Case Name :      Yangarra Resources Limited

Authors :           Peter C. Bell, Grant Evaskevich, Dean Leesui, Caterina von Maydell, Sachin Gupta

Source :             Ivey Publishing

Case ID :            W11078

Discipline :        Entrepreneurship

Case Length :    03 pages

Solution Sample availability : YES

Plagiarism : NO (100% Original work)

Yangarra Resources Limited (Yangarra), a Calgary-based junior oil and gas company, had several properties throughout Alberta comprising both soley controlled and joint ventures. The president and chief executive officer (CEO) was involved in the construction of a well on the Ferrier property, a joint venture between three companies each holding roughly one third of the stake. As part of the joint-venture agreement, Yangarra had signed an agreement that committed Yangarra to cover all expenses proportional to its working stake of 31.875 per cent. The well had been drilled but at a higher cost than expected with many charges not yet incurred nor charged. As a result of the cost-overruns, Yangarra had been asked to provide more funding to the project. In deciding whether to commit additional resources to the Farrier well, the CEO had to consider several factors including an existing gross overriding royalty revenue (GORR) agreement, uncertainty in estimating the recoverable quantity of oil, crown royalties and a current legal dispute.