Yoho Resources Inc. (TSX VENTURE:YO) ("Yoho" or the "Company") has filed today
on SEDAR the financial statements for the year ended September 30, 2012 and the
related managements' discussion and analysis ("MD&A"). Yoho today also filed its
Annual Information Form for the year ended September 30, 2012 which includes the
Company's reserves data and other oil and gas information for the year ended
September 30, 2012 as mandated by National Instrument 51-101 Standards of
Disclosure for Oil and Gas Activities of the Canadian Securities Administrators
("NI 51-101"). Copies of these documents may be found on www.sedar.com.
Yoho is also pleased to announce the results of a reserve and contingent
resource assessment of the Company's Kaybob Duvernay assets and an updated
reserve and contingent resource assessment of certain of the Company's Nig
Montney assets as evaluated by GLJ Petroleum Consultants Ltd. ("GLJ").
Highlights
-- Yoho's proved plus probable reserves as evaluated by GLJ as at September
30, 2012 increased 96% to 27.4 MMboe from 14.0 MMboe at September 30,
2011. The Company's proved reserves as at September 30, 2012 increased
40% to 10.8 MMboe from 7.7 MMboe. The percentage of Yoho's proved plus
probable reserves that are natural gas liquids has increased to 29% at
September 30, 2012 from 17% at September 30, 2011.
-- The net present value of Yoho's estimated future net revenue before
income taxes from proved plus probable reserves as at September 30, 2012
and utilizing GLJ's October 1, 2012 price forecast and discounted at
10%, is $216.4 million and the net present value of total proved
reserves as at September 30, 2012 is $87.7 million
-- Yoho's production during fiscal 2011 averaged 2,207 boe per day, a 10%
decrease from fiscal 2011 production of 2,475 boe per day. Fiscal 2012
production was impacted by disruptions in third party pipelines and a
resulting delay in obtaining regulatory approvals for re-commissioning.
These disruptions have been remedied and current production is estimated
at 2,500 boe per day. Yoho has an additional 700 boe per day behind pipe
to be tied-in following completion of pipeline construction.
-- Notwithstanding a year of low natural gas prices, Yoho generated funds
from operations for fiscal 2012 of $9.9 million ($0.22 per share basic
and diluted).
-- Net exploration and development expenditures for fiscal 2012 were $34.2
million. During the year ended September 30, 2012, Yoho drilled 8 (3.7
net) gas wells with an overall success rate of 100%. All of the wells
drilled in fiscal 2012 were individual, unconventional delineation
wells.
-- Yoho maintained a flexible balance sheet with total net debt of $18.5
million at September 30, 2012 on a bank credit facility of $52 million.
-- Reserve replacement was 484% on proved reserves and 1,760% on proved
plus probable reserves.
-- For fiscal 2012, Yoho achieved all-in finding, development and
acquisition costs of $16.30 per boe (including all technical revisions
and changes in future development capital). For the past three years,
Yoho's rolling average finding, development and acquisition costs were
$15.95 per boe (including all technical revisions and changes to future
development capital). Total future development capital for Yoho's proved
plus probable reserves at September 30, 2012 is $284.3 million scheduled
over five years. Total future development capital for Yoho's total
proved reserves at September 30, 3012 is $99.5 million scheduled over
three years.
-- Yoho's proved plus probable reserve life index (RLI), based on average
fiscal 2012 production, increased by 112% to 34 years from 16 years at
September 30, 2012.
-- At September 30, 2012 Yoho had 135,200 net acres of undeveloped land
with an internally estimated value of $75.4 million.
-- Yoho's net asset value per share as at September 30, 2012 is calculated
at $5.43 per share (basic) including an internal land value of $75.4
million and $3.93 per share (basic) excluding land value.
-- The best estimate for the Company's Contingent Resources for the
evaluated area at Kaybob in the Duvernay formation is 47.3 MMboe net as
at September 30, 2012, consisting of 162.6 bcf of natural gas and 20.2
million barrels of natural gas liquids. This estimate excludes all
proved plus probable reserves assigned to Yoho's interests at Kaybob by
GLJ as at September 30, 2012.
-- The best estimate of the Kaybob Duvernay Contingent Resources has a net
present value to Yoho of $255.0 million (after the recovery of all
anticipated capital) using a discount rate of 10% and utilizing the GLJ
price forecast as at October 1, 2012. The net present value of the
Kaybob Duvernay Contingent Resources is $5.07 per share basic. This
value has not been included in the calculation of Yoho's net asset
value.
