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Yangarra Announces 2016 Year End Corporate Reserves Information
February 14, 2017
Yangarra Resources Ltd. (“Yangarra” or the “Company”) (TSX:YGR) releases the results of its 2016 year end oil and gas reserves evaluation.
Reserve Report Highlights:
The independent reserves report prepared by Deloitte is dated February 14, 2017 and is effective as of December 31, 2016, (“2016 Reserve Report”).
The financial and operational information below is based on estimates and are unaudited. Proved Developed producing reserves (“PDP”)
- 9 million boe
- Net present value before tax discounted at 10% (“NPV10”) of $139.1 million
- Finding and development costs of $9.41/boe resulting in a PDP recycle ratio of 2.4 times
- PDP net asset value per fully diluted (“FD”) common share (“NAV per FD Share”) of $0.96 (PDP NPV10 less estimated year end debt with no value included for undeveloped land)
Total Proved reserves (“1P”)
- 5 million boe
- NPV10 of $489.6 million
- Finding and development costs, including changes in future development capital (“FDC”), of $6.75/boe resulting in a recycle ratio of 3.4 times
- 1P NAV per FD Share of $5.01 (1P NPV10 less estimated year end debt with no value included for undeveloped land)
Proved plus probable reserves (“2P”)
- 6 million boe
- NPV10 of $734.5 million
- Finding and development costs, including changes in FDC, of $6.18/boe resulting in a recycle ratio of 3.7 times
- 2P NAV per FD Share of $7.84 (2P NPV10 less estimated year end debt with no value included for undeveloped land)
- 2016 field operating netbacks used to calculate recycle ratios was $22.83/boe
- 2P Future development costs of $366.2 million, which is a 37% increase from 2015
- 2P Reserve Life Index (“RLI”) based on current production of 36.9 years, 1% decrease from 2015
- 359 Mbbl of negative technical revisions to PDP oil wells primarily associated with performance of legacy wells completed with ball-drop completion systems
- The increase in the PUD and Probable locations is a result of a drilling program that focused on developing new land with one well on a drilling pad, which allows for 4-5 follow-up wells per drilling pad without any additional infrastructure
Yangarra’s 10 well Cardium drilling program commenced in Q3 2016 and is anticipated to be complete by the end of Q1 2017. All of the wells except well #2 were drilled into the lower bioturbated portion of the Cardium reservoir with 8 of the 10 wells drilled with 2 mile lateral sections and 2 wells drilled with 1.5 mile lateral sections. Early indications suggest the 2 mile wells are the optimum lateral length, however specialized casing and float equipment is required to land the casing to drilled depth.
Pressure data obtained during fracking operations confirms that both frack intensity of 50-55 stages per mile and 100-meter inter-well spacing do not show communication. Frack operations in the bioturbated section require high pressure frack and coil spreads to crack the rock given the higher frack pressures encountered.
Initial production rates from wells 1 through 4 were previously press released by the Company on January 24, 2017, wells 5 and 6 have also been placed on-stream with both wells exceeding expectations. Wells 7 and 8 are currently being completed and wells 9 and 10 are currently drilling with 2 drilling rigs working. Yangarra expects to have all the wells completed and tied in by the end of Q1 2017.
Current corporate production is approximately 4,500 boe/d.
Oil and Gas Reserves
The following tables summarize certain information contained in the 2016 Reserve Report. The 2016 Reserve Report was prepared in accordance with definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook and National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities (“NI 51-101”).
Deloitte is using a price forecast of US$55.00/bbl WTI and US$57.00/bbl WTI for light oil for 2017 and 2018, respectively, and $3.25/mcf and $3.35/mcf for AECO natural gas in 2017 and 2018, respectively.
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