Corporate Presentation May 2017 TSX: YGR TSX: YGR
Corporate Snapshot Capitalization Reserves and Locations (2) NPV10 Ticker TSX: YGR December 31, 2016 mmboe ($mm) Shares Outstanding (mm) Proved Developed 7.9 $139.1 Basic 80.6 Total Proved 36.5 $489.6 Options (weighted avg. price $1.50) 7.8 2P 60.6 $734.5 Fully Diluted 88.4 Total Cardium Locations (1-mile) 752 Gross (522 Net) Market Cap ($mm) (at $2.90 / share) (1) $234 Booked Cardium Locations (1-mile) 214 Gross (150 Net) 2017 Q1 Net Debt ($mm) $78 ($100mm credit facility) NAV (3) / Fully Diluted Share (Excl. land) December 31, 2016 Enterprise Value ($mm) $312 $0.96 Proved Developed (2.1 recycle ratio) Insider Ownership Total Proved (2.9 recycle ratio) $5.01 Basic 13% Total Proved + Probable (3.2 recycle ratio) $7.84 Fully Diluted 21% 1) Price as at May 10, 2017 2) Reserves effective as at December 31, 2016 based on the reserve report prepared by Deloitte LLP, independent petroleum engineers (the “Reserves Report”) 3) NAV = NPV10 Reserve Value less Net Debt • Highly motivated management and board with insiders owning 13% of the basic shares and 21% of the fully diluted shares 2 TSX: YGR
People Management Team Randall Faminow, VP, Land Jim Evaskevich, President & CEO • 30+ years of experience in all aspects of oil and gas land work, • 30+ years extensive executive experience with strong including negotiation, acquisitions and divestments, contracts operations background and mergers James Glessing, CA, CFO Lorne Simpson B.Sc., C.E.T., VP, Operations • 17+ years oil and gas accounting experience • 30+ years experience in the industry • Executive and financial experience as CFO with North Peace • Supervisor, Drilling Ops with PetroBakken Energy Ltd. Energy Corp • Engineered, drilled or completed 250 HZ Cardium • Controller at BlackRock Ventures, wells, 200 HZ Bakken wells, 2 HZ Duvernay wells, 25 • Canadian Natural Resources, Shell and Deloitte HZ Montney wells, and dozens of Blue Sky, Viking, SWS, Glauc, and Rock Creek HZ wells Board of Directors Gordon Bowerman Neil Mackenzie • • Chairman Director of various public companies, including Canyon • Technical Services President of Cove Resources Ltd • • Currently a partner in Blackstone Fluids, an oil and gas Founder of several successful private and public oil drilling fluids company and gas companies Ted Morton Robert Weir • • A former Canadian politician and cabinet minister in President of Weir Resource Management Ltd the Alberta government • Jim Evaskevich Has held various positions in the Alberta Government included Minister of Energy (2011-2012), Minister of • President and CEO of Yangarra Resources Ltd Finance and Enterprise (2010-2011), and Minster of Sustainable Resources (2006-2010) 3 TSX: YGR
Why Own Yangarra? • Top Decile Full Cycle rates of return • Low-cost operator, high netbacks • 2017 Cash costs totaled $13.08/boe • Operating costs (including transportation) of $7.93/boe • Royalties of $3.05/boe (8% of revenue) • G&A costs of $0.51/boe • Finance and interest costs of $1.59/boe • Operating margins were 72% and cash flow margins were 67%. • Finding & Development costs of $6.18/boe • Low-cost philosophy, not just a result of current low commodity prices • Central Alberta Cardium formation focus • Large future drilling inventory • Consistent, low risk Cardium economics • Potential Duvernay upside 4 TSX: YGR
Full Cycle Returns • Capital allocation is determined based on narrowing the gap between half cycle and full cycle returns 1. Half cycle IRR is based on actual drilling and completion costs, production to date and P+P reserves 2. Full cycle IRR allocates all other capital costs to the wells (i.e. land, G&G, infrastructure) 5 TSX: YGR
Cardium Drilling Inventory (1) Drilling Locations (1-mile laterals) Proportionate (gross locations) • 752 gross (522 net) future 1-mile Cardium future drilling locations (1) • Opportunity to drill extended reach wells 1) Management estimate is based on an estimate prepared by a non-independent qualified reserves evaluator of the Company in 6 TSX: YGR accordance with National Instrument 51-101 and the COGE Handbook, with an effective date of October 15, 2015.