-- The best estimate for the Company's Contingent Resources for the
evaluated area at Nig in the Upper Montney formation is 52.7 MMboe net
as at September 30, 2012, consisting of 266.3 bcf of natural gas and 8.3
million barrels of natural gas liquids. This estimate excludes all
proved plus probable reserves assigned to Yoho's interest at Nig by GLJ
as at September 30, 2012.
-- The best estimate of the Nig Montney Contingent Resources has a net
present value to Yoho of $194.9 million (after the recovery of all
anticipated capital) using a discount rate of 10% and utilizing the GLJ
price forecast as at October 1, 2012. The net present value of the Nig
Montney Contingent Resources is $3.87 per share basic. This value has
not been included in the calculation of Yoho's net asset value.
FINANCIAL
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Year ended Year ended
September 30, September 30,
2012 2011
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Financial ($)
Petroleum and natural gas sales 23,177,160 29,523,389
Funds from operations (1) 9,917,532 14,618,416
per share - basic 0.22 0.38
per share - diluted 0.22 0.38
Net loss (8,899,211) (6,196,510)
per share - basic (0.20) (0.16)
per share - diluted (0.20) (0.16)
Net exploration and development
expenditures 34,696,555 35,029,751
Net acquisitions and dispositions (488,352) (810,000)
Total assets 154,495,876 138,595,121
Total debt (including working capital
deficiency) 18,505,730 22,622,390
Shareholders' equity 113,911,023 93,684,548
Weighted average common shares
outstanding
Basic 44,922,728 38,183,816
Diluted 44,922,728 38,183,816
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Notes:
(1) Funds from operations is calculated as cash provided by operating
activities, adding the change in non-cash working capital, decommissioning
obligation expenditures, the transportation liability charge and acquisition
costs. Funds from operations is used to analyze the Company's operating
performance and leverage. Funds from operations does not have a standardized
measure prescribed by International Financial Reporting Standards ("IFRS") and
therefore may not be comparable with the calculations of similar measures for
other companies. Yoho's calculation of funds from operations is detailed in the
MD&A for the years ended September 30, 2012 and 2011.
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Year ended Year ended
September 30, September 30,
2012 2011
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Operations
Production
Natural gas (mcf/d) 10,022 11,435
Oil and NGL (bbls/d) 537 569
Combined (boe/d) 2,207 2,475
Realized sales prices
Natural gas ($/mcf) 2.39 3.62
Oil and NGL ($/bbl) 73.32 69.46
Funds from operations per boe ($/boe)
Petroleum and natural gas sales 28.68 32.68
Royalties (2.84) (3.89)
Operating expenses (10.70) (10.39)
------------------------------------
Operating netback (2) 15.14 18.40
General and administrative (3.29) (2.86)
Interest (0.94) (0.71)
Realized gain on financial derivative
contracts 1.37 1.35
------------------------------------
Funds from operations (1) 12.28 16.18
------------------------------------
------------------------------------
Drilling activity
Total wells 8 9
Working interest wells 3.7 4.7
Success rate on working interest wells 100% 100%
Undeveloped land (net acres) 135,266 151,812
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Notes:
(1) Funds from operations is calculated as cash provided by operating
activities, adding the change in non-cash working capital, decommissioning
obligation expenditures, the transportation liability charge and acquisition
costs. Funds from operations is used to analyze the Company's operating
performance and leverage. Funds from operations does not have a standardized
measure prescribed by IFRS and therefore may not be comparable with the
calculations of similar measures for other companies. Yoho's calculation of
funds from operations is detailed in the MD&A for the years ended September 30,
2012 and 2011.
(2) Operating netback equals petroleum and natural gas sales including realized
hedging gains and losses on commodity contracts less royalties, operating costs
and transportation costs calculated on a boe basis. Operating netback and funds
from operations netback do not have a standardized measure prescribed by IFRS
and therefore may not be comparable with the calculations of similar measures
for other companies.
FINANCIAL
Notwithstanding a year of low natural gas prices, Yoho generated funds from
operations for fiscal 2012 of $9.9 million ($0.22 per share basic and diluted).
The fiscal 2012 capital program focused on drilling individual, unconventional
delineation wells, primarily at Kaybob, Alberta and Nig, British Columbia. Yoho
did not drill any wells on conventional style plays during fiscal 2012. As a
result of decreasing natural gas prices during fiscal 2012, the Company
recognized an $8.8 million impairment on its conventional cash generating units.
Total net debt at September 30, 2012 was $18.5 million on a bank credit facility
of $52 million.
