Corporate Presentation March 2016 TSX: YGR TSX: YGR Corporate - PowerPoint PPT Presentation

Corporate Presentation March 2016 TSX: YGR TSX: YGR

Corporate Snapshot Capitalization Reserves and Locations (2) mmboe NPV10 ($mm) Ticker TSX: YGR Proved Developed 5.6 $97.9 Shares Outstanding (mm) Basic 67.7 Total Proved 24.7 $315.9 2P 40.6 $499.5 Options (weighted avg. price $1.83) 6.1 Fully Diluted 74.0 Total Cardium Locations 462 Gross (270 Net) Market Cap ($mm) (at $0.67 / share) (1) $45 Booked Cardium Locations 140 Gross (87 Net) Q4 Net Debt ($mm) $61 NAV (3) / Share (Excl. land) ($80mm credit facility with ATB) Enterprise Value ($mm) $106 Proved Developed $0.56 Insider Ownership Total Proved $3.78 Basic 14% Total Proved + Probable $6.59 Fully Diluted 21% 2) Reserves effective as at December 31, 2015 based on the reserve report prepared by Deloitte LLP, independent petroleum engineers (the “Reserves Report”) 3) NAV = NPV10 Reserve Value less Net Debt 1) Price as at March 15, 2016 • Highly motivated management and board with insiders owning 14% of the basic shares and 21% of the fully diluted shares 2 TSX: YGR

Corporate Strategy • Establish Sustainability • Target and maintain 2,750 – 3,000 boe/d and continue building deep inventory for when commodity prices turn • Prepare for future growth • Acquire Cardium land at the low-end of the cycle • Consolidate partner interests • Secure infrastructure capacity • Prepare and drill (one-well) pad-drilling sites; leaving significant torque to add 3 wells on existing pads • Future growth opportunity • Current inventory supports an ability to increase pace of development when justified by full cycle returns • Will ramp up to 2 or 3 rigs as commodity price improve • Multi-well pads with one well now ready for a quick ramp-up to a 4-5 well pad Low commodity prices Recovering commodity prices • Build inventory, avoid eroding well • Accelerate drilling and add lower-cost economics production on half-cycle economics 3 TSX: YGR

People Management Team Randall Faminow, VP, Land Jim Evaskevich, President & CEO • 30+ years of experience in all aspects of oil and gas land work, • 30+ years extensive executive experience with strong including negotiation, acquisitions and divestments, contracts operations background and mergers James Glessing, CA, CFO Lorne Simpson B.Sc., C.E.T., VP, Operations • 15+ years oil and gas accounting experience • 30+ years experience in the industry • Executive and financial experience as CFO with North Peace • Supervisor, Drilling Ops with PetroBakken Energy Ltd. Energy Corp • Engineered, drilled or completed 250 HZ Cardium • Controller at BlackRock Ventures, wells, 200 HZ Bakken wells, 2 HZ Duvernay wells, 25 • Canadian Natural Resources, Shell and Deloitte HZ Montney wells, and dozens of Blue Sky, Viking, SWS, Glauc, and Rock Creek HZ wells Board of Directors Gordon Bowerman Neil Mackenzie • • Chairman Director of various public companies, including Canyon Technical Services • President of Cove Resources Ltd • Currently a partner in Blackstone Fluids, an oil and gas • Founder of several successful private and public oil drilling fluids company and gas companies Ted Morton Robert Weir • A former Canadian politician and cabinet minister in • President of Weir Resource Management Ltd the Alberta government Jim Evaskevich • Has held various positions in the Alberta Government included Minister of Energy (2011-2012), Minister of • President and CEO of Yangarra Resources Ltd Finance and Enterprise (2010-2011), and Minster of Sustainable Resources (2006-2010) 4 TSX: YGR

Why Ow n Yangarra? • Top Decile Full Cycle rates of return • Low-cost operator, high netbacks • Low-cost philosophy, not just a result of current low commodity prices • Central Alberta Cardium formation focus • Large future drilling inventory • Consistent, low risk Cardium economics 5 TSX: YGR

Full Cycle Returns • Capital allocation is determined based on narrowing the gap between half cycle and full cycle returns Half Cycle IRR ⁽ ¹ ⁾ Full Cycle IRR ⁽ ² ⁾ Full Cycle with Duvernay 90% 80% 70% 60% 50% IRR 40% 79% 67% 65% 30% 44% 20% 41% 34% 33% 31% 31% 27% 26% 24% 10% 12% 0% 2010 2011 2012 2013 2014 2015 1. Half cycle IRR is based on actual drilling and completion costs, production to date and P+P reserves 2. Full cycle IRR allocates all other capital costs to the wells (i.e. land, G&G, infrastructure) 6 TSX: YGR