Cardium Formation 119 (89 net) Sections of Cardium #6 - YGR 102/8-14-41-6W5 – 2.0 mile 101 stages – 1,520 tons On Prod: February 3, 2017 Clean-up phase (Day 1-20): 217 boe/d (93% liquids) #2 - YGR 100/1-14-41-6W5 – 2.0 mile #7 - YGR 102/16-15-44-10W5 – 2.0 mile Production phase (Day 21-35): 534 boe/d (88% liquids) 102 stages – 1,533 tons 74 stages 1,120 tons On Prod: October 25, 2016 On Prod: March 23, 2017 IP90 Rate: 120 boe/d (94% liquids) IP35 Rate: 662 boe/d (~38% liquids) #9 - YGR 100/5-19-41-7W5 – 2.0 mile 109 stages – 1,640 tons #3 - YGR 104/14-19-41-5W5 – 1.4 mile On Prod: March 1, 2017 69 Stages – 1,056 tons Clean-up phase (Day 1-20): 130 boe/d (98% liquids) Production phase (Day 21-35): 173 boe/d (94% liquids) On Prod: October 29, 2016 IP90 Rate: 414 boe/d (77% liquids) #5 - YGR 100/2-26-39-9W5 – 2.0 mile 103 stages – 1,114 tons #1 - YGR 103/4-7-41-5W5 – 1.6 mile On Prod: February 2, 2017 71 Stages – 1,070 tons IP35 Rate: 645 boe/d (89% liquids) On Prod: October 5, 2016 IP90 Rate: 480 boe/d (82% liquids) #8 - YGR 100/1-34-39-8W5 – 2.0 mile 105 stage – 1,535 tons On Prod: April 6, 2017 #4 - YGR 100/1-26-37-8W5 – 2.0 Mile IP27 Rate: 1,017 boe/d (~80% liquids) 101 Stages – 1,520 tons On Prod: December 5, 2017 #10 - YGR 100/3-23-37-8W5 – 2.0 mile IP30: 395 boe/d (76% liquids) 104 stages – 1,565 tons On Prod: April 6, 2017 IP37 Rate: 313 boe/d (~69% liquids) Well #2 drilled using old well path Well #7 restricted due to capacity constraints Well #9 on pump, recently started flowing 7
Deeper Drill Path Upper Cardium Bioturbated Lower Cardium New Well Path Old Well Path Upper Cardium Bioturbated Zone Lower Cardium Old Frac Plane New Frac Plane Upper Cardium (5-15% Porosity) 2.5-4.0m Bioturbated Zone (20-80% Sand) 3.0-7.0m Lower Cardium (3-6% Porosity) 1.5-3.0m 8
Deeper Drill Path OOIP/section 5,157 Mstb OBOEIP/section 14,323 Mbbl 3% 105 API Upper Reservoir Core analysis Porosity 9-11% Kmax average 0.09md OOIP 2,959 Mstb OBOEIP 8,218 Mbbl 10m Bioturbated Interval not analyzed Log Porosity 3-4% OOIP 2,198 Mstb OBOEIP 6,105 Mbbl 9
2017 Capital Plan CAPEX budget for 2017 $50.0 million Budget focused on Cardium Wells -5 wells in the first quarter and 10 wells in the second half Funded with cash flow and the existing credit facilities 2017 Guidance Production (boe/d) Annual Average 4,500 – 5,000 boe/d Cash flow from operations $45 – 50 million Year end net debt $65 – 70 million Annual debt to cash flow 1.3 – 1.6 : 1 Pricing Assumptions (annual average) WTI (USD/bbl) $55.00 Edmonton Par (CDN/bbl) $68.71 AECO (CDN/GJ) $3.00 10 TSX: YGR
2016 F&D and Recycle Ratios Finding and Development Recycle Ratios • Consistent improvement in, and Reserves (1) continued focus on, F&D costs and NPV10 BT Volumes recycle ratios • In Yangarra’s view Probable and proven Cardium locations have a similar chance of success • Reserve Life Index (“RLI”) • 37 years with one rig • 18 years with two rigs 2P NPV10: $734.5 million 2P Reserves: 60.6 mmboe • 12 years with three rigs 1) Reserves effective as at December 31, 2016 based on the Reserves Report 11 TSX: YGR
Duvernay Formation 15-19-39-6W5 (1.5 Mile) IP 20 - 700 boe/d 52% liquids (81 stages & 1,744 tons of sand) 12 TSX: YGR
Risk Management Program Oil Hedges 2017 200 bbl/d collar C$65.00 WTI/bbl and a ceiling of C$75.00 WTI/bbl (2017) 100 bbl/d at C$70.00 WTI/bbl (2017) 200 bbl/d at C$71.00 WTI/bbl (Feb – Jun 2017) 200 bbl/d at C$69.25 WTI/bbl (Mar – Jul 2017) 300 bbl/d at C$67.00 WTI/bbl (Apr – Jun 2017) 500 bbl/d at C$75.20 WTI/bbl (Jul – Dec 2017) 200 bbl/d at C$76.50 WTI/bbl (Jul – Dec 2017) 2018 Sold Call on 200 bbl/d at US$70.00 WTI/bbl (2018) 2019 Sold Call on 500 bbl/d at US$60.00 WTI/bbl (2019) Sold Call on 200 bbl/d at US$65.00 WTI/bbl (2019) Differential Hedges 500 bbl/d Edmonton par to WTI differential at US$2.85/bbl (Apr – Dec 2017) 2017 Natural Gas 2017 2,000 GJ/d at $3.12/GJ (2017) 2,000 GJ/d at $3.01/GJ (2017) Interest Rate Swaps 4.400% (2.150% + 2.25% Stamping Fee) Fixed rate on $10 million (June 2014-May 2018) 4.600% (2.350% + 2.25% Stamping Fee) Fixed rate on $10 million (June 2014-June 2018) 4.185% (1.935% + 2.25% Stamping Fee) Fixed rate on $10 million (May 2018-Nov 2023) 4.195% (1.945% + 2.25% Stamping Fee) Fixed rate on $10 million (June 2018-Nov 2023) 13 TSX: YGR
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