OPERATIONS UPDATE
Kaybob Duvernay
Yoho is currently drilling the first two horizontal Duvernay development wells
from a pad site at 15P-16-62-21 W6 on the Yoho operated Tony Creek block. The
wells are expected to be drilled and completed by the end of December 2012, with
production testing of the well in early 2013. Construction of an 11.2 kilometer
pipeline from the padsite to a SemCams pipeline has recommenced now that surface
conditions have improved in the area with completion expected in early 2013.
Upon completion of the pipeline construction, the 13-22-62-21 W5 horizontal
well, along with the 15P-16 pad production, will be brought on-stream.
Nig Montney
The 7.2 kilometer Yoho operated pipeline at Nig (50% working interest) has been
completed and previously shut-in production from the d-97-H/94-H-4 gas/liquids
well located in the northern portion of the Company's land block was placed on
production on November 20, 2012. This pipeline is part of Yoho's development
plan in the Nig area and will facilitate timely tie-in of future development
wells.
LAND HOLDINGS
The Company internally estimated the fair market value of its net undeveloped
land holdings as at September 30, 2012 to be $75.4 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, 2012 is outlined below:
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Developed Acres Undeveloped Acres Total Acres
Location Gross (1) Net (2)Gross (1) Net (2)Gross (1) Net (2)
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Alberta 74,805 34,755 115,245 66,165 190,049 100,920
British Columbia 53,179 31,043 99,241 69,101 152,420 100,114
Other 324 117 - - 324 117
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Total 128,308 65,915 214,486 135,266 342,793 201,181
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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 dated November 15, 2012 with an
effective date of September 30, 2012 (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 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 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 96% in fiscal
2012 to 27,449 Mboe. Proved reserves increased by 40% to 10,821 Mboe and
comprised 39% of the Company's total proved plus probable reserves. Proved
undeveloped reserves are 54% of the total proved reserves. The future capital in
the GLJ Report (undiscounted) is $284.3 million for the proved and probable
reserves and is $99.5 million for total proved reserves.
The following table provides summary reserve information based upon the GLJ
Report and using the published GLJ (October 1, 2012) price forecast.
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Light and Medium Oil Heavy Oil Natural Gas Liquids
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Company Company Company
Interest Interest Interest
(1) Net (2) (1) Net(2) (1) Net (2)
(Mbbl) (Mbbl) (Mbbl) (Mbbl) (Mbbl) (Mbbl)
Proved producing 281 218 96 81 577 422
Non-producing 1 1 - - 180 137
Undeveloped 114 89 - - 1,625 1,238
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Total proved 396 307 96 81 2,382 1,797
Probable 527 426 28 24 5,441 4,057
------------------------------------------------------------
Total proved &
probable 922 733 124 105 7,823 5,855
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Total Barrels of Oil
Natural Gas Equivalent (3)
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Company Company
Interest Interest
(1) Net (2) (1) Net (2)
(Mmcf) (Mmcf) (Mboe) (Mboe)
Proved producing 19,978 18,030 4,284 3,726
Non-producing 2,865 2,514 658 557
Undeveloped 24,841 22,075 5,879 5,006
----------------------------------------
Total proved 47,684 42,618 10,821 9,289
Probable 63,793 57,297 16,628 14,056
----------------------------------------
Total proved & probable 111,477 99,916 27,449 23,345
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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) 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, 2012 and based on the published GLJ
(October 1, 2012) future price forecast are summarized in the following table:
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Discounted at
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Undiscounted 5% 10% 15% 20%
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(M$)
Proved producing 92,196 69,051 55,308 46,322 40,024
Non-producing 15,333 11,276 8,850 7,261 6,143
Undeveloped 97,109 48,826 23,558 9,042 112
--------------------------------------------------
Total proved 204,638 129,153 87,716 62,626 46,280
Probable 464,657 227,455 128,708 79,121 50,802
--------------------------------------------------
Total proved plus probable 669,294 356,608 216,424 141,747 97,082
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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 below.
