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
-- Yoho's proved plus probable reserves (Company interest) as evaluated by
GLJ as at September 30, 2013 increased 92% to 52.7 MMboe from 27.4 MMboe
at September 30, 2012. The Company's proved reserves (Company interest)
as at September 30, 2013 increased 9% to 11.8 MMboe from 10.8 MMboe.
-- The net present value of Yoho's estimated future net revenue before
income taxes from proved plus probable reserves as at September 30, 2013
and utilizing GLJ's October 1, 2013 price forecast and discounted at
10%, is $353.5 million and the net present value of total proved
reserves as at September 30, 2013 is $90.5 million.
-- Net exploration and development expenditures for fiscal 2013 are
estimated to be $26.9 million. During the year ended September 30, 2013,
Yoho drilled 2 (1.5 net) gas wells.
-- Reserve replacement was 220% on proved reserves and 3,064% on proved
plus probable reserves.
-- For fiscal 2013, Yoho achieved an estimated all-in finding, development
and acquisition costs of $9.54 per boe (including all technical
revisions and changes in future development capital). For the past three
years, Yoho's rolling average estimated finding, development and
acquisition costs were $12.50 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, 2013
is $506.8 million scheduled over seven years. Total future development
capital for Yoho's total proved reserves at September 30, 2013 is $129.7
million scheduled over five years.
-- Yoho's net asset value per share as at September 30, 2013 is calculated
at $8.12 per share (basic) including an internal land value of $87.4
million and $6.39 per share (basic) excluding land value.
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:
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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 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
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Total 96,720 39,127 165,065 110,319 261,785 149,446
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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 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.
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Light and Medium Natural Gas
Oil Heavy Oil 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
Proved producing 225 180 119 103 848 639
Non-producing 1 1 6 6 4 3
Undeveloped 125 103 - - 2,240 1,785
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Total proved 351 284 126 109 3,092 2,427
Probable 458 384 39 34 10,210 7,936
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Total proved &
probable (4) 809 668 164 143 13,301 10,363
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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
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
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Total proved 49,687 44,689 11,849 10,268
Probable 181,113 154,449 40,892 34,096
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Total proved & probable (4) 230,801 199,138 52,742 44,364
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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) 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:
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Discounted at
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Undiscounted 5% 10% 15% 20%
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(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)
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Total proved 211,491 133,571 90,533 64,395 47,349
Probable 1,003,480 479,371 262,938 156,340 97,120
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Total proved plus probable 1,214,971 612,942 353,471 220,735 144,469
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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 above.
Development Costs
Forecast Prices and Costs
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Proved Plus
Probable
Proved Reserves Reserves
------------------------------
Year (M$) (M$)
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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
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Total Undiscounted (all years) 129,738 506,840
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Total discounted 10% 110,371 379,006
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Price Forecast
The GLJ October 1, 2013 price forecast is summarized as follows:
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$US/$Cdn Edmonton Hardisty Natural gas
Exchange WTI @ light crude Heavy at AECO-C Westcoast
Year Rate Cushing oil 12 API spot Station 2
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(US$/bbl) (C$/bbl) ($Cdn/bbl) (C$/MMbtu) (C$/MMbtu)
2013 Q4 0.97 102.50 100.52 75.54 3.09 3.29
2014 0.97 97.50 97.94 73.58 3.71 3.56
2015 0.97 97.50 97.94 73.58 4.10 3.95
2016 0.97 97.50 99.48 75.35 4.48 4.33
2017 0.97 97.50 99.48 75.95 4.87 4.72
2018 0.97 97.50 99.48 75.95 5.12 4.97
2019 0.97 98.54 100.56 76.78 5.22 5.07
2020 0.97 100.51 102.59 78.35 5.33 5.18
2021 0.97 102.52 104.66 79.95 5.44 5.29
2022 0.97 104.57 107.77 81.59 5.55 5.40
Thereafter - +2.0%/yr +2.0%/yr +2.0%/yr +2.0%/yr +2.0%/yr
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Note:
(1) Inflation is accounted for at 2.0% per year
Capital Program Efficiency
The efficiency of the Company's capital program for the fiscal year ended
September 30, 2013 and other prior periods is summarized below.
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Three Year
Average
2013 (1) 2012 2011 - 2013
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Proved Proved Proved
plus plus plus
Proved Probable Proved Probable Proved Probable
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Exploration and development expenditures
($ thousands) 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 ($thousands) 30,229 222,505 57,431 197,606 119,327 481,841
Total 57,142 249,418 91,639 231,814 214,863 577,377
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Reserves additions after
revisions (Mboe) (5)
- Exploration and
development 2,152 26,222 3,780 14,025 8,848 46,352
- Revisions 17 479 110 116 111 318
- Net acquisitions (288) (556) 25 82 (281) (497)
- Total reserve
additions after
revisions 1,881 26,146 3,915 14,223 8,678 46,173
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Finding & Development
Costs ($/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%
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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.
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Forecast Prices and Costs before tax ($ thousands)
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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)
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Net asset value 409,735
Common shares outstanding at September 30, 2013 (thousands) -
Basic 50,457
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Net asset value per share - basic $ 8.12
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Net asset value per share - basic (excluding land value) $ 6.39
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Notes:
(1) Internally estimated value (see "Land Holdings").
Fiscal 2013 figures include information based on estimated unaudited
(2) financial results that may change on the completion of the audited
financial statements.
Working capital deficiency includes an estimate of the Company's
(3) 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:
-- 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)
"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
FOR FURTHER INFORMATION PLEASE CONTACT:
Yoho Resources Inc.
Wendy S. Woolsey, CA
Vice President, Finance and CFO
(403) 537-1771
www.yohoresources.ca