Yoho Resources Inc.
TSX VENTURE : YO

Yoho Resources Inc.

August 24, 2011 08:43 ET

Yoho Resources Inc. Announces Financial and Operating Results for the Third 2011 Fiscal Quarter; Initial Production from Duvernay Wells Increases Netbacks

Eleven Horizontal Wells Targeting Duvernay and Montney Budgeted for Fiscal 2012

CALGARY, ALBERTA--(Marketwire - Aug. 24, 2011) -

NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

Yoho Resources Inc. (TSX VENTURE:YO) ("Yoho" or the "Company") filed today the interim unaudited consolidated financial statements for the nine months ended June 30, 2011 and related Management's Discussion and Analysis on www.sedar.com.

Highlights

  • Production for the three months ended June 30, 2011 was 2,500 boe per day. Production for the quarter was impacted by the turnaround at the McMahon Gas Plant in British Columbia and forest fires and extensive flooding in the Kaybob area of Alberta.
  • The first two successful Duvernay horizontal wells in Kaybob, Alberta were placed on production during fiscal Q3. The high level of associated liquids production from these wells contributed to a $20.16 per boe operating netback for fiscal Q3, a 15% increase from $17.56 per boe in fiscal Q2 2011.
  • Net exploration and development expenditures for the first nine months of fiscal 2011 were $28.1 million.
  • Generated funds from operations for fiscal Q3 2011 of $4.1 million ($0.10 per share diluted).
  • Maintained a flexible balance sheet with total net debt of $20.0 million at June 30, 2011. During Q3 the bank credit facility was increased to $40 million.

Operations

During fiscal Q3, Yoho continued to move forward with the three unconventional resource projects that the Company has been developing.

Kaybob, Alberta

During fiscal Q3, the first two successful horizontal wells targeting the Duvernay formation were placed on production. Yoho has a 33 1/3% working interest in these wells and continues to be encouraged by the production results. In particular, the natural gas liquids content of both wells exceeds the original expectations for liquid-to-gas ratios, with condensate and pentanes comprising approximately 61% of the natural gas liquids. Yoho currently has working interests in 50.5 gross (17.7 net) sections of land with Duvernay rights in the Kaybob area along this liquids rich trend. Near term development plans include drilling six wells and ultimate development spacing expected to be 6 to 8 wells per section.

Umbach, British Columbia

During fiscal Q3, Yoho completed its first horizontal well to test the Montney formation at Umbach. The a-A41-A/94-H-4 well was flowed (on test) up casing at 6.3 Mmcf per day. Liquids production with the natural gas is expected to be 30 barrels per Mmcf with approximately 40-50% of the liquids being condensate. Tie-in operations for this well are currently underway. Yoho has accumulated 38,610 gross (20,005 net) acres of land on this Montney play. A second horizontal well is currently drilling with plans for a total of five wells in 2012. Ultimate development well density is expected to be 4 wells per section.

Mike, British Columbia

During fiscal Q3, the a-B21-I/94-H-3 well targeting the Jean Marie formation was tied-in and placed on production at an initial stable rate of 3.0 Mmcf per day. Yoho has accumulated 22,000 net acres of land adjacent to this well. Although this successful horizontal well, along with the two existing vertical wells, delineates a substantial development project for the Company, this area cannot currently compete for capital allocation by the Company relative to Yoho's liquids rich Duvernay and Montney plays. Further development of the Jean Marie will be dependent upon natural gas pricing.

Outlook

The successful drilling in 2011 of these three unconventional projects delineates a drilling inventory that may have in excess of 250 locations under full development. The Company's ongoing exploration and development plan will focus on the Duvernay and Montney plays due to the high rate of natural gas liquids associated with the gas. Yoho's Board of Directors has approved the fiscal 2012 capital budget which has been set at $35 to $40 million and includes the drilling of six horizontal Duvernay wells at Kaybob, five horizontal Montney wells at Umbach and the construction of a Yoho operated 25 Mmcf per day compressor station at Umbach. Production for fiscal 2012 is budgeted to average between 3,200 and 3,300 boe per day with exit production of between 3,700 and 3,800 boe per day. The fiscal 2012 capital program is expected to generate funds from operations of $22 to $24 million based on a natural gas price of $3.75 per GJ at AECO and an oil price of $90.00 per barrel at Edmonton. Both natural gas and oil prices have been adjusted in the budget for Yoho's relative quality to posted prices. The Company expects to fund the fiscal 2012 capital program with a combination of cash flow and the Company's credit facilities. With the continued volatility in commodity prices, the activity levels for fiscal 2012 will be monitored to match capital expenditures with expected cash flow and available credit lines.

Cautionary Statements

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", "schedule", "budget", "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; the life of Yoho's reserves; resource estimates; 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 funds from operations; 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.

The recovery, reserve and resources estimates of Yoho's reserves and resources provided herein are estimates only and there is no guarantee that the estimated reserves or resources with 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.

Yoho Resources Inc. is a Calgary based junior oil and natural gas company with operations focusing in northeast British Columbia, West Central Alberta and the Peace River Arch of Alberta. 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.

Contact Information

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