Forecast Prices and Costs
----------------------------------------
Proved Plus Probable
Proved Reserves Reserves
----------------------------------------
Year (M$) (M$)
----------------------------------------------------------------------------
2012 2,467 2,467
2013 31,558 61,026
2014 53,617 90,880
2015 11,867 47,812
2016 - 51,632
2017 - 30,197
2018 - -
2019 - 126
2020 -
2021 - -
Remainder - 196
----------------------------------------
Total Undiscounted (all years) 99,509 284,335
----------------------------------------
Total discounted 10% 86,330 228,382
----------------------------------------
----------------------------------------
Price Forecast
The GLJ October 1, 2012 price forecast is summarized as follows:
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Hardisty Natural
$US/$Cdn WTI @ Edmonton Heavy gas Westcoast
light crude
Year Exchange Cushing oil 12 API at AECO-C Station 2
Rate spot
----------------------------------------------------------------------------
(US$/bbl) (C$/bbl) ($Cdn/bbl)(C$/MMbtu)(C$/MMbtu)
2012 Q4 1.00 92.50 90.50 66.78 2.92 2.72
2013 0.98 92.50 92.35 69.00 3.44 3.24
2014 0.98 95.00 95.92 72.57 3.90 3.70
2015 0.98 97.50 98.47 74.53 4.36 4.16
2016 0.98 100.00 101.02 76.48 4.82 4.62
2017 0.98 100.00 101.02 76.48 5.05 4.85
2018 0.98 101.35 102.40 77.54 5.43 5.23
2019 0.98 103.38 104.47 79.13 5.54 5.34
2020 0.98 105.45 106.58 80.75 5.65 5.45
2021 0.98 107.56 108.73 82.40 5.76 5.56
Thereafter - +2.0%/yr +2.0%/yr +2.0%/yr +2.0%/yr +2.0%/yr
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Notes:
(1) Inflation is accounted for at 2.0% per year
The following table compares the GLJ October 1, 2012 price forecast with the GLJ
October 1, 2011 price forecast.
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AECO Spot Gas $/Mmbtu Edmonton Light Sweet Crude $/Bbl
-------------------------------- --------------------------------
October 1, October 1, October 1, October 1,
Year 2012 2011 Variance % 2012 2011 Variance %
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2012 Q4 2.92 3.90 (25.1) 90.50 91.84 (1.5)
2013 3.44 4.36 (21.1) 92.35 94.39 (2.2)
2014 3.90 4.59 (15.0) 95.92 96.94 (1.1)
2015 4.36 5.05 (13.7) 98.47 102.02 (2.5)
2016 4.82 5.51 (12.5) 101.02 101.02 (-)
2017 5.05 5.97 (15.4) 101.02 102.41 (1.4)
2018 5.43 6.43 (15.6) 102.40 104.47 (2.0)
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Capital Program Efficiency
The efficiency of the Company's capital program for the fiscal year ended
September 30, 2012 is summarized below.
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Three Year Average
2012 2011 (5) 2010 - 2012
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Proved Proved Proved
plus plus plus
Proved Probable Proved Probable Proved Probable
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Exploration and
development
expenditures
($ thousands) 33,615 33,615 35,030 35,030 91,440 91,440
Net acquisitions
($ thousands)
(2) 593 593 (810) (810) 20,940 20,940
Change in future
development
capital -
exploration and
development
($thousands) 57,431 197,606 31,667 61,730 97,007 276,897
Total 91,639 231,814 65,887 95,950 209,387 389,277
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Reserves
additions after
revisions
(Mboe) (4)
- Exploration
and
development 3,780 14,025 2,916 6,106 8,581 23,121
- Revisions 110 116 (16) (277) 334 (36)
- Net
acquisitions 25 82 (18) (23) 802 1,324
- Total
reserve
additions
after
revisions 3,915 14,223 2,882 5,806 9,717 24,409
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Finding &
Development
Costs
($/boe)(1) 23.40 16.35 23.00 16.60 21.14 15.96
Finding,
Development &
Acquisition
Costs ($/boe)
(3) 23.41 16.30 22.86 16.52 21.55 15.95
Reserves
Replacement
Ratio 484% 1,760% 319% 643% 383% 961%
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Notes:
(1) 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.
(2) 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.
(3) 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.
(4) 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.
(5) Exploration and development expenditures for 2011 have been adjusted from
previous year's disclosure to comply with IFRS.
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, 3012 based on the estimated
future net revenues associated with Yoho's proved plus probable reserves
discounted at 10% as presented in the GLJ Report. The values in this table do
not include the net present value assigned to either of the Company's Contingent
Resource Reports.
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Forecast Prices and Costs before tax ($ thousands)
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Proved plus probable reserves - discounted at 10% 216,424
Undeveloped land (1) 75,400
Bank debt and working capital deficiency as at September 30,
2012 (2) (18,506)
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Net asset value 273,318
Common shares outstanding at September 30, 2012 (thousands)
- Basic 50,332
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Net asset value per share - basic $ 5.43
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Net asset value per share - basic (excluding land value) $ 3.93
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Notes:
(1) Internally estimated value (see "Land Holdings").
(2) 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, 2012.
RESOURCE AND RESERVES EVALUATION FOR KAYBOB DUVERNAY
GLJ was engaged to prepare an independent evaluation report of Yoho's reserves
and contingent resources at Kaybob, Alberta effective as at September 30, 2012
(the "GLJ Kaybob Report"). The GLJ Kaybob Report is dated November 15, 2012 and
was prepared in accordance with NI 51-101 and the COGE Handbook. The GLJ Kaybob
Report is the first independent assessment prepared for Yoho for the Duvernay at
Kaybob and evaluated 100% of Yoho's acreage at Kaybob.
