign exchange rates that vary over time. In this
analysis, the present value of the proved and probable reserves is
calculated at a before tax 10 percent discount rate.
|
(2)
|
The calculation of
proceeds from exercise of stock options and the diluted number of
common shares outstanding only include stock options that are
"in-the-money" based on the closing price of YGR of $2.62 as at
December 31, 2018.
|
(3)
|
Net debt or adjusted
working capital (deficit), which represent current assets less
current liabilities, excluding current derivative financial
instruments, are used to assess efficiency, liquidity and the
general financial strength of the Company. There is no IFRS measure
that is reasonably comparable to net debt or adjusted working
capital (deficit).
|
Year End Disclosure
The financial statements for the year-ended December 31, 2018 are scheduled to be released on
March 7, 2019.
Additional reserve information as required under NI 51-101 will
be included in the Company's Annual Information Form which will be
filed on SEDAR on or before March 31,
2019.
Reader Advisories:
Oil and Gas Advisories. Natural gas has been
converted to a barrel of oil equivalent (Boe) using 6,000 cubic
feet (6 Mcf) of natural gas equal to one barrel of oil (6:1),
unless otherwise stated. The Boe conversion ratio of 6 Mcf to
1 Bbl is based on an energy equivalency conversion method and does
not represent a value equivalency; therefore Boe's may be
misleading if used in isolation. References to natural gas liquids
("NGLs") in this news release include condensate, propane, butane
and ethane and one barrel of NGLs is considered to be equivalent to
one barrel of crude oil equivalent (Boe). One ("BCF") equals
one billion cubic feet of natural gas. One ("Mmcf") equals
one million cubic feet of natural gas.
All reserve references in this press release are "Company share
gross reserves". Company share gross reserves are the Company's
total working interest reserves (operating or non-operating) before
the deduction of any royalty obligation s but including royalty
interests payable the Company. It should not be assumed that
the present worth of estimated future cash flow presented in the
tables above represents the fair market value of the reserves.
There is no assurance that the forecast prices and costs
assumptions will be attained and variances could be material. The
recovery and reserve estimates of Yangarra's 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.
This press release contains metrics commonly used in the oil and
natural gas industry which have been prepared by management, such
as "recycle ratio", "operating netback", "finding and development
costs", "reserve life index" and "net asset value". These terms do
not have a standardized meaning and may not be comparable to
similar measures presented by other companies and, therefore,
should not be used to make such comparisons.
Management uses these oil and gas metrics for its own
performance measurements and to provide shareholders with measures
to compare Yangarra's operations over time. Readers are cautioned
that the information provided by these metrics, or that can be
derived from metrics presented in this press release, should not be
relied upon for investment or other purposes.
Forward Looking Information. This press release contains
forward-looking statements and forward-looking information
(collectively "forward-looking information") within the meaning of
applicable securities laws relating to the Company's plans and
other aspects of our anticipated future operations, management
focus, strategies, financial, operating and production results and
business opportunities. Forward-looking information typically uses
words such as "anticipate", "believe", "continue", "sustain",
"project", "expect", "forecast", "budget", "goal", "guidance",
"plan", "objective", "strategy", "target", "intend" or similar
words suggesting future outcomes, statements that actions, events
or conditions "may", "would", "could" or "will" be taken or occur
in the future, including statements about our strategy, plans,
objectives, priorities and focus, growth plans; our estimations on
future costs; volatility of commodity prices, and currency
fluctuations. Statements relating to "reserves" are also deemed to
be forward-looking statements, as they involve the implied
assessment, based on certain estimates and assumptions, that the
reserves described exist in the quantities predicted or estimated
and that the reserves can be profitably produced in the future.
The forward-looking information is based on certain key
expectations and assumptions made by our management, including
expectations and assumptions concerning prevailing commodity
prices, exchange rates, interest rates, applicable royalty rates
and tax laws; future production rates and estimates of operating
costs; performance of existing and future wells; reserve volumes;
anticipated timing and results of capital expenditures; the success
obtained in drilling new wells; the sufficiency of budgeted capital
expenditures in carrying out planned activities; the timing,
location and extent of future drilling operations; the state of the
economy and the exploration and production business; results of
operations; performance; business prospects and opportunities; the
availability and cost of financing, labour and services; the impact
of increasing competition; ability to efficiently integrate assets
and employees acquired through acquisitions, ability to market oil
and natural gas successfully and our ability to access capital.
Although we believe that the expectations and assumptions on
which such forward-looking information is based are reasonable,
undue reliance should not be placed on the forward-looking
information because Yangarra can give no assurance that they will
prove to be correct. Since forward-looking information addresses
future events and conditions, by its very nature they involve
inherent risks and uncertainties. Our actual results, performance
or achievement could differ materially from those expressed in, or
implied by, the forward-looking information and, accordingly, no
assurance can be given that any of the events anticipated by the
forward-looking information will transpire or occur, or if any of
them do so, what benefits that we will derive therefrom. Management
has included the above summary of assumptions and risks related to
forward-looking information provided in this press release in order
to provide security holders with a more complete perspective on our
future operations and such information may not be appropriate for
other purposes.
Readers are cautioned that the foregoing lists of factors are
not exhaustive. Additional information on these and other factors
that could affect our operations or financial results are included
in reports on file with applicable securities regulatory
authorities and may be accessed through the SEDAR website
(www.sedar.com).
These forward-looking statements are made as of the date of this
press release and we disclaim any intent or obligation to update
publicly any forward-looking information, whether as a result of
new information, future events or results or otherwise, other than
as required by applicable securities laws.
All reference to $ (funds) are in Canadian dollars unless
otherwise stated.
Neither the TSX nor its Regulation Service Provider (as that
term is defined in the Policies of the TSX) accepts responsibility
for the adequacy and accuracy of this release.
SOURCE Yangarra Resources Ltd.