Corporate Presentation November 2014 TSX: YGR TSX: YGR
• Our job is to create shareholder value • Integrity and ethical behavior are essential to success • Sound ethics and shareholders interests are compatible • It is okay to be wrong: own it, accept it, learn from it • Embrace adversity, it is a difficult business • Diversity of skill-sets within the team are critical to success • Loyalty, performance and achievement are recognized • Top decile performance in all categories is the goal • Full cycle Corporate IRR is what measures our success 2 TSX: YGR
Publicly listed junior oil and gas company TSX: YGR Shares Outstanding Basic 57.7 million Options/Warrants (weighted average $1.87) 4.9 million Fully Diluted 62.6 million Insider Ownership Basic 15% Fully Diluted 21% Market Capitalization (at $1.60/share) $92 million Q3 Net Debt ($90 million in ATB credit facilities) $51 million Enterprise Value $143 million Q3/2014 net debt to annualized cash flow 1.4 : 1 Forecast Q4/2014 net debt to annualized cash flow 1.2 : 1 Future drilling locations (Cardium & Glauc) - Current 188 Gross (141 net) Proved plus Probable Reserves @ Dec 31, 2013 (Deloitte) 17.5 million boe Net Present Value @ 10% (P+P) @ Dec 31, 2013 $251 million NAV / Share (with no undeveloped land value) @ Dec 31, 2013 $4.20 3 TSX: YGR
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 • 15+ 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 • President of Cove Resources Ltd Technical Services • • Founder of several successful private and public oil Currently a partner in Blackstone Fluids, an oil and gas and gas companies drilling fluids company Robert Weir Ted Morton • • President of Weir Resource Management Ltd A former Canadian politician and cabinet minister in the Alberta government • Has held various positions in the Alberta Government Jim Evaskevich 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) 4 TSX: YGR
Half Cycle IRR (1) Full Cycle IRR (2) 80% 70% 60% 50% IRR 40% 67% 65% 30% 20% 41% 34% 31% 26% 24% 10% 12% 0% 2010 2011 2012 2013 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
Completion cost per stage Drilling cost per meter $250,000 $800 $700 $200,000 $600 $500 $150,000 $400 $100,000 $300 $200 $50,000 $100 $0 $0 2010 2011 2012 2013 2010 2011 2012 2013 Q3 2014 Operating costs/boe versus peers Q3 2014 G & A/boe versus peers 25.00 8.00 7.00 20.00 6.00 Average $15.39 5.00 15.00 4.00 Average $3.21 10.00 3.00 2.00 5.00 1.00 0.00 0.00 YGR MEI SRX RE TVE MQL RTK AEI ZAR GXE CJ SRX RE YGR RTK AEI CJ GXE TVE MQL MEI ZAR 6 TSX: YGR
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50,000,000 4,000 40,000,000 (Cashflow) 3,000 (mboe) 30,000,000 2,000 20,000,000 1,000 10,000,000 Cashflow Production 0 0 2010 2011 2012 2013 2014 (est) 0.00006 Production per share 0.80 Cash Flow per Share 0.70 0.00005 0.60 0.00004 0.50 0.00003 0.40 0.30 0.00002 0.20 0.00001 0.10 - - 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 9 TSX: YGR
P+P Reserves (mboe) Reserve Value PV10 ($ millions) 20,000 300 250 15,000 200 Oil 10,000 150 NGL's 100 5,000 Natural gas 50 0 0 2010 2011 2012 2013 2010 2011 2012 2013 Reserve Value PV10 ($ millions) P+P Reserves (mboe) 300 20,000 250 15,000 200 PROB 150 10,000 PUD 100 PDNP 5,000 50 PDP 0 0 2010 2011 2012 2013 2010 2011 2012 2013 • 298% increase in reserves since 2010 (86% per share) • Replaced 2013 production by 614% (546% in 2012) • Finding and development recycle ratio of 2.57 times on P+P reserves • Finding and development costs of $14.07/boe on proved plus probable reserves • Reserve life index of 16.0 years • Future development costs of $125 million 10 TSX: YGR