Resource Evaluation
Summary of Company Duvernay Contingent Resources (1)(2)(3)(4)(5)
Forecast Prices and Costs
As at September 30, 2012
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Natural Gas
Natural Gas Liquids BOE
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(MMcf) (Mbbl) (MBoe)
Low Estimate (5) 133,616 14,090 36,360
Best Estimate (5) 162,576 20,226 47,322
High Estimate (5) 244,035 36,406 77,079
Notes:
(1) Yoho's total working interest contingent resources are before deducting
royalties owned by others.
(2) 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.
(3) The estimates of contingent resources for individual properties may not
reflect the same confidence level as estimates of net present values for all
properties, due to the effects of aggregation.
(4) May not add due to rounding.
(5) See note on probabilities under "Special Note Regarding Disclosure of
Reserves or Resources" below.
Summary of Company Duvernay Contingent Resources Net Present Values of Future
Revenue (1)(2)(3)(4)(5)(6)
Forecast Prices and Costs
Before Income Taxes ($ thousands) as at September 30, 2012
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Discounted at
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Undiscounted 5% 10% 15% 20%
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Low Estimate (6) 731,676 263,852 83,496 7,620 (25,697)
Best Estimate (6) 1,485,280 572,114 255,051 121,522 57,984
High Estimate (6) 3,273,672 1,328,367 680,485 395,949 248,553
Notes:
(1) The estimated future net revenues are stated before deducting income taxes
and future estimated site restoration costs, and are reduced for estimated
future abandonment costs and estimated capital for future development associated
with the contingent resource.
(2) It should not be assumed that the undiscounted and discounted net present
values represent the fair market value of the contingent resource.
(3) The estimates of net present values for individual properties may not
reflect the same confidence level as estimates of net present values for all
properties, due to the effects of aggregation.
(4) Based on GLJ's price deck dated October 1, 2012.
(5) Numbers in this table are subject to rounding error.
(6) See note on probabilities under "Special Note Regarding Disclosure of
Reserves or Resources" below.
Contingent resources are those quantities of petroleum estimated, as of a given
date, to be potentially recoverable from known accumulations using established
technology or technology under development, but which are not currently
considered to be commercially recoverable due to one or more contingencies.
Contingencies which must be overcome to enable the reclassification of
contingent resources as reserves can be categorized as economic, non-technical
and technical. The COGE Handbook identifies non-technical contingencies as
legal, environmental, political and regulatory matters or a lack of markets.
There are several non-technical contingencies that prevent the classification of
the contingent resources estimated above as being classified as reserves. The
primary contingency which prevents the classification of Yoho's contingent
resources as reserves is the current early stage of development. Additional
drilling, completion, and testing data is generally required before Yoho can
commit to their development. It is also appropriate to classify as contingent
resources the estimated discovered recoverable quantities associated with a
project in the early evaluation stage. As additional drilling takes place, it is
expected that the contingent resources will be booked into the reserves
category. Estimates of contingent resources described herein are estimates only;
the actual resources may be higher or lower than those calculated in the GLJ
Kaybob Report. There is no certainty that it will be commercially viable to
produce any portion of the resources described in the evaluation.
The most significant positive and negative factors with respect to the
contingent resource estimates relate to the fact that the field is currently at
an evaluation/delineation stage. Resource-in-place, productivity and capital
costs may be higher or lower than current estimates. Additional drilling and
testing are required to confirm volumetric estimates and reservoir productivity
for the contingent resources to be reclassified as reserves.
Reserves Evaluation
After the recent drilling success at Kaybob, the Company's working interest of
total proved plus probable reserves for the Duvernay at Kaybob as at September
30, 2012 is estimated by GLJ to be 15.0 MMboe. As at September 30, 2011, a total
of 2.6 MMboe of proved plus probable reserves were assigned to the Duvernay at
Kaybob. The reserves evaluation incorporates approximately 23% of Yoho's land
base at Kaybob, Alberta.
Summary of Kaybob Duvernay Company Working Interest Reserves (1) (2) (3) (4) (5)
Forecast Prices and Costs
As at September 30, 2012
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BOE Total
Barrels of
Natural Gas Oil
Natural Gas Liquids Equivalent
----------------------------------------------------------------------------
(MMcf) (Mbbl) (MBoe)
Proved producing 1,377 155 385
Total proved 13,902 1,606 3,923
Total probable 37,554 4,856 11,115
Total proved plus probable 51,456 6,462 15,038
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Notes:
(1) Yoho's total working interest means Yoho's working interest (operated and
non-operated) share before deducting royalties and including any royalty
interests of the Company.
