CALGARY, June 12, 2017 /CNW/ - Yangarra Resources
Ltd. ("Yangarra" or the "Company") (TSX:YGR) provides the
following updates.
New Cardium 2-mile Type Curve
Yangarra has analyzed the results from its most recent 10 well
program to develop a type curve for future 2-mile Cardium wells on
the Company's land base. The wells drilled in the bioturbated zone
exhibit better initial flow rates, higher pressures and lower than
expected declines.
The type curve has IP30 rates of 490 boe/d (390 bbl/d of oil),
IP90 rates of 425 boe/d (295 bbl/d of oil) and twelve month
declines of 48% on a boe basis. At US$47.50/bbl WTI pricing, the type curve
generates a half cycle internal rate of return of 132%, has a
payout of 10 months and an NPV10 of $5.5
million (the full assumption list and sensitivities can be
found in the updated corporate presentation).
Using the new type curve the Company projects annual production
per share growth for 2017 of 85% when compared to 2016.
Capital Budget & Guidance
The Company's Board of Directors has approved an increased 2017
capital budget of $70 million.
The revised capital budget projects drilling an additional 12
extended reach horizontal Cardium wells, annual 2017 production of
5,500 – 6,000 boe/d and cash flow from operations of $47.5 to $52.5 million.
The Company expects year-end 2017 net debt of $77.5 – $82.5
million resulting in a debt to annual cash flow ratio of
1.5x – 1.7x and fourth quarter annualized debt to cash flow
approaching 1.1x. The budget assumes an average price of
US$47.50/bbl for WTI crude oil (down
from US$55.00/bbl in the previous
budget), C$61.65/bbl Edmonton par and an average price of
$2.75/GJ for AECO natural gas (down
from $3.00/GJ in the previous
budget).
Operations Update
Five new 2-mile Cardium wells, have been licensed and two
multi-well pads have been constructed. The Company plans to spud
the first well as soon as weather permits. Yangarra continues its
strategy of building multi-well pads, completing a tie-in at that
location to facilities to handle the associated gas, while drilling
only a single well on the pad. In a future development phase these
locations will allow the Company to drill several additional from
the existing pad with minimal additional cost.
Based on previous performance, Yangarra expects to execute the
balance of the 2017 drilling program with one rig.
The Company plans to commence construction at its 2-4 oil
handling facility to connect an oil sales pipeline, as well as add
to storage and blending facilities in the third quarter.
The Company's hedge position for the balance of 2017 provides
coverage for 40% of projected oil volumes at an average price of
C$72.75/bbl and 30% of projected
natural gas volumes at an average price of $3.07/GJ.
Corporate Presentation
An updated corporate presentation is available on the Company's
website www.yangarra.ca
Forward looking information
This press release contains forward-looking statements.
More particularly, this press release contains statements
concerning planned exploration and development activities, the
anticipated daily production average during 2017, the anticipated
profitability of the Company if commodity prices were to future
decline from the current levels and the planned corporate strategy
during the current commodity environment.
The forward-looking statements in this press release are
based on certain key expectations and assumptions made by Yangarra,
including expectations and assumptions concerning the success of
future drilling and development activities, the performance of
existing wells, the performance of new wells, the successful
application of technology, prevailing weather conditions, commodity
prices, royalty regimes and exchange rates and the availability of
capital, labour and services.
Although Yangarra believes that the expectations and
assumptions on which the forward-looking statements are based are
reasonable, undue reliance should not be placed on the
forward-looking statements because Yangarra can give no assurance
that they will prove to be correct. Since forward-looking
statements address future events and conditions, by their very
nature they involve inherent risks and uncertainties. Actual
results could differ materially from those currently anticipated
due to a number of factors and risks. These include, but are
not limited to, risks associated with the oil and gas industry in
general (e.g., operational risks in development, exploration and
production; delays or changes in plans with respect to exploration
or development projects or capital expenditures; the uncertainty of
reserves estimates; the uncertainty of estimates and projections
relating to production, costs and expenses; and health, safety and
environmental risks), uncertainty as to the availability of labour
and services, commodity price and exchange rate fluctuations,
unexpected adverse weather conditions, general business, economic,
competitive, political and social uncertainties, capital market
conditions and market prices for securities and changes to existing
laws and regulations. Certain of these risks are set out in
more detail in Yangarra's current Annual Information Form, which is
available on Yangarra's SEDAR profile at
www.sedar.com.
Forward-looking statements are based on estimates and
opinions of management of Yangarra at the time the statements are
presented. Yangarra may, as considered necessary in the
circumstances, update or revise such forward-looking statements,
whether as a result of new information, future events or otherwise,
but Yangarra undertakes no obligation to update or revise any
forward-looking statements, except as required by applicable
securities laws.
Any references in this press release to initial and/or final
raw test or production rates and/or "flush" production rates are
useful in confirming the presence of hydrocarbons, however, such
rates are not necessarily determinative of the rates at which such
wells will commence production and decline thereafter.
Additionally, such rates may also include recovered "load oil"
fluids used in well completion stimulation. While encouraging,
readers are cautioned not to place reliance on such rates in
calculating the aggregate production for the Corporation. The
initial production rate may be estimated based on other third party
estimates or limited data available at this time. In all cases in
this press release, initial production or test are not necessarily
indicative of long-term performance of the relevant well or fields
or of ultimate recovery of hydrocarbons.
Barrels of Oil Equivalent
The term barrels of oil equivalent ("boe") may be misleading,
particularly if used in isolation. Per boe amounts have been
calculated using a conversion ratio of six thousand cubic feet (6
mcf) of natural gas to one barrel (1 Bbl) of crude oil. The
boe conversion ratio of 6 mcf to 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 that the value ratio based on the current
price of crude oil as compared to natural gas is significantly
different from the energy equivalency of 6:1, utilizing a
conversion on a 6:1 basis may be misleading as an indication of
value.
All reference to $ (funds) are in Canadian dollars, unless
otherwise indicated.
SOURCE Yangarra Resources Ltd.