F& D and Recycle Ratios Finding and Development Recycle Ratios $40.00 7.0x $35.00 6.0x $30.00 5.0x $25.00 4.0x $/boe $20.00 3.0x $15.00 2.0x $10.00 1.0x $5.00 $- 0.0x 2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2015 Proven F&D P+P F&D Proven Recycle P+P Recycle • Consistent improvement in, and Reserves (1) continued focus on, F&D costs and NPV10 BT Volumes recycle ratios • In Yangarra’s view Probable and PDP PDP 14% 2P 19% proven Cardium locations have a 2P 37% 39% similar chance of success • Reserve Life Index (“RLI”) 1P 1P 47% 44% • 37 years with one rig • 18 years with two rigs 2P NPV10: $499.5 million 2P Reserves: 40.6 mmboe • 12 years with three rigs 1) Reserves effective as at December 31, 2015 based on the Reserves Report 7 TSX: YGR

Low -Cost Producer • Company founded on a low cost operations Netback Analysis ($/boe) philosophy $60.00 • Consistent low cost mentality in high and low $50.00 commodity price environments $40.00 • We own and operate our facilities resulting Realized Price ⁽ ¹ ⁾ in lower operating costs (no hidden fees for $30.00 financial engineering) $20.00 • Centralized field operations with Company $10.00 owned equipment and experienced field staff • Building our own separator packages $0.00 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2013 2013 2013 2013 2014 2014 2014 2014 2015 2015 2015 2015 • 13 employees/contractors in head office; 6 field Corp. Netback Interest G&A Transportation Op. Costs Royalties employees/contractors 1) Including derivative contracts and royalty income Cost per Meter Drilled vs. Drilling Cost per Well Low -Cost Driller $800 $7,000 691 $700 • Experienced drilling team $6,000 Cost per Meter Drilled $600 Cost Per Well ($’000) 524 $5,000 • Pad drilling from existing locations 486 474 $500 $4,000 • Long-term relationship with service providers 369 $400 $3,000 • Cemented liners and sliding sleeves reduce costs $300 significantly $2,000 $200 • Coil fracs without nitrogen require less horsepower $1,000 $100 on location resulting in reduced completion costs $0 $0 2011 2012 2013 2014 2015 $ / Meter Drilled Drilling Cost per Well 8 TSX: YGR

Updated Completion Technology • Cemented liners and sliding sleeve Completion Stages and Costs • Tighter well frac spacing 30 $250,000 • Increased ability to target fracs • Better frac isolation, 25 • No longer losing energy to packers $200,000 • Improved initial rates Number Of Stages 20 Cost per Stage $150,000 Sand Concentration 1,000 15 900 $100,000 800 KG of Sand/M3 10 700 600 $50,000 500 5 400 300 200 0 $0 2010 2011 2012 2013 2014 2015 100 0 Average number of stages per well Cost per stage 18 Stages 30 Stages 45 Stages Extended Reach Well Results Extended Reach Costs • Closable siding sleeve technology $450 $40,000 410 has made extended reach wells $400 $35,000 367 possible Cost per Meter Drilled $350 $30,000 290 $300 $25,000 Cost per Frac • Significant reduction in drilling costs $250 $20,000 per meter with extended reach wells $200 $15,000 $150 $10,000 $100 $5,000 $50 $0 $0 1-Mile 1.5 Mile 2 Mile 9 TSX: YGR Drilling Cost per Meter Cost per Frac

Average 1-mile Well Costs ($M) $6,000 $5,000 473 $4,000 1,807 373 Equip 298 Complete $3,000 273 1,376 173 Drill 1,187 1,134 970 $2,000 2,832 2,134 $1,000 1,808 1,578 1,563 $0 2011 2012 2013 2014 2015 Monobore Drilling Cemented Completions Service Costs Reductions Extended Reach 10 TSX: YGR

Cardium Formation • Interest in 100+ sections • 85+ horizontal wells drilled • Secured firm capacity on gas systems • Increased firm capacity from 0 in 2014 to 6.0 mmcf/d currently Yangarra Field Office Red Deer 80 km Rocky Mountain House 11 TSX: YGR TSX: YGR

Cardium Drilling Inventory (1) Drilling Locations (1-mile laterals) Proportionate (gross locations) 500 450 78 Ferrier 115 North 400 Locations Willesden 84 2-mile 350 Green Locations Locations 212 1-mile Locations 300 Locations 250 200 269 Willesden 150 Green 100 Locations 38 1.5-mile 50 Locations 0 2010 2011 2012 2013 2014 2015 Net Gross 462 gross (270 net) future 1-mile Cardium future drilling locations (1) • • Opportunity to drill extended reach wells Total Cardium gross oil in place of 559 mmboe (1) • • Willesden Green rock is generally tighter then Ferrier and North Willesden green 1) Management estimate is based on an estimate prepared by a non-independent qualified reserves evaluator of the Company in 12 TSX: YGR accordance with National Instrument 51-101 and the COGE Handbook, with an effective date of October 15, 2015.