CALGARY, March 7, 2019 /CNW/ - Yangarra
Resources Ltd. ("Yangarra" or the
"Company") (TSX:YGR) announces its financial and operating
results for the year ended December 31,
2018.
2018 Highlights
- Average Production of 9,425 boe/d an increase of 64% from
2017.
- Oil and gas sales were $134
million with funds flow from operations of $82 million ($0.97
per share - basic).
- Adjusted EBITDA (which excludes changes in derivative financial
instruments) was $82 million
($0.97 per share - basic).
- Net income of $34 million
($0.40 per share - basic) or
$48 million before tax.
- Operating costs were $7.13/boe
(including $1.31/boe of
transportation costs).
- Operating netbacks, which include the impact of commodity
contracts, were $26.04 per boe.
- Operating margins were 65% and cash flow margins were
61%.
- G&A costs of $0.72/boe.
- Royalties were 10% of oil and gas revenue.
- Total capital expenditures were $151
million.
- Net debt (which excludes the current derivative financial
instruments) was $155 million.
- Net Debt to funds flow from operations was 1.9 : 1
- Wells drilled in 2018 resulted in a corporate half cycle IRR of
157% and a full cycle IRR of 107%
- Proved Developed Producing reserves increased by 96%, F&D
costs were $10.15/boe, the recycle
ratio was 2.7 and additions replaced 434% of 2018
production.
- Total Proved reserves increased by 35%, F&D costs were
$6.63/boe, the recycle ratio was 4.1
and additions replaced 672% of 2017 production.
- Proved plus Probable reserves increased by 44%, F&D costs
were $4.90/boe, the recycle ratio was
5.6 and additions replaced 1,220% of 2018 production.
- Return on capital employed ("ROCE") of 12%
- Corporate LMR is 12.2 with decommissioning liabilities of
$12 million (discounted).
-
- The decommissioning liabilities includes 26 inactive wells, all
of which are scheduled to be abandoned before the end of 2019.
Fourth Quarter Highlights
- Average production of 12,238 boe/d (58% liquids) during the
quarter an increase of 19% from the third quarter of 2018 and 82%
increase from the same period in 2017.
- Oil and gas sales were $30
million, an increase of 20% from the same period in 2017.
- Funds flow from operations of $17
million ($0.20 per share -
basic), a decrease of 2% from the same period in 2017.
- Adjusted EBITDA (which excludes changes in derivative financial
instruments) was $17 million
($0.20 per share - basic).
- Net income of $13 million
($0.16 per share - basic) or
$19 million net income before
tax.
- Operating costs were $6.88/boe
(including $1.31/boe of
transportation costs).
- Field netbacks were $16.58 per
boe.
- Operating netbacks, which include the impact of commodity
contracts, were $17.56 per boe.
- Operating margins were 65% and cash flow margins were
55%.
- G&A costs of $1.01/boe, which
included year-end bonuses.
- Royalties were 12% of oil and gas revenue.
- Total capital expenditures were $37
million.
- Net Debt to annualized fourth quarter funds flow from
operations was 2.3 : 1.
Syndicated Facility
Subsequent to December 31, 2018,
the borrowing base review was completed and the maximum amount
available under the syndicated credit facility was increased to
$225 million.
