CALGARY, May 8, 2019 /CNW/ - Yangarra
Resources Ltd. ("Yangarra" or the
"Company") (TSX:YGR) announces its financial and operating
results for the three months ended March 31,
2019.
First Quarter Highlights
- Average production of 11,956 boe/d (52% liquids) during the
quarter, a decrease of 2% from the fourth quarter of 2018 and a 59%
increase from the same period in 2018.
- Oil and gas sales were $39.9
million, an increase of 34% from the same period in
2018.
- Funds flow from operations of $27.7
million ($0.32 per share –
basic), an increase of 49% from the same period in
2018.
- Adjusted EBITDA (which excludes changes in derivative financial
instruments) was $28.1 million
($0.33 per share - basic).
- Net income of $11.5 million
($0.13 per share – basic,
$16.4 million before tax), an
increase of 103% from the same period in 2018.
- Operating costs were $6.83/boe
(including $0.96/boe of
transportation costs).
- Field netbacks were $27.46/boe.
- Operating netbacks, which include the impact of commodity
contracts, were $27.62/boe.
- Operating margins were 74% and cash flow margins were 68%.
- G&A costs of $0.32/boe.
- Royalties were 8% of oil and gas revenue.
- Total capital expenditures (including E&E) were
$59.0 million.
- Net debt (which excludes current derivative financial
instruments) was $188 million.
- Net Debt to annualized first quarter funds flow from operations
was 1.70 : 1.
- Corporate LMR is 12.6 with decommissioning liabilities of
$13.3 million (discounted).
Operations Update
Production during the quarter was reduced by approximately 1,000
boe/d (75% liquids) with two wells shut in due to third party line
failure and four wells on two pads shut in for a month to
accommodate completions of four new wells on those pads. All
production was restored during the month of April.
Yangarra installed a new compression facility in South Ferrier
capable of processing an additional 25 mmcf/d with total corporate
nameplate capacity of more than 100 mmcf/d. Yangarra has
accumulated a sizeable land base at the Cow Lake/Cheddarville areas
and expects a significant portion of its drilling budget, over the
next few quarters, to be devoted to these areas now that Company
owned compression capacity is available.
Lower industry activity created an environment of decreasing
drilling, completion and equipping costs which together with
improving commodity pricing resulted in improving full cycle
returns. As a result of these conditions, Yangarra accelerated the
capital program, with 9 wells drilled and 10 wells completed in
Q1.
Capital expenditures in Q2 are expected to be $13-17 million depending on when drilling
operations can resume due to spring breakup. Free cash flow
generated in Q2 will be directed to debt reduction. Production in
Q2 will be reduced with a two week turn-around in Willesden Green
in May with quarterly production projected to be 13,000-14,000
boe/d.
As part of the Custom Energy Solutions program of Energy Efficiency
Alberta, Yangarra has partnered with the Alberta Energy Regulator
("AER") to measure methane emissions company wide in Central Alberta and has initiated a program to
significantly reduce those emissions.
Financial Summary
|
|
|
|
|
2019
|
2018
|
|
Q1
|
Q4
|
Q1
|
Statements of
Comprehensive Income
|
|
|
|
Petroleum &
natural gas sales
|
$
|
39,907
|
$
|
30,174
|
$
|
29,750
|
|
|
|
|
Net income (before
tax)
