CALGARY, ALBERTA–(Marketwired – Nov. 19, 2013) – Yoho Resources Inc. (“Yoho” or the “Company”) (TSX VENTURE:YO) is pleased to announce the results of its independent reserve evaluation for the year ended September 30, 2013 as prepared by GLJ Petroleum Consultants Ltd. (“GLJ”). The Company’s annual audit of its financial statements is not yet complete and accordingly all financial amounts referred to in this press release are estimates and are subject to revision. Complete reserves disclosure will be included in Yoho’s Annual Information Form for its fiscal year ended September 30, 2013, which is expected to be filed in early December 2013.
Highlights
OPERATIONS UPDATE
Kaybob Duvernay
Yoho is currently participating in the drilling of one (0.5 net) horizontal well in the Kaybob area targeting the Duvernay formation. Current plans for Yoho are to drill a total of 4 (1.5 net) horizontal wells in the Duvernay shale play in fiscal 2014.
Nig Montney
At Nig, Yoho is currently waiting on license approval to drill a horizontal well targeting the Upper Montney formation at c-29-A/94-H-4. This well will be the final well in the delineation phase of the Company’s Upper Montney program.
LAND HOLDINGS
The Company internally estimated the fair market value of its net undeveloped land holdings as at September 30, 2013 to be $87.4 million. This evaluation was completed principally using industry activity levels, third party transactions and land acquisitions that occurred in proximity to Yoho’s undeveloped lands during the previous 12 months.
A summary of the Company’s land holdings at September 30, 2013 is outlined below:
| Developed Acres | Undeveloped Acres | Total Acres | ||||
| Location | Gross (1) | Net (2) | Gross (1) | Net (2) | Gross (1) | Net (2) |
| Alberta | 60,440 | 22,938 | 93,209 | 49,050 | 153,649 | 71,988 |
| British Columbia | 35,956 | 16,071 | 71,856 | 61,269 | 107,812 | 77,340 |
| Other | 324 | 117 | – | – | 324 | 117 |
| Total | 96,720 | 39,127 | 165,065 | 110,319 | 261,785 | 149,446 |
| Notes: | |
| (1) | “Gross” means the total area of properties in which the Company has an interest. |
| (2) | “Net” means the total area in which the Company has an interest multiplied by the working interest owned by the Company. |
CORPORATE RESERVES
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, 2013 (the “GLJ Report”). The following presentation 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 and in the “Highlights” section above 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 our 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
The Company’s total proved plus probable reserves increased by 92% in fiscal 2013 to 52,742 Mboe. Proved reserves increased by 9% to 11,849 Mboe and comprised 22% of the Company’s total proved plus probable reserves. Proved undeveloped reserves are 62% of the total proved reserves. The future capital in the GLJ Report (undiscounted) is $506.8 million for the proved and probable reserves and is $129.7 million for total proved reserves. The future capital is programmed over a seven year time period for proved plus probable reserves and five year time period for proved reserves.
The following table provides summary reserve information based upon the GLJ Report and using the published GLJ (October 1, 2013) price forecast.
| 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 | 225 | 180 | 119 | 103 | 848 | 639 | |
| Non-producing | 1 | 1 | 6 | 6 | 4 | 3 | |
| Undeveloped | 125 | 103 | – | – | 2,240 | 1,785 | |
| Total proved | 351 | 284 | 126 | 109 | 3,092 | 2,427 | |
| Probable | 458 | 384 | 39 | 34 | 10,210 | 7,936 | |
| Total proved & probable (4) | 809 | 668 | 164 | 143 | 13,301 | 10,363 | |
| 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 | 19,191 | 17,434 | 4,391 | 3,828 | |
| Non-producing | 546 | 491 | 102 | 91 | |
| Undeveloped | 29,950 | 26,765 | 7,356 | 6,349 | |
| Total proved | 49,687 | 44,689 | 11,849 | 10,268 | |
| Probable | 181,113 | 154,449 | 40,892 | 34,096 | |
| Total proved & probable (4) | 230,801 | 199,138 | 52,742 | 44,364 | |
| 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 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
The estimated before tax net present value of future net revenues associated with Yoho’s reserves effective September 30, 2013 and based on the published GLJ (October 1, 2013) future price forecast are summarized in the following table:
| Discounted at | |||||||
| Undiscounted | 5% | 10% | 15% | 20% | |||
| (M$) | |||||||
| Proved | |||||||
| Proved producing | 96,182 | 75,276 | 62,334 | 53,588 | 47,285 | ||
| Non-producing | 597 | 528 | 470 | 422 | 381 | ||
| Undeveloped | 114,712 | 57,767 | 27,729 | 10,386 | (316 | ) | |
| Total proved | 211,491 | 133,571 | 90,533 | 64,395 | 47,349 | ||
| Probable | 1,003,480 | 479,371 | 262,938 | 156,340 | 97,120 | ||
| Total proved plus probable | 1,214,971 | 612,942 | 353,471 | 220,735 | 144,469 | ||
| Notes: | |
| (1) | The estimated future net revenues are stated before deducting future estimated site restoration costs and are reduced for estimated future abandonment 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. |
The following table sets forth development costs deducted in the estimation of the future net revenue attributable to the reserve categories noted above.