(2) 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.
(3) The estimates of reserves for individual properties may not reflect the same
confidence level as estimates of reserves for all properties, due to the effects
of aggregation.
(4) Includes non-associated gas, associated gas and solution gas.
(5) Numbers in this table are subject to rounding error.
Summary of Kaybob Duvernay Company Net Present Value of Future Revenue from
Reserves (1) (2) (3) (4) (5)
Forecast Prices and Costs
Before Income Taxes ($ thousands)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
As at September 30, 2012
----------------------------------------------------------------------------
Discounted at
Undiscounted 5% 10%
------------------------------------
Total proved 87,039 49,887 30,298
Total probable 341,811 165,516 93,740
------------------------------------
Total proved plus probable 428,820 215,403 124,038
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Notes:
(1) The estimated future net revenues are stated before deducting income taxes
and future estimated site restoration costs, and are reduced for estimated
future abandonment costs and estimated capital for future development associated
with the reserves.
(2) It should not be assumed that the undiscounted and discounted net present
values represent the fair market value of the reserves.
(3) The estimates of net present values for individual properties may not
reflect the same confidence level as estimates of net present values for all
properties, due to the effects of aggregation.
(4) Based on GLJ's price deck dated October 1, 2012.
(5) Numbers in this table are subject to rounding error.
RESOURCE AND RESERVES EVALUATION FOR NIG MONTNEY
GLJ was engaged to prepare an independent evaluation report of Yoho's reserves
and contingent resources at Nig, British Columbia effective as at September 30,
2012 (the "GLJ Nig Report"). The GLJ Nig Report is dated November 15, 2012 and
was prepared in accordance with NI 51-101 and the COGE Handbook. The GLJ Nig
Report is an update to the report previously prepared by GLJ which evaluated
approximately 55% of Yoho's acreage at Nig. As a result of recent drilling
activity during fiscal 2012, GLJ has now been able to evaluate a total of 82% of
the Company's acreage at Nig.
Nig Montney
Resource Evaluation
Summary of Company Montney Contingent Resources (1)(2)(3)(4)(5)
Forecast Prices and Costs
As at September 30, 2012
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Natural Gas
Natural Gas Liquids BOE
----------------------------------------------------------------------------
(MMcf) (Mbbl) (MBoe)
Low Estimate (5) 206,212 6,415 40,784
Best Estimate (5) 266,364 8,287 52,681
High Estimate (5) 324,948 10,109 64,267
Notes:
(1) Yoho's total working interest contingent resources are before deducting
royalties owned by others.
(2) 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.
(3) The estimates of contingent resources for individual properties may not
reflect the same confidence level as estimates of net present values for all
properties, due to the effects of aggregation.
(4) May not add due to rounding.
(5) See note on probabilities under "Special Note Regarding Disclosure of
Reserves or Resources" below.
Summary of Company Montney Contingent Resources Net Present Values of Future
Revenue (1)(2)(3)(4)(5)(6)
Forecast Prices and Costs
Before Income Taxes ($ thousands) as at September 30, 2012
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Discounted at
----------------------------------------------------------------------------
Undiscounted 5% 10% 15% 20%
----------------------------------------------------------------------------
Low Estimate (6) 836,704 320,526 133,858 57,911 24,112
Best Estimate (6) 1,317,426 470,152 194,961 88,474 41,674
High Estimate (6) 1,806,191 615,225 256,833 121,633 61,994
Notes:
(1) The estimated future net revenues are stated before deducting income taxes
and future estimated site restoration costs, and are reduced for estimated
future abandonment costs and estimated capital for future development associated
with the contingent resource.
(2) It should not be assumed that the undiscounted and discounted net present
values represent the fair market value of the contingent resource.
(3) The estimates of net present values for individual properties may not
reflect the same confidence level as estimates of net present values for all
properties, due to the effects of aggregation.
(4) Based on GLJ's price deck dated October 1, 2012.
(5) Numbers in this table are subject to rounding error.
(6) See note on probabilities under "Special Note Regarding Disclosure of
Reserves or Resources" below.
Contingent resources are those quantities of petroleum estimated, as of a given
date, to be potentially recoverable from known accumulations using established
technology or technology under development, but which are not currently
considered to be commercially recoverable due to one or more contingencies.
Contingencies which must be overcome to enable the reclassification of
contingent resources as reserves can be categorized as economic, non-technical
and technical. The COGE Handbook identifies non-technical contingencies as
legal, environmental, political and regulatory matters or a lack of markets.
