CALGARY, Jan. 24, 2017 /CNW/ – Yangarra Resources Ltd. (“Yangarra” or the “Company”) (TSX:YGR) provides the following operations update.
Production for 2016 averaged approximately 2,930 boe/d (23% growth from 2015) with fourth quarter production of 3,100 boe/d (53% liquids). Current production is approximately 4,000 boe/d. The Company’s base corporate decline rate for 2016 was approximately 20% (excluding wells drilled in 2016).
The Company drilled five (5) extended reach wells (“ERW”) in the Cardium and completed its standing Duvernay well in 2016, with all operations conducted in the second half of the year. Four of the five Cardium wells were on-stream in 2016, with the fifth well completed over year end and will be on-stream by the end of January. The Duvernay well was placed on-stream at year end.
As the 2016 Cardium drilling program evolved, wells were drilled deeper into the Cardium reservoir with fracturing intervals reduced to less than 30 meters. These changes have resulted in higher liquid content and higher flowing pressures than previous offsetting wells.
Initial Production (“IP”) rates on the 2016 wells are as follows:
Cardium |
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103/04-07-41-5W5 (1.5 mile) IP 90 |
480 boe/d 82% liquids (71 stages & 1,070 tons of sand) |
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100/01-14-41-6W5 (2.0 mile) IP 60(1) |
120 boe/d 94% liquids (74 stages & 1,120 tons of sand) |
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104/14-19-41-5W5 (1.5 mile) IP 60 |
506 boe/d 82% liquids (69 stages & 1,056 tons of sand) |
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100/01-26-37-8W5 (2.0 mile) IP 30(2) |
395 boe/d 76% liquids (101 stages & 1,520 tons of sand) |
(1) |
Well 2 drilled using old well path (higher in formation similar to older drill programs) and therefore |
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(2) |
Well 4 restricted more than previous wells with current flow rate higher than its IP 30 rate. |
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Duvernay |
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100/15-19-39-6W5 (1.5 Mile) IP 20 (3) |
700 boe/d 52% liquids (81 stages & 1,744 tons of sand) |
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(3) |
Well restricted to 2,500 psi |
The Company has added a second rig to assist with drilling five planned wells in the first quarter of 2017 and expects all five wells, plus the well carried over from 2016, to be on-stream by the end of the first quarter.
The Company increased its land position by 30.5 sections of Cardium land and now has 690 (430 net) wells in Cardium drilling inventory (based on 1-mile horizontal lengths). Yangarra intends to continue to drill ERWs in the Cardium given superior economics and production rates and continues to have success where pooling is required.
Yangarra abandoned 25 suspended wells over the past year (33% of total) and plans to abandon 50% of the remaining suspended wells in 2017. Cost savings from land and surface rentals together with recovered surplus equipment results in very quick payouts for this program.
The Company operates 90% of its production and has compression capacity of 24 mmcf/d in Central Alberta. A third oil hauling truck was recently added to Yangarra’s fleet to handle field transfers of incremental volumes from the recent drilling program.
Capital Budget & Guidance
Fourth quarter capital is expected to be approximately $13 million, bringing the total capital spent in 2016 to $31 million. Fourth quarter cash flow is expected to be $6 million resulting in year-end net debt of $65 million and a Q4 annualized debt to cash flow of 2.7 to 1.0.
The Company’s Board of Directors has approved an initial capital budget of $50 million for 2017. The 2017 capital budget includes drilling of 15 ERW’s in the Cardium, five (5) wells in the first quarter and ten (10) wells in the second half.
The budget is expected to increase the Company’s annual 2017 production to 4,500 – 5,000 boe/d with cash flow from operations estimated at $45 to $50 million.
The Company expects year-end 2017 net debt of $65 – $70 million resulting in a debt to annual cash flow ratio of 1.3 – 1.6 to 1. The budget assumes an average price of US$55.00/bbl for WTI crude oil (CDN$68.71 bbl Edmonton par) and an average price of $3.00/GJ for AECO natural gas.
The annual review of the bank facility is scheduled for May 2017.
Hedging Program Update
The Company’s hedge position for 2017 consists of:
- 200 bbl/d costless collar with a floor of C$65.00 WTI/bbl and a ceiling of C$75.00 WTI/bbl
- 100 bbl/d at C$70.00 WTI/bbl
- 200 bbl/d at C$64.45 WTI/bbl Jan – Mar 2017
- 2,000 GJ/d at $3.12/GJ
- 2,000 GJ/d at $3.01/GJ
Corporate Profile
Yangarra Resources Ltd. is a junior oil and gas company engaged in the exploration, development and production of natural gas and oil with operations in Western Canada, with a main focus on Central Alberta, where the Company has extensive infrastructure and land holdings.
Growth Strategies
Yangarra Resources is dedicated to creating value for its shareholders through its commitment to a clear business strategy and performance objectives. The Company’s strategy is to increase the value of its corporate assets through the drill bit and by assembling a large focused land base in Alberta that features high-quality, long-life light oil and liquids-rich gas reserves. The Company has assembled a significant future drilling inventory and will strive to grow this inventory through drilling, geology and strategic acquisitions.