CAPEX budget for 2014 $75.0 million • Budget focused on Central Alberta • Includes $5 million of Duvernay spending • Funded with cash flow and the existing credit facilities 2014 Guidance Production (boe/d) Annual Average 3,000 boe/d Cash flow from operations $40 million Year end Debt $53 million Debt to annualized Q4 cash flow 1.1 : 1 Pricing Assumptions (annual average) Crude oil – Edmonton Par $80.00/bbl Natural Gas $3.50/GJ Corporate decline assumptions 40% in year one 15% thereafter 11 TSX: YGR
Central Alberta • Interest in 140 sections of land • 85 + horizontal wells drilled since 2010 • Focus • Cardium and Glauc plays Pembina Edmonton • Light oil Willesden Green • Rocky Mountain House High netback Ferrier Red Deer • Quick payouts Calgary 12 TSX: YGR TSX: YGR
Cardium (1) Present value of future cash-flow, discounted at 10%, net of Drill, Complete and Equipping costs. Future Drilling Locations 147 gross (107 net) Locations booked in 2013 Reserve Report 35 gross (29 net) Drill, Complete and Equip $2.7 million – $3.2 million Average: $2.9 million NPV10 ($90/bbl & $4.00/mcf) (1) $2.4 million – $4.7 million Average: $3.3 million IRR – Half cycle before tax 67% – 172% Average: 106% Payout 8 months – 16 months Average: 13 months Capital Efficiency (IP 365) $6,500 – $27,000 $14,850 Glauconite Future Drilling Locations 41 gross (34 net) Locations booked in 2013 Reserve Report 11 gross (8 net) Drill, Complete and Equip $3.0 million – $3.5 million Average: $3.3 million NPV10 ($90/bbl & $4.00/mcf) (1) $2.9 million – $6.3 million Average: $3.7 million IRR – Half cycle before tax 75% – 188% Average: 122% Payout 8 months – 13 months Average: 11 months Capital Efficiency (IP 365) $7,500 – $12,000 $10,250 Total Cardium & Glauc Locations 188 gross (141 net) 13 TSX: YGR
T44 T44 LOWE LOWER CARD UPPER UPPE R CARDIUM GASSY GASSY IUM OIL CAR CARDIUM T43 T43 DIUM WILLESDEN GREEN CARDIUM FIELD L L O O W W E E R R T42 T42 CAR CARDIUM DIUM P R O S P E C T I V E UPPE UPPER C C A A H R R D D Z I I T41 U U T41 M M O I L PRO ROSP SPECT CTIVE VE LOWER LOW ER CARD RDIUM IUM HZ HZ O OIL GAS T40 T40 FERRIER CARDIUM FIELD P R O S P E C HZ T I V E P O R I O L S H P E Z C Legend T OIL I V E Wells T39 T39 cardium wtr inj PROSPECTIVE HZ cardium gas GAS cardium oil Working PROSPECTIVE HZ OIL yangarra land Farmin land T38 T38 Cardium Show Map cardium pool outlines T37 T37 By : Poruchny Date : 2013/12/04 Scale = 1:85000 Project : cardium show map R9 R8 R7 R6 R5W5 14 TSX: YGR TSX: YGR
T42 T42 T41 T41 HOADLEY BARRIER ISLAND BARRIER ISLAND T40 T40 HOADLEY CHANNEL HANNEL any any cut cut amoun amount T39 T39 Legend Wells glauc @TD glauc pens HZ glauc liquid rich gas All Glauc liquid rich gas T38 T38 Working CHANNEL Yangarra land any any cut cut amoun amount Glauconite Show Map T37 T37 Porosity Trends By : Poruchny Date : 2013/12/04 Scale = 1:85000 Project : glauc show map2 R9 R8 R7 R6 R5 R4 R3W5 15 TSX: YGR
• Let industry de-risk the play • Continue land-base to 2020 with strat test wells • Larger players are migrating to the Duvernay which may provide opportunities in plays like the Cardium and Glauc in Central Alberta • Our first strat test well is planned for 2014 • Continue to collect data and further de-risk Yangarra’s acreage The Duvernay represents option value that is not reflected in the current share price 16 TSX: YGR
• Early production rates show initial liquids yields up to 200 bbl/MMcf • Duvernay operators are still establishing Best Practices for Drilling and Completion • Production data supports the emergence of an economically attractive liquids fairway • Geological parameters (mineralogy, thickness, HC potential, TOC, fractures, brittleness, net pay, etc.) are generally known from industry activity/results, public data/analysis and YGR proprietary work • Reservoir Characteristics evolving • Local variations in rock YGR Acreage properties/well performance can be expected with further drilling 17 TSX: YGR
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