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 this resource.
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 statements.
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.