| Development Costs Forecast Prices and Costs |
||
| Proved Reserves | Proved Plus Probable Reserves | |
| Year | (M$) | (M$) |
| Q4 2013 | 7,057 | 7,057 |
| 2014 | 34,614 | 43,794 |
| 2015 | 53,175 | 97,709 |
| 2016 | 25,151 | 115,431 |
| 2017 | 9,741 | 117,930 |
| 2018 | – | 88,436 |
| 2019 | – | 36,274 |
| 2020 | – | – |
| 2021 | – | 38 |
| 2022 | – | – |
| Remainder | – | 171 |
| Total Undiscounted (all years) | 129,738 | 506,840 |
| Total discounted 10% | 110,371 | 379,006 |
Price Forecast
The GLJ October 1, 2013 price forecast is summarized as follows:
| Year | $US/$Cdn Exchange Rate |
WTI @ Cushing |
Edmonton light crude oil |
Hardisty Heavy 12 API |
Natural gas at AECO-C spot |
Westcoast Station 2 |
| (US$/bbl) | (C$/bbl) | ($Cdn/bbl) | (C$/MMbtu) | (C$/MMbtu) | ||
| 2013 Q4 | 0.97 | 102.50 | 100.52 | 75.54 | 3.09 | 3.29 |
| 2014 | 0.97 | 97.50 | 97.94 | 73.58 | 3.71 | 3.56 |
| 2015 | 0.97 | 97.50 | 97.94 | 73.58 | 4.10 | 3.95 |
| 2016 | 0.97 | 97.50 | 99.48 | 75.35 | 4.48 | 4.33 |
| 2017 | 0.97 | 97.50 | 99.48 | 75.95 | 4.87 | 4.72 |
| 2018 | 0.97 | 97.50 | 99.48 | 75.95 | 5.12 | 4.97 |
| 2019 | 0.97 | 98.54 | 100.56 | 76.78 | 5.22 | 5.07 |
| 2020 | 0.97 | 100.51 | 102.59 | 78.35 | 5.33 | 5.18 |
| 2021 | 0.97 | 102.52 | 104.66 | 79.95 | 5.44 | 5.29 |
| 2022 | 0.97 | 104.57 | 107.77 | 81.59 | 5.55 | 5.40 |
| Thereafter | – | +2.0%/yr | +2.0%/yr | +2.0%/yr | +2.0%/yr | +2.0%/yr |
| Note: | |
| (1) | Inflation is accounted for at 2.0% per year |
Capital Program Efficiency
The efficiency of the Company’s capital program for the fiscal year ended September 30, 2013 and other prior periods is summarized below.
