Yangarra Resources Ltd. · TSX:YGR
Yangarra Resources — Investor Presentation (May 2016)
27 slides from Yangarra Resources's investor presentation, May 2016
Slide 1: Corporate Presentation May 2016
Corporate Presentation May 2016 TSX: TSX:YGR YGR
Slide 2: Corporate Snapshot
Corporate Snapshot Capitalization (post financing) Reserves and Locations (2) Ticker TSX: YGR mmboe NPV10 ($mm) Shares Outstanding (mm) Proved Developed 5.6 $97.9 Basic 79.2 Total Proved 24.7 $315.9 Options (weighted avg. price $1.48) 6.7 2P 40.6 $499.5 Fully Diluted 85.9 Total Cardium Locations 462
Slide 3: Corporate Strategy
Corporate Strategy • Prepare for future growth • Acquire Cardium land at the low-end of the cycle • Consolidate partner interests • Secure infrastructure capacity • Prepare and drill (one-well) pad-drilling sites; leaving significant torque to add 3 wells on existing pads • Future growth opportunity
Slide 4: People
People Management Team Jim Evaskevich, President & CEO Randall Faminow, VP, Land • 30+ years extensive executive experience with strong • 30+ years of experience in all aspects of oil and gas land work, operations background including negotiation, acquisitions and divestments, contracts and mergers
Slide 5: Why Own Yangarra?
Why Own Yangarra? • Top Decile Full Cycle rates of return • Low-cost operator, high netbacks • 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 TSX: YGR 5
Slide 6: What does a Recovery look like?
What does a Recovery look like? Source: Peter Tertzakian, Arc Energy Charts • Meaningful cash will start to trickle back into the system once oil prices pop above $50/bbl • First dollars will be headed to banks • Next, producing companies will have to take time to restock their wallets and heal thei
Slide 7: Full Cycle Returns
Full Cycle Returns • Capital allocation is determined based on narrowing the gap between half cycle and full cycle returns Half Cycle IRR ⁽¹⁾ Full Cycle IRR ⁽²⁾ Full Cycle with Duvernay 90% 80% 70% 60% 50% IRR 40% 79% 67% 65% 30% 20% 41% 44% 34% 31% 33% 31% 24% 26% 27% 10% 12% 0% 2010 2011 2012 2013
Slide 8: F&D and Recycle Ratios
F&D and Recycle Ratios Finding and Development Recycle Ratios $40.00 7.0x $35.00 6.0x $30.00 5.0x $25.00 4.0x $/boe $20.00 3.0x $15.00 2.0x $10.00 $5.00 1.0x $- 0.0x 2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2015 Proven F&D P+P F&D Proven Recycle P+P Recycle • Consistent improvement in,
Slide 9: Low-Cost Driller
Low-Cost Driller • Experienced drilling team • Pad drilling from existing locations • Long-term relationship with service providers • Cemented liners and sliding sleeves reduce costs significantly • Coil fracs without nitrogen require less horsepower on location resulting in reduced completion costs
Slide 10: Updated Completion Technology
Updated Completion Technology Sand Concentration • Cemented liners and sliding sleeve 1,000 • Tighter well frac spacing 900 • KG of Sand/M3 800 Increased ability to target fracs 700 • Better frac isolation 600 • No longer losing energy to packers 500 400 • Improved initial rates 300 200 100 0 18 Sta
Slide 11: Impact of More Stages
Impact of More Stages 350 Cumulative Production 300 05-17 10.30 Mbbl 12-17 12.52 Mbbl 250 Daily Oil Rate (bbl/d) 200 20% Improvement in IRR 150 100 50 0 0 20 40 60 80 100 120 140 160 180 200 Days on Production 00/05-17-041-07W5 (1-mile, sleeves, 18 stage, 360T) 02/12-17-041-07W5 (1-mile, sleeves, 30
Slide 12: Extended Reach Well Results
Extended Reach Well Results • Cemented liners with siding sleeves has made extended reach wells possible • Significant reduction in drilling costs per meter with extended reach wells Extended Reach Costs $450 $40,000 410 $400 $35,000 367 Cost per Meter Drilled $350 $30,000 $300 290 Cost per Frac $25