Financial Summary
|
|
|
|
|
|
|
|
2018
|
2017
|
|
Year Ended
|
|
Q4
|
Q3
|
Q4
|
|
2018
|
2017
|
Statements of
Comprehensive Income
|
|
|
|
|
|
|
Petroleum &
natural gas sales
|
$
|
30,174
|
$
|
45,132
|
$
|
25,172
|
|
$
|
134,978
|
$
|
77,913
|
|
|
|
|
|
|
|
|
Net income (before
tax)
|
$
|
18,842
|
$
|
18,302
|
$
|
6,598
|
|
$
|
47,795
|
$
|
27,346
|
|
|
|
|
|
|
|
|
Net income
|
$
|
13,315
|
$
|
12,947
|
$
|
4,682
|
|
$
|
33,566
|
$
|
19,485
|
Net income per share
- basic
|
$
|
0.16
|
$
|
0.15
|
$
|
0.06
|
|
$
|
0.40
|
$
|
0.24
|
Net income per share
- diluted
|
$
|
0.15
|
$
|
0.15
|
$
|
0.05
|
|
$
|
0.39
|
$
|
0.23
|
|
|
|
|
|
|
|
Statements of Cash
Flow
|
|
|
|
|
|
|
Funds flow from
operations
|
$
|
17,167
|
$
|
29,524
|
$
|
17,564
|
|
$
|
82,335
|
$
|
52,903
|
Funds flow from
operations per share - basic
|
$
|
0.20
|
$
|
0.35
|
$
|
0.22
|
|
$
|
0.97
|
$
|
0.66
|
Funds flow from
operations per share - diluted
|
$
|
0.20
|
$
|
0.34
|
$
|
0.20
|
|
$
|
0.95
|
$
|
0.63
|
Cash from operating
activities
|
$
|
25,952
|
$
|
26,539
|
$
|
20,542
|
|
$
|
83,768
|
$
|
51,775
|
|
|
|
|
|
|
|
Statements of
Financial Position
|
|
|
|
|
|
|
Property and
equipment
|
$
|
454,772
|
$
|
426,745
|
$
|
342,100
|
|
$
|
454,772
|
$
|
342,100
|
Total
assets
|
$
|
501,974
|
$
|
479,397
|
$
|
378,231
|
|
$
|
501,974
|
$
|
378,231
|
Working capital
deficit
|
$
|
20,775
|
$
|
23,528
|
$
|
11,210
|
|
$
|
20,775
|
$
|
11,210
|
Net Debt (which
excludes current derivative financial instruments)
|
$
|
155,882
|
$
|
135,712
|
$
|
93,533
|
|
$
|
155,882
|
$
|
93,533
|
Non-Current
Liabilities, excluding bank debt
|
$
|
60,204
|
$
|
58,467
|
$
|
44,367
|
|
$
|
60,204
|
$
|
44,367
|
Shareholders
equity
|
$
|
255,336
|
$
|
239,946
|
$
|
207,957
|
|
$
|
255,336
|
$
|
207,957
|
|
|
|
|
|
|
|
Weighted average
number of shares - basic
|
85,340
|
85,331
|
81,302
|
|
84,653
|
80,720
|
Weighted average
number of shares - diluted
|
86,981
|
87,614
|
85,749
|
|
86,860
|
84,157
|
|
|
|
|
|
|
|
Company Netbacks ($/boe)
|
|
|
|
|
|
|
|
2018
|
2017
|
|
Year Ended
|
|
Q4
|
Q3
|
Q4
|
|
2018
|
2017
|
|
|
|
|
|
|
|
Sales
price
|
$26.80
|
$
|
47.52
|
$
|
40.71
|
|
$
|
39.24
|
$
|
37.19
|
Royalty
expense
|
(3.34)
|
(4.38)
|
(3.80)
|
|
(3.90)
|
(3.06)
|
Production
costs
|
(5.57)
|
(5.28)
|
(6.49)
|
|
(5.82)
|
(6.74)
|
Transportation
costs
|
(1.31)
|
(1.07)
|
(0.97)
|
|
(1.31)
|
(1.03)
|
Field operating
netback
|
16.58
