Yoho Resources Inc. Announces 54% Increase in Total Proved plus Probable Reserves as at September 30, 2011 and updates operations

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CALGARY, Nov. 28, 2011 /CNW/ - Yoho Resources Inc. ("Yoho" or the "Company") is pleased to provide an operational update and announce the results of its independent reserve evaluation for its fiscal year ended September 30, 2011 as evaluated 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, 2011, which is expected to be filed in early December 2011.

Highlights

  • Yoho's proved plus probable reserves as at September 30, 2011 increased 54% to 14,034 Mboe.
  • Yoho's production during fiscal 2011 averaged 2,475 boe per day, a 9% increase over fiscal 2010 production.
  • In a year of reduced capital expenditures, reserve replacement was 319% on proved reserves and 643% on proved plus probable reserves.
  • During 2011, Yoho drilled the first horizontal wells in the Nig Creek and Mike resource plays.  Yoho also participated in the second horizontal well ever drilled into the Duvernay shale play in West Central Alberta, following up last year's initial exploratory venture into this emerging shale play.
  • For fiscal 2011, Yoho achieved all-in finding, development and acquisition costs of $16.56 per boe (including all technical revisions and changes in future capital).  For the past three years, Yoho's rolling average finding, development and acquisition costs were $14.92 per boe (including all technical revisions and changes to future capital).
  • Yoho's proved plus probable reserve life index (RLI), based on fourth quarter average production, increased by 45% to 16 years from 11 years at September 30, 2010.
  • Net capital expenditures for fiscal 2011 were $34.4 million. Capital expenditures for fiscal 2011 were 21% lower than the $43.8 million spent in fiscal 2010.
  • At September 30, 2011 Yoho had 151,812 net acres of undeveloped land with an internally estimated value of $45.6 million.
  • The net present value of Yoho's estimated future net revenue before income taxes from proved plus probable reserves, utilizing GLJ's October 1, 2011 price forecast and discounted at 10%, is $149.7 million.
  • Yoho's net asset value per share as at September 30, 2011 is calculated at $4.32 per share (basic).

Operations Update

Fiscal 2011 was a year of substantial exploration success for Yoho.  Faced with extremely low pricing for natural gas and a continued pessimistic outlook for the commodity, Yoho undertook to increase our efforts to explore for natural gas containing higher quantities of liquids as well as prospective oil plays, substantially increasing the economic viability of the Company's asset base relative to the dry natural gas which the Company had historically been exploring for and producing.

Yoho successfully drilled a number of horizontal wells in the following three resource plays during 2011:

  • a high liquids content Duvernay shale gas play at Kaybob in west central Alberta;
  • a liquids rich Montney gas play at Nig Creek in north-east British Columbia; and
  • a Jean Marie gas play at Mike in north-eastern British Columbia.

Currently the Company has ongoing drilling and completions operations on the third and fourth horizontal wells at Nig Creek and 2 horizontal wells at Kaybob in the Duvernay shale.

Yoho is currently planning a capital program for fiscal 2012 of between $35 and $40 million.  With the continued volatility in commodity prices, the activity levels for fiscal 2012 will be monitored closely, particularly in light of current low natural gas pricing.

Drilling

During the year ended September 30, 2011, Yoho drilled 9 (4.7 net) wells resulting in 7 (3.9 net) gas wells and 2 (0.8 net) oil wells with an overall success rate of 100% on net wells drilled.

Land Holdings

The Company internally estimated the fair market value of its net undeveloped land holdings as at September 30, 2011 to be $45.6 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 past year.

A summary of the Company's land holdings at September 30, 2011 is outlined below:

             
  Developed Acres Undeveloped Acres Total Acres
Location Gross (1) Net (2) Gross (1) Net (2) Gross (1) Net (2)
             
Alberta 66,500 24,600 136,500 79,412 203,000 104,012
British Columbia 39,175 13,238 111,600 72,400 150,775 85,638
Other 320 145 - - 320 145
Total 105,995 37,983 248,100 151,812 354,095 189,795

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 Corporation has an interest multiplied by the working interest owned by the Company.

Reserves

The reserves data set forth below is based upon an independent reserve assessment and evaluation prepared by GLJ dated November 21, 2011 with an effective date of September 30, 2011 (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 COGE Handbook and the reserve definitions contained in National Instrument 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 54% in fiscal 2011 to 14,034 Mboe. Proved reserves increased by 35% to 7,714 Mboe and comprised 55% of the Company's total proved plus probable reserves. Proved undeveloped reserves are 37% of the total proved reserves.  The future capital in the GLJ Report is $86.7 million for the proved and probable reserves.

The following table provides summary reserve information based upon the GLJ Report and using the published GLJ (October 1, 2011) price forecast.