Slide 13: Impact of Extended Reach
Impact of Extended Reach 350 Cumulative Production 300 04-09 10.29 Mbbl 13-09 17.87 Mbbl 250 Daily Oil Rate (bbl/d) 200 33% Improvement in IRR 150 100 50 0 0 20 40 60 80 100 120 140 160 180 200 Days on Production 02/13-09-041-07W5 (2-mile, sleeves, 60 stage, 900T) 00/04-09-041-07W5 (1-mile, ball-dro
Slide 14: Well Economics
Well Economics $45/bbl $55/bbl $65/bbl WTI (USD/bbl) WTI (USD/bbl) WTI (USD/bbl) IRR (%) Payout IRR (%) Payout IRR (%) Payout Willesden Green (yrs) (yrs) (yrs) 1-Mile ($2.5 million well cost) 26% 2.7 58% 1.4 87% 1.1 1.5-Mile ($3.0 million well cost) 32% 2.3 67% 1.1 98% 0.8 2-Mile ($3.5 million well
Slide 15: Well Economics
Well Economics IRR - Well Cost Sensitivity Payout (yrs) - Well Cost Sensitivity 160% 1.8 140% 1.6 1.4 120% 1.2 100% 1.0 80% 0.8 60% 0.6 40% 0.4 20% 0.2 $3.0 Million $2.7 Million $2.4 Million $2.1 Million $3.0 Million $2.7 Million $2.4 Million $2.1 Million 0% 0.0 0% -10% -20% -30% 0% -10% -20% -30% A
Slide 16: Cardium Drilling Inventory
Cardium Drilling Inventory (1) Drilling Locations (1-mile laterals) Proportionate (gross locations) 500 450 115 North 78 Ferrier 400 Locations Willesden 350 Green 84 2-mile Locations Locations 212 1-mile Locations 300 Locations 250 200 269 150 Willesden Green 100 Locations 38 1.5-mile 50 Locations 0
Slide 17: New Alberta Royalties
New Alberta Royalties For wells with TVD shallower than or equal to 2,000 metres C* ($) = 1,170*(TVD-249) + 800*TLL + 0.6*TVD*TPP For wells with TVD deeper than 2,000 metres C* ($) = 1,170*(TVD-249) + 3,120*(TVD-2,000) + 800*TLL + 0.6*TVD*TPP Cardium 1.0-Mile 1.5 Mile 2.0 Mile Duvernay TVD 2,150 2,1
Slide 18: Production Potential
Production Potential 10,000 9,000 8,000 7,000 6,000 Boe/d 5,000 4,000 3,000 2,000 1,000 0 2016 2017 2018 1-Rig 2-Rigs 3-Rigs TSX: YGR 18
Slide 19: Risk Management Program
Risk Management Program Oil Hedges 2016: 400 bbl/d collar C$73.45 WTI/bbl and a ceiling of C$85.00 WTI/bbl 2016: 400 bbl/d Edmonton par to WTI differential at US$3.95/bbl 2016: 200 bbl/d at C$54.00 WTI/bbl April – June 2016 2016: 200 bbl/d at C$56.50 WTI/bbl July – Sep 2016 2016/2017: 200 bbl/d at C
Slide 20: Analyst Coverage
Analyst Coverage Acumen Capital Finance Partners Limited Industrial Alliance Securities Inc. Trevor Reynolds Michael Charlton Oil and Gas Research Analyst Research Analyst - Oil & Gas [email protected] [email protected] (403) 410-6842 (403) 705-4978 AltaCorp Capital Inc. Paradigm
Slide 21: Appendix
on Itd. Appendix TSX: YGR 21
Slide 22: Cardium Formation
Cardium Formation • Interest in 100+ sections • 85+ horizontal wells drilled Yangarra Field Office Red Deer 80 km Rocky Mountain House TSX: TSX:YGR YGR 22
Slide 23: Duvernay South Block
Duvernay South Block TSX: YGR 23
Slide 24: Glauconite Formation
Glauconite Formation 35 36 31 32 33 34 35 36 31 32 33 34 35 36 31 32 33 34 35 36 31 32 33 34 35 36 31 32 33 34 35 36 31 32 33 34 35 36 31 32 33 34 6 5 4 3 2 26 25 30 29 28 27 26 25 30 29 28 27 26 25 30 29 28 27 26 25 30 29 28 27 26 25 30 29 28 27 26 25 30 29 28 27 26 25 30 29 28 27 24 19 20 21 22 23
Slide 25: Forward-looking Statements
Forward-looking Statements Statements in this presentation may contain forward-looking information including expectations of future production and components of cash flow and earnings. Forward looking statements or information are based on current expectations, estimates and projections that involve
Slide 26: Reserve Definitions
Reserve Definitions 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
Slide 27: Yangarra Resources Ltd. contact
Yangarra Resources Ltd. 1530, 715 – 5 Ave. SW Calgary, Alberta T2P 2X6 403-262-9558 TSX: YGR 27
Yangarra Resources — Investor Presentation (May 2016) on 6ix