|
36.79
|
29.45
|
|
28.21
|
26.36
|
Realized gain (loss)
on commodity contract settlement
|
0.98
|
(3.65)
|
0.93
|
|
(2.17)
|
1.32
|
Operating
netback
|
17.56
|
33.15
|
30.39
|
|
26.04
|
27.68
|
G&A
|
(1.01)
|
(0.61)
|
(1.44)
|
|
(0.72)
|
(0.95)
|
Finance
expenses
|
(1.72)
|
(1.30)
|
(0.32)
|
|
(1.45)
|
(1.07)
|
Funds flow
netback
|
14.83
|
31.24
|
28.63
|
|
23.87
|
25.66
|
Depletion and
depreciation
|
(7.61)
|
(10.09)
|
(9.63)
|
|
(9.26)
|
(10.47)
|
Asset
Impairment
|
(0.00)
|
(0.85)
|
-
|
|
(0.23)
|
-
|
Accretion
|
(0.06)
|
(0.06)
|
(0.74)
|
|
(0.07)
|
(0.29)
|
Stock-based
compensation
|
(1.37)
|
(1.59)
|
(0.66)
|
|
(1.52)
|
(0.72)
|
Unrealized gain (loss)
on financial instruments
|
10.94
|
0.62
|
(6.92)
|
|
1.10
|
(1.13)
|
Deferred income
tax
|
(4.91)
|
(5.64)
|
(3.10)
|
|
(4.14)
|
(3.75)
|
Net Income
netback
|
$
|
11.83
|
$
|
13.63
|
$
|
7.57
|
|
$
|
9.76
|
$
|
9.30
|
|
|
|
|
|
|
|
Commodity Prices
|
|
|
|
|
|
|
|
2018
|
2017
|
|
Year Ended
|
|
Q4
|
Q3
|
Q4
|
|
2018
|
2017
|
Realized Pricing
(Including realized commodity contracts)
|
|
|
|
|
|
|
Oil ($/bbl)
|
$
|
44.46
|
$
|
74.84
|
$
|
72.70
|
|
$
|
63.42
|
$
|
65.61
|
NGL ($/bbl)
|
$
|
30.91
|
$
|
40.05
|
$
|
40.63
|
|
$
|
35.03
|
$
|
35.15
|
Gas ($/mcf)
|
$
|
1.64
|
$
|
1.38
|
$
|
2.06
|
|
$
|
1.59
|
$
|
2.46
|
|
|
|
|
|
|
|
Realized Pricing
(Excluding commodity contracts)
|
|
|
|
|
|
|
Oil ($/bbl)
|
$
|
42.58
|
$
|
82.54
|
$
|
72.33
|
|
$
|
67.48
|
$
|
64.23
|
NGL ($/bbl)
|
$
|
29.73
|
$
|
41.76
|
$
|
40.29
|
|
$
|
37.87
|
$
|
33.74
|
Gas ($/mcf)
|
$
|
1.64
|
$
|
1.30
|
$
|
1.77
|
|
$
|
1.57
|
$
|
2.25
|
|
|
|
|
|
|
|
Oil Price
Benchmarks
|
|
|
|
|
|
|
West Texas
Intermediate ("WTI") (US$/bbl)
|
$
|
61.05
|
$
|
69.50
|
$
|
55.40
|
|
$
|
64.98
|
$
|
50.84
|
Edmonton Par
(C$/bbl)
|
$
|
42.71
|
$
|
81.92
|
$
|
69.30
|
|
$
|
69.35
|
$
|
63.20
|
Edmonton Par to WTI
differential (US$/bbl)
|
$
|
(28.77)
|
$
|
(6.83)
|
$
|
(0.04)
|
|
$
|
(11.48)
|
$
|
(2.18)
|
|
|
|
|
|
|
|
Natural Gas Price
Benchmarks
|
|
|
|
|
|
|
AECO gas
(Cdn$/mcf)
|
$
|
1.59
|
$
|
1.19
|
$
|
1.70
|
|
$
|
1.51
|
$
|
2.15
|
|
|
|
|
|
|
|
Foreign
Exchange
|
|
|
|
|
|
|
U.S./Canadian Dollar
Exchange
|
0.76
|
0.77
|
0.80
|
|
0.77
|
0.77
|
|
|
|
|
|
|
|
Operations Summary
Net petroleum and natural gas production, pricing and revenue
are summarized below:
|
|
|
|
|
|
|
|
2018
|
2017
|
|
Year Ended
|
|
Q4
|
Q3
|
Q4
|
|
2018
|
2017
|
|
|
|
|
|
