CALGARY, Feb. 19, 2013 /CNW/ - Yangarra Resources Ltd. ("Yangarra" or the "Company") (TSX-V:YGR) announces that December 2012
field production averaged 2,180 boe/d (50% oil and NGL's). Annual
production for 2012 was 1,915 boe/d (40% oil and NGL's) which is a 52%
increase in production per common share over 2011.
Net capital expenditures in 2012 were scaled back to 60% of the planned
$35 million budget due to low natural gas pricing, wet conditions in
Central Alberta and infrastructure constraints. A new compression
facility is currently being constructed by the Company at Ferrier to
remove those infrastructure constraints.
The Company recently completed the sale of a non-core asset in Central
Alberta for $5 million. The asset carried a value of $365,000 (NPV 10)
in the Company's April 30, 2012 engineering report.
Since resuming the drilling program in September 2012, the Company has
drilled 7 gross (5.6 net) oil wells and expects to drill an additional
3 gross (1.6 net) Cardium oil wells prior to breakup. Yangarra has
changed the drilling program with the adoption of mono-bore drilling
and increased use of multi-well pads, effectively cutting drilling
times by 50%.
Yangarra is focusing its drilling program on the oil weighted Cardium
formation, targeting both the Willesden Green and Ferrier areas.
Internal type curves for the areas suggest an IP 30 rate of 185 boe/d
(85% liquids) in Willesden Green and 400 boe/d (60% liquids) in Ferrier
with drill and complete costs of $2.3 million and $3.1 million
respectively. The Company's internal modeling indicates netbacks of
$58.17/boe for Willesden Green and $45.44/boe at Ferrier with both
areas generating similar internal rates of return of approximately
50%. Yangarra will develop the Willesden Green area using six wells
per section based on micro-seismic and will continue to develop the
Ferrier area with four wells per section.
In the current drilling program, 2 gross (2.0 net) Cardium wells have
been drilled in Willesden Green area with one well on-stream at an IP
30 rate of 185 boe/d, and the second well flow testing with test rates
of 230 boe/d over a 9 day test. A third Willesden Green well (1.0 net)
is planned prior to breakup.
The Company recently drilled 2 gross (0.6 net) wells in Ferrier area
with test rates over 11 days of 700 and 900 boe/d, respectively. A
third well (0.3 net) is currently being drilled and a fourth well (0.3
net) will be drilled prior to breakup on the same pad.
The Company expects to complete construction of the new compressor
facility at Ferrier in the second quarter of 2013. All Yangarra
operated wells in the Ferrier area, including five standing wells, will
be tied into the new facility with all production flowing into Keyera's
deep cut Strachan plant.
The Company also drilled 2 gross (2.0 net) Glauconite oil wells in the
Westerose area. The first well has been on-stream for 35 days with an
IP 30 of 260 boe/d and the second well is currently in the completion
phase. These wells are characterized by 80% oil content.
The Company's second horizontal Second White Specks ("SWS") well had
production rates over 60 days of 48 boe/d (82% oil). Yangarra will
continue to analyze completion techniques and monitor production from
the two existing wells to determine the best practice for developing
Yangarra continues to hold significant future drilling locations in the
Hoadley Glauconite formation. The Company did not drill any wells in
this formation in the recent drilling program due to low natural gas
and natural gas liquids ("NGL") prices; however, the inventory is ready
for drilling once prices strengthen.
The Duvernay, where Yangarra owns 60 net sections, is rapidly being
de-risked by industry. There are several wells that are either drilled
or planned by industry players directly adjacent to the Company's
liquids rich Duvernay holdings. Yangarra will continue to analyze
industry well results as they become available and has deferred
development plans until 2014/2015.
2013 Capital Budget
The $25 million 2013 capital budget will focus on development of
Yangarra's Cardium light oil play with a four year inventory
indentified. The budget is expected to increase the Company's annual
production by 25% to 2,400 boe/d with cash flow from operations
estimated at $24 million ($0.20/share) and a 2013 debt to cash flow
ratio of 1.5. The budget assumes an average price of US$85/bbl of WTI
crude oil and an average price of $3.00/mcf of AECO natural gas.
2013 Hedging Program
The Company has hedged 700 bbls/d of oil at $98.99 and 3.3 mmcf/d of
natural gas at $3.65/mcf for calendar 2013.
Natural gas has been converted to a barrel of oil equivalent (Boe) using
6,000 cubic feet (6 Mcf) of natural gas equal to one barrel of oil
(6:1), unless otherwise stated. The Boe conversion ratio of 6 Mcf to 1
Bbl is based on an energy equivalency conversion method and does not
represent a value equivalency; therefore Boe's may be misleading if
used in isolation. References to natural gas liquids ("NGLs") in this
news release include condensate, propane, butane and ethane and one
barrel of NGLs is considered to be equivalent to one barrel of crude
oil equivalent (Boe). One ("BCF") equals one billion cubic feet of
natural gas. One ("Mmcf") equals one million cubic feet of natural
gas. Operating netbacks are calculated as revenue from all products
less operating costs.
Certain information regarding Yangarra set forth in this news release,
including management's assessment of future plans, operations and
operational results may constitute forward-looking statements under
applicable securities law and necessarily involve risks associated with
oil and gas exploration, production, marketing and transportation such
as loss of market, volatility of prices, currency fluctuations,
imprecision of reserves estimates, environmental risks, competition
from other producers and ability to access sufficient capital from
internal and external sources. As a consequence, actual results may
differ materially from those anticipated in the forward-looking
The initial production rates discussed in this press release are not
necessarily indicative of long-term performance or of ultimate recovery
due to high initial decline rates.
All reference to $ (funds) are in Canadian dollars.
Neither the TSX Venture Exchange nor its Regulation Service Provider (as
that term is defined in the Policies of the TSX Venture Exchange)
accepts responsibility for the adequacy and accuracy of this release.
SOURCE: Yangarra Resources Ltd.
For further information:
please contact James Evaskevich, President and CEO at (403) 262-9558.