 
  Light and Medium Oil   Heavy Oil   Natural Gas Liquids  
  Company
Interest (1)
Net (2)   Company
Interest (1)
Net(2)   Company
Interest (1)
Net (2)  
  (Mbbl) (Mbbl)   (Mbbl) (Mbbl)   (Mbbl) (Mbbl)  
                   
  Proved producing 350 264   115 95   509 372  
  Non-producing 1 1   - -   105 83  
  Undeveloped 116 90   - -   499 389  
Total proved 467 355   115 95   1,112 843  
Probable 324 246   29 24   1,316 976  
Total proved & probable 791 600   145 119   2,428 1,819  

             
    Natural Gas   Total Barrels of Oil Equivalent (3)
    Company
Interest (1)
Net (2)   Company
Interest (1)
Net (2)
    (Mmcf) (Mmcf)   (Mboe) (Mboe)
             
  Proved producing   19,146 17,241   4,166 3,605
  Non-producing   3,690 3,065   720 594
  Undeveloped   13,282 11,479   2,828 2,392
Total proved   36,118 31,785   7,714 6,590
Probable   27,905 23,998   6,320 5,246
Total proved & probable   64,023 55,782   14,034 11,836

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 maybe 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
(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, 2011 and based on the published GLJ (October 1, 2011) future price forecast are summarized in the following table:

                     
  Discounted at
  Undiscounted   5%   10%   15%   20%
(M$)                    
                     
  Proved producing   101,623   79,097   64,905   55,259   48,318
  Non-producing   17,423   12,552   9,755   7,978   6,759
  Undeveloped   52,005   28,156   15,021   7,146   2,108
Total proved   171,051   119,805   89,681   70,383   57,184
Probable   184,955   99,055   60,020   39,328   27,047
Total proved plus probable   356,006   218,861   149,701   109,710   84,231

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.

Price Forecast

The GLJ October 1, 2011 price forecast is summarized as follows:

             
  $US/$Cdn WTI @ Edmonton Hardisty Heavy Natural gas Westcoast
Year Exchange Cushing light crude oil 12 API at AECO-C Station 2
  Rate       spot  
    (US$/bbl) (C$/bbl) ($Cdn/bbl) (C$/MMbtu) (C$/MMbtu)
2011 Q4 0.98 85.00 91.84 61.49 3.90 3.70
2012 0.98 90.00 94.39 66.16 4.36 4.16
2013 0.98 95.00 96.94 70.78 4.59 4.39
2014 0.98 100.00 101.02 73.81 5.05 4.85
2015 0.98 100.00 101.02 73.81 5.51 5.31
2016 0.98 100.00 101.02 73.81 5.97 5.77
2017 0.98 101.36 102.41 74.83 6.43 6.23
2018 0.98 103.38 104.47 76.36 6.86 6.66
2019 0.98 105.45 106.58 77.92 7.00 6.80
2020 0.98 107.56 108.73 79.52 7.14 6.94
Thereafter --- +2.0%/yr +2.0%/yr +2.0%/yr +2.0%/yr +2.0%/yr

Notes:

(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, 2011 is summarized below.

                                 
    2011 2010 Three Year Average
2009 - 2011
    Proved   Proved   Proved
    plus   plus   plus
  Proved Probable Proved Probable Proved Probable
Exploration and Development expenditures    
($ thousands) (4) 35,225 35,225 22,600 22,600 71,341 71,341
Acquisitions ($ thousands) (2) (4) (810) (810) 21,158 21,158 22,154 22,154
Change in future development capital ($thousands)              
  - Exploration and Development 31,667 61,730 5,214 13,428 37,177 77,756
  - Acquisitions - - 2,695 4,133 2,695 4,133
Reserves additions after revisions (Mboe) (5)            
  - Exploration and Development 2,900 5,829 2,125 3,116 5.980 10,310
  - Acquisitions (18) (23) 795 1,265 949 1,445
  - Total reserve additions after revisions 2,882 5,806 2,920 4,381 6,929 11,755
Finding & Development Costs ($/boe) (1) (4) 23.07 16.63 13.09 11.56 18.14 14.46
             
Finding, Development & Acquisition Costs ($/boe) (3) (4) 22.93 16.56 17.69 14.00 19.24 14.92
             
Reserves Replacement Ratio 319% 643% 353% 529% 265% 449%
             

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)      The 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 Canadian Generally Accepted Accounting Principles.
(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.
(4)      Fiscal 2011 figures include information based on estimated unaudited financial results that may change on the completion of the audited financial statements.
(5)      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.

Net Asset Value

The following table provides a calculation of Yoho's estimated net asset value and net asset value per share based on the estimated future net revenues associated with Yoho's proved plus probable reserves discounted at 10% as presented in the GLJ Report.