|
|
Daily production
volumes
|
|
|
|
|
|
|
Natural gas
(mcf/d)
|
30,573
|
24,378
|
16,782
|
|
22,993
|
14,901
|
Oil (bbl/d)
|
5,111
|
4,853
|
2,687
|
|
4,120
|
2,295
|
NGL's
(bbl/d)
|
2,032
|
1,406
|
1,237
|
|
1,473
|
962
|
Combined
(boe/d 6:1)
|
12,238
|
10,323
|
6,721
|
|
9,425
|
5,740
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
Petroleum &
natural gas sales - Gross
|
$
|
30,174
|
$
|
45,132
|
$
|
25,172
|
|
$
|
134,978
|
$
|
77,913
|
Realized gain (loss)
on commodity contract settlement
|
1,104
|
(3,462)
|
578
|
|
(7,449)
|
2,774
|
Total
sales
|
31,278
|
41,670
|
25,750
|
|
127,529
|
80,687
|
Royalty
expense
|
(3,763)
|
(4,157)
|
(2,349)
|
|
(13,405)
|
(6,412)
|
Total Revenue - Net
of royalties
|
$
|
27,516
|
$
|
37,513
|
$
|
23,401
|
|
$
|
114,124
|
$
|
74,275
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Working Capital Summary
The following table summarizes the change in working capital
during the year ended December 31,
2018 and December 31,
2017:
|
|
|
|
2018
|
2017
|
Net Debt - beginning
of period
|
$
|
(93,533)
|
$
|
(65,006)
|
|
|
|
Funds flow from
operations
|
82,334
|
52,903
|
Additions to property
and equipment
|
(141,060)
|
(83,472)
|
Decommissioning costs
incurred
|
(333)
|
(95)
|
Additions to E&E
Assets
|
(9,773)
|
-
|
Issuance of
shares
|
6,776
|
2,180
|
Other
|
(293)
|
(43)
|
Net Debt - end
of period
|
$
|
(155,882)
|
$
|
(93,533)
|
|
|
|
Credit facility
limit
|
$
|
175,000
|
$
|
120,000
|
Capital Spending
Capital spending is summarized as follows:
|
|
|
|
|
|
|
|
2018
|
2017
|
|
Year Ended
|
Cash
additions
|
Q4
|
Q3
|
Q4
|
|
2018
|
2017
|
|
|
|
|
|
|
|
Land, acquisitions
and lease rentals
|
$
|
340
|
$
|
79
|
$
|
1,163
|
|
$
|
569
|
$
|
7,165
|
Drilling and
completion
|
22,299
|
38,265
|
25,406
|
|
106,855
|
64,309
|
Geological and
geophysical
|
412
|
163
|
263
|
|
913
|
825
|
Equipment
|
11,991
|
9,893
|
4,312
|
|
32,337
|
10,854
|
Other asset
additions
|
214
|
82
|
20
|
|
385
|
320
|
|
$
|
35,256
|
$
|
48,481
|
$
|
31,164
|
|
$
|
141,060
|
$
|
83,472
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploration &
evaluation assets
|
$
|
1,690
|
$
|
1,563
|
$
|
(730)
|
|
$
|
9,773
|
$
|
(730)
|
Annual General Meeting of Shareholders
The Company's Annual General Meeting of Shareholders is
scheduled for 10:00 AM on Thursday May 9,
2019 in the Tillyard Management Conference Centre, Main
Floor, 715 5th Avenue SW, Calgary,
AB.
