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Yoho Resources Planning One Duvernay Kaybob Completion

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   |    Thursday,August 20,2015

Yoho Resources Inc. has filed on SEDAR the financial statements for the nine months ended June 30, 2015 and the related managements' discussion and analysis.

Highlights 

• Yoho's production during fiscal Q3 2015 averaged 1,911 boe per day (38% oil and natural gas liquids), a 10% increase over production for fiscal Q2 2015. Two Duvernay wells (0.83 net) were brought on-stream in May 2015; however, during fiscal Q3, pipeline service outages and gas plant turnarounds lead to average production of approximately 340 boe per day being shut-in during the quarter. Approximately 70% of current corporate production is now from Duvernay production at Kaybob.
• Yoho generated funds from operations for fiscal Q3 2015 of $1.5 million ($0.03 per share basic and diluted and $8.39 per boe), an increase of 126% from funds from operation for fiscal Q2 of $0.6 million. Operating netbacks for fiscal Q3 2015 were $13.75 per boe, an increase of 65% from operating netbacks for fiscal Q2 of $8.35 per boe as prices received for pentane were higher during fiscal Q3 compared to fiscal Q2. Operating netbacks in fiscal Q3 2015 for the Company's Duvernay production at Kaybob were $21.35 per boe.
• During 2015, natural gas pricing in Northeast BC and Northwest Alberta has been negatively impacted as a result of, among other things, increased supply coupled with multiple, overlapping pipeline service outages and transportation bottlenecks. Yoho has entered into a contract for firm service for 3 MMcf per day on the Alliance pipeline for 23 months beginning in December 2015. The Company continues to review other options to mitigate the impact of these pipeline service outages on both production restrictions and natural gas prices received.
• During fiscal Q3, Yoho completed a financing totaling $17.5 million consisting of $11.8 million principal amount of 8.25% convertible secured second lien debentures, 7,562,300 flow-through common shares at an issue price of $0.68 per flow-through common share for gross proceeds of $5.1 million and 950,000 common shares at an issue price of $0.63 per common share for gross proceeds of $0.6 million. The aggregate net proceeds of the financing were initially applied to reduce the Company's outstanding bank debt.
• At June 30, 2015 $7.0 million was utilized on the Company's bank credit facilities and total bank debt plus working capital deficiency was $28.3 million. Currently $14.4 million is drawn on the Company's bank credit facilities. Yoho will continue to monitor bank borrowings closely during this time of low commodity prices.
• Yoho's total exploration and development expenditures for the first nine months of fiscal 2015 were $32.8 million and included the costs of drilling three (1.0 net) Duvernay gas wells. Capital expenditures for the period also included costs to finish drilling and begin completion operations on two wells spud in September 2014.
• Yoho's net Duvernay acreage has been reduced by 2.5 net sections (10.5% of the total net Duvernay acreage) through an asset exchange of minor working interest lands and land expiry. The remaining Yoho Duvernay lands will be continued past the primary term expiry.

Outlook

• Yoho is expecting that fiscal Q4 2015 production will continue to be impacted by pipeline service outages and transportation bottlenecks to similar levels that it experienced during fiscal Q3 2015.
• The Company has entered into several transportation and marketing agreements that are expected to somewhat mitigate these interruptions into fiscal 2016.
• Yoho is planning to commence completion operations on one Duvernay well at Kaybob in September at 16-12-59-19 W5 (100% working interest). The Company is carefully monitoring its capital spending in light of the recent volatility in commodity prices.