There are several non-technical contingencies that prevent the classification of
the contingent resources estimated above as being classified as reserves. The
primary contingency which prevents the classification of Yoho's contingent
resources as reserves at Nig is the current early stage of development.
Additional drilling, completion, and testing data is generally required before
Yoho can commit to their development. As additional drilling and/or development
takes place, it is expected that some or all of the contingent resources will be
booked as reserves. Additional drilling and testing are required to confirm
volumetric estimates and reservoir productivity for the contingent resources to
be reclassified as reserves. It is also appropriate to classify as contingent
resources the estimated discovered recoverable quantities associated with a
project in the early evaluation stage. As additional drilling takes place, it is
expected that the contingent resources will be booked into the reserves
category. The most significant positive and negative factors with respect to the
contingent resource estimates at Nig relate to the fact that the field is
currently at an evaluation/delineation stage. At Nig, the Montney formation is
areally extensive in this region; however, well control in certain areas of
Yoho's lands is limited. As well, the resource evaluation includes the Upper
Montney only and does not include an assessment of the Lower Montney which the
Company considers prospective over its land base. Resource-in-place,
productivity and capital costs may be higher or lower than current estimates.
There is no certainty that it will be commercially viable to produce any portion
of the resources described in the evaluation.
Reserves Evaluation
After the recent drilling success at Nig, the Company's interest of total proved
plus probable reserves for the Montney at Nig as at September 30, 2012 is
estimated by GLJ to be 4.9 MMboe. As at September 30, 2011, a total of 3.4 MMboe
of proved plus probable reserves were assigned to the Montney at Nig. The
reserves evaluation incorporates approximately 6% of Yoho's land base at Nig,
British Columbia.
Summary of Nig Montney Company Working Interest Reserves (1) (2) (3) (4) (5)
Forecast Prices and Costs
As at September 30, 2012
----------------------------------------------------------------------------
----------------------------------------------------------------------------
BOE Total
Barrels of
Natural Gas Oil
Natural Gas Liquids Equivalent
----------------------------------------------------------------------------
(MMcf) (Mbbl) (MBoe)
Proved producing 2,645 96 536
Total proved 11,522 372 2,292
Total probable 13,286 418 2,632
Total proved plus probable 24,808 790 4,924
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Notes:
(1) Yoho's total working interest means Yoho's working interest (operated and
non-operated) share before deducting royalties and including any royalty
interests of the Company.
(2) 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.
(3) The estimates of reserves for individual properties may not reflect the same
confidence level as estimates of reserves for all properties, due to the effects
of aggregation.
(4) Includes non-associated gas, associated gas and solution gas.
(5) Numbers in this table are subject to rounding error.
Summary of Nig Montney Company Net Present Value of Future Revenue from Reserves
(1) (2) (3) (4) (5)
Forecast Prices and Costs
Before Income Taxes ($ thousands)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
As at September 30, 2012
----------------------------------------------------------------------------
Discounted at
Undiscounted 5% 10%
------------------------------------
Total proved 33,450 18,711 10,851
Total probable 53,600 24,372 12,159
------------------------------------
Total proved plus probable 87,050 43,083 23,010
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Notes:
(1) The estimated future net revenues are stated before deducting income taxes
and future estimated site restoration costs, and are reduced for estimated
future abandonment costs and estimated capital for future development associated
with the reserves.
(2) It should not be assumed that the undiscounted and discounted net present
values represent the fair market value of the reserves.
(3) The estimates of net present values for individual properties may not
reflect the same confidence level as estimates of net present values for all
properties, due to the effects of aggregation.
(4) Based on GLJ's price deck dated October 1, 2012.
(5) Numbers in this table are subject to rounding error.
OUTLOOK
For fiscal 2013, Yoho is currently planning a total capital program of between
$35.0 and $38.0 million. The exploration program and related capital budget is
weighted to drilling the two unconventional plays at Kaybob and Nig, with the
majority of the capital allocated to the Duvernay at Kaybob. Yoho's fiscal 2013
budget assumes an oil price of $90.00 per barrel at Edmonton and a posted gas
price of $2.82 per GJ at AECO. It is estimated that overall production for
fiscal 2013 will average approximately 3,100 to 3,200 boe per day with exit
production estimated at 3,400 to 3,500 boe per day. Activity levels for fiscal
2013 will continue to be monitored to align capital expenditures with expected
cash flow and available credit lines.
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.