Year End Disclosure
The Company's financial statements, notes to the financial
statements, management's discussion and analysis and annual
information form will be filed on SEDAR (www.sedar.com) and are
available on the Company's website (www.yangarra.ca).
Forward looking information
Certain information regarding Yangarra set forth in this news
release, 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. Certain of these risks are set out in more detail
in Yangarra's current Annual Information Form, which is available
on Yangarra's SEDAR profile at www.sedar.com.
Forward-looking statements are based on estimates and
opinions of management of Yangarra at the time the statements are
presented. Yangarra may, as considered necessary in the
circumstances, update or revise such forward-looking statements,
whether as a result of new information, future events or otherwise,
but Yangarra undertakes no obligation to update or revise any
forward-looking statements, except as required by applicable
securities laws.
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.
Barrels of Oil Equivalent
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.
Finding and Development Costs ("F&D") and Recycle
Ratios
F&D costs are calculated by dividing the identified
capital expenditures by the applicable reserves additions. F&D
costs can include or exclude changes to future development capital
costs.
Recycle Ratio is calculated as operating netback divided by
F&D costs.
Non-GAAP Financial Measures
This press
release contains references to measures used in the oil and natural
gas industry such as "funds flow from operations", "operating
netback", and "net debt". These measures do not have
standardized meanings prescribed by generally accepted accounting
principles ("GAAP") and, therefore should not be considered
in isolation. These reported amounts and their underlying
calculations are not necessarily comparable or calculated in an
identical manner to a similarly titled measure of other companies
where similar terminology is used. Where these measures are
used they should be given careful consideration by the
reader. These measures have been described and presented in
this press release in order to provide shareholders and potential
investors with additional information regarding the Company's
liquidity and its ability to generate funds to finance its
operations.
Funds flow from operations should not be considered an
alternative to, or more meaningful than, cash provided by
operating, investing and financing activities or net income as
determined in accordance with GAAP, as an indicator of Yangarra's
performance or liquidity. Funds flow from operations is used
by Yangarra to evaluate operating results and Yangarra's ability to
generate cash flow to fund capital expenditures and repay
indebtedness. Funds flow from operations denotes cash flow
from operating activities as it appears on the Company's Statement
of Cash Flows before decommissioning expenditures and changes in
non-cash operating working capital. Funds flow from operations is
also derived from net income (loss) plus non-cash items including
deferred income tax expense, depletion and depreciation expense,
impairment expense, stock-based compensation expense, accretion
expense, unrealized gains or losses on financial instruments and
gains or losses on asset divestitures. Funds from operations
netback is calculated on a per boe basis and funds from operations
per share is calculated as funds from operations divided by the
weighted average number of basic and diluted common shares
outstanding. Operating netback denotes petroleum and natural
gas revenue and realized gains or losses on financial instruments
less royalty expenses, operating expenses and transportation and
marketing expenses calculated on a per boe basis. Yangarra
uses net debt as a measure to assess its financial position.
Net debt includes current assets less current liabilities excluding
the current portion of the fair value of financial instruments and
the deferred premium on financial instruments, plus the long-term
financial obligation.
Readers should also note that Adjusted EBITDA is a non-GAAP
financial measures and do not have any standardized meaning under
GAAP and is therefore unlikely to be comparable to similar measures
presented by other companies. Yangarra believes that Adjusted
EBITDA is a useful supplemental measure, which provide an
indication of the results generated by the Yangarra's primary
business activities prior to consideration of how those activities
are financed, amortized or taxed. Readers are cautioned, however,
that Adjusted EBITDA should not be construed as an alternative to
comprehensive income (loss) determined in accordance with GAAP as
an indicator of Yangarra's financial performance.
All reference to $ (funds) are in Canadian dollars.
Neither the TSX nor its Regulation Service Provider (as that
term is defined in the Policies of the TSX) accepts responsibility
for the adequacy and accuracy of this release.
SOURCE Yangarra Resources Ltd.