   
Forecast Prices and Costs before tax ($ thousands)
Proved plus probable reserves - discounted at 10% 149,701
Undeveloped land (1) 45,600
Bank debt and estimated working capital deficiency as at September 30, 2011 (2)(3) (22,605)
Net asset value 172,696
Common shares outstanding at September 30, 2011 (thousands) 39,940
Net asset value per share $ 4.32

Notes:

(1)      Internally estimated value (see "Land Holdings")
(2)      Fiscal 2011 figures include information based on estimated unaudited financial results that may change on the completion of the audited financial statements.
(3)      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, 2011.

About Yoho

Yoho Resources Inc. is a Calgary based junior oil and natural gas company with operations focusing in the northwest Peace River Arch of 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, 2011, 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, 2011 and changes could be material.

Internal estimates

Additionally, certain information contained herein, such as the estimated fair value of the Company's land holdings, are based in estimated values the Company believes to be reasonable and are subject to the same limitations as discussed under "Forward-looking Information and Statements" below.

Forward-looking information and statements

This news release contains certain forward-looking information and statements within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking information or statements. In particular, but without limiting the forgoing, this news release contains forward-looking information and statements pertaining to the following: the volumes and estimated value of Yoho's oil and gas reserves;Yoho's fiscal 2012 budget; current field operations; the life of Yoho's reserves; the volume and product mix of Yoho's oil and gas production; future oil and natural gas prices and Yoho's commodity risk management programs; future liquidity and financial capacity; future results from operations and operating metrics; future costs, expenses and royalty rates; future interest costs; the exchange rate between the $US and $Cdn; future development, exploration, acquisition and development activities and related capital expenditures; the number of wells to be drilled and completed; the amount and timing of capital projects; operating costs; the total future capital associated with development of reserves and resources; and forecast reductions in operating 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. In addition, forward-looking statements or information are based on a number of material factors, expectations or assumptions of Yoho which have been used to develop such statements and information but which may prove to be incorrect. Although Yoho believes that the expectations reflected in such forward-looking statements or information are reasonable, undue reliance should not be placed on forward-looking statements because Yoho can give no assurance that such expectations will prove to be correct. In addition to other factors and assumptions which may be identified herein, assumptions have been made regarding, among other things: the impact of increasing competition; the general stability of the economic and political environment in which Yoho operates; the timely receipt of any required regulatory approvals; the ability of Yoho to obtain qualified staff, equipment and services in a timely and cost efficient manner; drilling results; the ability of the operator of the projects in which Yoho has an interest in to operate the field in a safe, efficient and effective manner; the ability of Yoho 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 and exploration; the timing and cost of pipeline, storage and facility construction and expansion and the ability of Yoho to secure adequate product transportation; future commodity prices; currency, exchange and interest rates; regulatory framework regarding royalties, taxes and environmental matters in the jurisdictions in which Yoho operates; and the ability of Yoho to successfully market its oil and natural gas products.

The forward-looking information and statements included in this news release are not guarantees of future performance and should not be unduly relied upon. Such information and statements; including the assumptions made in respect thereof, involve known and unknown risks, uncertainties and other factors that may cause actual results or events to defer materially from those anticipated in such forward-looking information or statements including, without limitation: changes in commodity prices; changes in the demand for or supply of Yoho's products; unanticipated operating results or production declines; changes in tax or environmental laws, royalty rates or other regulatory matters; changes in development plans of Yoho or by third party operators of Yoho's properties, increased debt levels or debt service requirements; inaccurate estimation of Yoho's oil and gas reserve and resource volumes; limited, unfavourable or a lack of access to capital markets; increased costs; a lack of inadequate insurance coverage; the impact of competitors; and certain other risks detailed from time-to-time in Yoho's public disclosure documents, (including, without limitation, those risks identified in this news release and Yoho's Annual Information  Form).

The forward-looking information and statements contained in this news release speak only as of the date of this news release, and Yoho does not assume any obligation to publicly update or revise any of the included forward-looking statements or information, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

Oil and Gas Advisory

The reserves information contained in this press release has been prepared in accordance with National Instrument 51-101 "Standards of Disclosure for Oil and Gas Activities" of the Canadian Securities Administrators ("NI 51-101"). Complete NI 51- 101 reserves disclosure will be included in our Annual Information Form for the year ended September 30, 2011.   Listed below are cautionary statements that are specifically required by NI 51-101:

  • Where applicable, 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.
  • 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.

SOURCE Yoho Resources Inc.

For further information:

Wendy S. Woolsey
Vice President, Finance and CFO
Yoho Resources Inc.
Phone:  (403) 537-1771
www.yohoresources.ca

Brian A. McLachlan
President and CEO
Yoho Resources Inc.
Phone:  (403) 537-1771
www.yohoresources.ca

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Yoho Resources Inc.

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