Cautionary Statements
Special Note Regarding Forward-Looking Information
This news release contains certain forward-looking statements, which are based
on numerous assumptions including but not limited to (i) drilling success; (ii)
production; (iii) future capital expenditures; (iv) net present values of future
net revenues; and (v) cash flow from operating activities. The reader is
cautioned that assumptions used in the preparation of such information may prove
to be incorrect.
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 that: (i) commodity prices will
be volatile throughout calendar 2012 and 2013; (ii) capital, undeveloped lands
and skilled personnel will continue to be available at the level Yoho has
enjoyed to date; (iii) Yoho will be able to obtain equipment in a timely manner
to carry out exploration, development and exploitation activities; (iv)
production rates for fiscal 2013 are expected to show growth from fiscal 2012;
(v) Yoho will have sufficient financial resources with which to conduct the
capital program; and (vi) the current tax and regulatory regime will remain
substantially unchanged. Certain or all of the forgoing assumptions may prove to
be untrue.
Certain information regarding Yoho set forth in this document, including
estimates of the quantities of the Company's proved reserves, probable reserves,
contingent resources, estimates of the net present value of future net revenue
of the estimates of the Company's proved reserves, and probable reserves and
contingent resources and expected operating activities in the Kaybob - Duvernay
and Nig Montney areas, 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 stock market volatility and market
valuations of companies with respect to announced transactions and the final
valuations thereof. Readers are cautioned that the foregoing list of factors is
not exhaustive.
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.
Special Note Regarding Disclosure of Reserves and Resources
Contingent resources is defined in the COGE Handbook as those quantities of
petroleum estimated, as of a given date, to be potentially recoverable from
known accumulations using established technology or technology under
development, but which are not currently considered to be commercially
recoverable due to one or more contingencies. Contingencies may include factors
such as economic, legal, environmental, political, and regulatory matters, or a
lack of markets. It is also appropriate to classify as contingent resources the
estimated discovered recoverable quantities associated with a project in the
early evaluation stage. Contingent resources are further classified in
accordance with the level of certainty associated with the estimates and may be
subclassified based on project maturity and/or characterized by their economic
status.
The contingent resources estimates herein, including the corresponding estimates
of before tax present value estimates, are estimates only and the actual results
may be greater than or less than the estimates provided herein. There is no
certainty that it will be commercially viable or technically feasible to produce
any portion of the resources.
Probability
"Low Estimate" is a classification of estimated resources described in the COGE
Handbook as being considered to be a conservative estimate of the quantity that
will actually be recovered. It is likely that the actual remaining quantities
recovered will exceed the Low Estimate. If probabilistic methods are used, there
should be a 90% probability (P90) that the quantities actually recovered will
equal or exceed the Low Estimate. "Best Estimate" is a classification of
estimated resources described in the COGE Handbook as being considered to be the
best estimate of the quantity that will actually be recovered. It is equally
likely that the actual remaining quantities recovered will be greater or less
than the Best Estimate. If probabilistic methods are used, there should be a 50%
probability (P50) that the quantities actually recovered will equal or exceed
the Best Estimate. "High Estimate" is a classification of estimated resources
described in the COGE Handbook as being considered to be an optimistic estimate
of the quantity that will actually be recovered. It is unlikely that the actual
remaining quantities recovered will exceed the High Estimate. If probabilistic
methods are used, there should be a 10% probability (P10) that the quantities
actually recovered will equal or exceed the High Estimate.
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
Additionally, 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, 2012.
Listed below are cautionary statements applicable to our reserves information
that are specifically required by NI 51-101:
-- Individual properties may not reflect the same confidence level as
estimates of reserves for all properties due to the effects of
aggregation.
-- With respect to finding and development costs, 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.
-- This press release contains estimates of the net present value of our
future net revenue from our reserves. Such amounts do not represent the
fair market value of our reserves.
-- Reserves included herein are stated on a company interest basis (before
royalty burdens and including royalty interests) unless noted otherwise
as well as on a gross and net basis as defined in NI 51-101. "Company
interest" is not a term defined by NI 51-101 and as such the estimates
of Company interest reserves herein may not be comparable to estimates
of "gross" reserves prepared in accordance with NI 51-101 or to other
issuers' estimates of company interest reserves.
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)
"Mboe" means 1,000 barrels of oil equivalent
"MMbtu" means million British Thermal Units
"$M" means thousands of dollars
"WTI" means West Texas Intermediate, the reference price paid in U.S. dollars at
Cushing, Oklahoma for the crude oil standard grade.
FOR FURTHER INFORMATION PLEASE CONTACT:
Yoho Resources Inc.
Wendy S. Woolsey, CA
Vice President, Finance and CFO
(403) 537-1771
www.yohoresources.ca