| 2013 (1) | 2012 | Three Year Average 2011 – 2013 |
|||||||||||
| Proved | Proved | Proved | |||||||||||
| plus | plus | plus | |||||||||||
| Proved | Probable | Proved | Probable | Proved | Probable | ||||||||
| Exploration and development expenditures | |||||||||||||
| ($ thousands) | 30,438 | 30,438 | 33,615 | 33,615 | 99,278 | 99,278 | |||||||
| Net acquisitions ($ thousands) (3) | (3,525 | ) | (3,525 | ) | 593 | 593 | (3,742 | ) | (3,742 | ) | |||
| Change in future development capital – exploration and development ($thousands) | 30,229 | 222,505 | 57,431 | 197,606 | 119,327 | 481,841 | |||||||
| Total | 57,142 | 249,418 | 91,639 | 231,814 | 214,863 | 577,377 | |||||||
| Reserves additions after revisions (Mboe) (5) | |||||||||||||
| – Exploration and development | 2,152 | 26,222 | 3,780 | 14,025 | 8,848 | 46,352 | |||||||
| – Revisions | 17 | 479 | 110 | 116 | 111 | 318 | |||||||
| – Net acquisitions | (288 | ) | (556 | ) | 25 | 82 | (281 | ) | (497 | ) | |||
| – Total reserve additions after revisions | 1,881 | 26,146 | 3,915 | 14,223 | 8,678 | 46,173 | |||||||
| Finding & Development Costs ($/boe)(2) | 27.97 | 9.47 | 23.40 | 16.35 | 24.40 | 12.45 | |||||||
| Finding, Development & Acquisition Costs ($/boe) (4) | 30.38 | 9.54 | 23.41 | 16.30 | 24.76 | 12.50 | |||||||
| Reserves Replacement Ratio | 220 | % | 3,064 | % | 484 | % | 1,760 | % | 338 | % | 1,801 | % | |
| Notes: | |
| (1) | The fiscal 2013 amounts include information based on unaudited financial results that may change on the completion of the audited financial statements. |
| (2) | 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. |
| (3) | Acquisition costs related to corporate acquisitions reflects the consideration paid for the shares acquired plus the net debt assumed, both valued at closing and does not reflect the fair market value allocated to the acquired oil and gas assets under IFRS. |
| (4) | This calculation includes reserve revisions and changes in future development costs. Yoho also calculates finding, development and acquisition (“FD&A”) costs which incorporate both the costs and associated reserve additions related to acquisitions net of any dispositions during the year. Since acquisitions can have a significant impact on Yoho’s annual reserve replacement costs, the Company believes that FD&A costs provide a more meaningful representation of Yoho’s cost structure than finding and development costs alone. |
| (5) | Oil equivalent 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. |
Net Asset Value
The following table provides a calculation of Yoho’s estimated net asset value and net asset value per share as at September 30, 2013 based on the estimated future net revenues associated with Yoho’s proved plus probable reserves discounted at 10% as presented in the GLJ Report.
| Forecast Prices and Costs before tax | ($ thousands | ) |
| Proved plus probable reserves – discounted at 10% | 353,471 | |
| Undeveloped land (1) | 87,400 | |
| Bank debt and working capital deficiency as at September 30, 2013 (2)(3) | (31,136 | ) |
| Net asset value | 409,735 | |
| Common shares outstanding at September 30, 2013 (thousands) – Basic | 50,457 | |
| Net asset value per share – basic | $ 8.12 | |
| Net asset value per share – basic (excluding land value) | $ 6.39 |
| Notes: | |
| (1) | Internally estimated value (see “Land Holdings”). |
| (2) | Fiscal 2013 figures include information based on estimated unaudited financial results that may change on the completion of the audited financial statements. |
| (3) | Working capital deficiency includes an estimate of the Company’s accounts receivable and future tax less accounts payable and accrued liabilities and derivatives as at September 30, 2013. |
OUTLOOK
For fiscal 2014, Yoho is currently planning a total capital program of between $31.0 and $32.0 million weighted towards drilling of two unconventional plays at Kaybob and Nig. Yoho’s fiscal 2014 budget assumes an oil price of $85.00 per barrel at Edmonton and a posted gas price of $3.40 per gigajoule at AECO. Yoho estimates that overall production for fiscal 2014 will average approximately 2,750 to 2,800 boe per day with cash flow estimated between $18.0 and $19.0 million.
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”.
This press release shall not constitute an offer to sell or a solicitation of an offer to buy the securities in any jurisdiction. The common shares of Yoho will not be and have not been registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States, or to a U.S. person, absent registration or applicable exemption therefrom.
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
Unaudited financial information
Certain financial and operating information included in this press release for the year ended September 30, 2013, such as finding and development costs, production information, and net asset value, are based on estimated unaudited financial results for the quarter and year then ended, and are subject to the same limitations as discussed under Forward Looking Information set out below. These estimated amounts may change upon the completion of audited financial statements for the year ended September 30, 2013 and changes could be material.
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, expected operating activities in the Kaybob – Duvernay and Nig Montney areas 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, 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, 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.
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.
Internal estimates
Certain information contained herein, such as the estimated fair value of the Company’s land holdings, are based on estimated values the Company believes to be reasonable and are subject to the same limitations as discussed under “Special Note Regarding Forward-looking Information” above.
Oil and Gas Advisory
The reserves information contained in this press release has been prepared in accordance with NI 51-101. Complete NI 51- 101 reserves disclosure will be included in our Annual Information Form for the year ended September 30, 2013 which is expected to be filed in early December 2013. Listed below are cautionary statements applicable to our reserves information that are specifically required by NI 51-101:
Selected Definitions
The following terms used in this press release have the meanings set forth below:
“AECO” refers to a natural gas storage facility located at Suffield, Alberta
“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
“Mcf” means one thousand cubic feet
“Mmcf” means one million cubic feet
“MMbtu” means million British Thermal Units
“$M” means thousands of dollars