|
$
|
16,386
|
$
|
18,842
|
$
|
8,047
|
|
|
|
|
Net income
|
$
|
11,514
|
$
|
13,315
|
$
|
5,658
|
Net income per share
- basic
|
$
|
0.13
|
$
|
0.16
|
$
|
0.07
|
Net income per share
- diluted
|
$
|
0.13
|
$
|
0.15
|
$
|
0.07
|
|
|
|
|
Statements of Cash
Flow
|
|
|
|
Funds flow from
operations
|
$
|
27,731
|
$
|
17,167
|
$
|
18,638
|
Funds flow from
operations per share - basic
|
$
|
0.32
|
$
|
0.20
|
$
|
0.22
|
Funds flow from
operations per share - diluted
|
$
|
0.32
|
$
|
0.20
|
$
|
0.22
|
Cash from operating
activities
|
$
|
22,963
|
$
|
25,952
|
$
|
14,989
|
|
|
|
|
Statements of
Financial Position
|
|
|
|
Property and
equipment
|
$
|
511,113
|
$
|
454,772
|
$
|
367,513
|
Total
assets
|
$
|
566,081
|
$
|
501,974
|
$
|
411,579
|
Working capital
deficit
|
$
|
18,699
|
$
|
20,775
|
$
|
18,845
|
Net Debt (which
excludes current derivative financial
instruments)
|
$
|
188,063
|
$
|
155,882
|
$
|
108,020
|
Non-Current
Liabilities, excluding bank debt
|
$
|
70,229
|
$
|
60,204
|
$
|
47,626
|
Shareholders
equity
|
$
|
268,584
|
$
|
255,336
|
$
|
218,031
|
|
|
|
|
Weighted average
number of shares - basic
|
85,359
|
85,340
|
82,886
|
Weighted average
number of shares - diluted
|
86,772
|
86,981
|
86,336
|
|
|
|
|
|
|
|
|
Company Netbacks ($/boe)
|
|
|
|
|
2019
|
2018
|
|
Q1
|
Q4
|
Q1
|
|
|
|
|
Sales
price
|
$
|
37.09
|
$
|
26.80
|
$
|
44.03
|
Royalty
expense
|
(2.79)
|
(3.34)
|
(4.15)
|
Production
costs
|
(5.87)
|
(5.57)
|
(6.40)
|
Transportation
costs
|
(0.96)
|
(1.31)
|
(1.65)
|
Field operating
netback
|
27.46
|
16.58
|
31.84
|
Realized gain (loss)
on commodity contract settlement
|
0.16
|
0.98
|
(2.25)
|
Operating
netback
|
27.62
|
17.56
|
29.59
|
G&A
|
(0.32)
|
(1.01)
|
(0.57)
|
Finance
expenses
|
(1.97)
|
(1.72)
|
(1.29)
|
Funds flow
netback
|
25.33
|
14.83
|
27.73
|
Depletion and
depreciation
|
(8.48)
|
(7.61)
|
(10.07)
|
Accretion
|
(0.06)
|
(0.06)
|
(0.07)
|
Stock-based
compensation
|
(1.18)
|
(1.37)
|
(1.21)
|
Unrealized gain (loss)
on financial instruments
|
(0.39)
|
10.94
|
(4.47)
|
Deferred income
tax
|
(4.53)
|
(4.91)
|
(3.54)
|
Net Income
netback
|
$
|
10.70
|
$
|
11.83
|
$
|
8.37
|
|
|
|
|
Business Environment
|
|
|
|
|
2019
|
2018
|
|
Q1
|
Q4
|
Q1
|
Realized Pricing
(Including realized commodity contracts)
|
|
|
|
Oil ($/bbl)
|
$
|
66.00
|
$
|
44.46
|
$
|
68.51
|
NGL ($/bbl)
|
$
|
38.21
|
$
|
30.91
|
$
|
40.50
|
Gas ($/mcf)
|
$
|
2.56
|
$
|
1.64
|
$
|
2.21
|
|
|
|
|
Realized Pricing
(Excluding commodity contracts)
|
|
|
|
Oil ($/bbl)
|
$
|
66.00
|
$
|
42.58
|
$
|
72.04
|
NGL ($/bbl)
|
$
|
37.18
|
$
|
29.73
|
$
|
45.24
|
Gas ($/mcf)
|
$
|
2.56
|
$
|
1.64
|
$
|
2.21
|
|
|
|
|
Oil Price
Benchmarks
|
|
|
|
West Texas
Intermediate ("WTI") (US$/bbl)
|
$
|
54.90
|
$
|
61.05
|
$
|
62.87
|
Edmonton Par
(C$/bbl)
|
$
|
66.48
|
$
|
42.71
|
$
|
72.06
|
Edmonton Par to WTI
differential (US$/bbl)
|
$
|
(4.91)
|
$
|
(28.77)
|
$
|
(5.87)
|
|
|
|
|
Natural Gas Price
Benchmarks
|
|
|
|
AECO gas
(Cdn$/mcf)
|
$
|
1.94
|
$
|
1.59
|
$
|
1.85
|
|
|
|
|
Foreign
Exchange
|
|
|
|
U.S./Canadian Dollar
Exchange
|
0.75
|
0.76
|
0.79
|
|
|
|
|
Operations Summary
Net petroleum and natural gas production, pricing and revenue
are summarized below:
|
|
|
|
|
2019
|
2018
|
|
Q1
|
Q4
|
Q1
|
|
|
|
|
Daily production
volumes
|
|
|
|
Natural gas
(mcf/d)
|
34,707
|
30,573
|
18,538
|
Oil (bbl/d)
|
4,343
|
5,111
|
3,352
|
NGL's
(bbl/d)
|
1,829
|
2,032
|
1,066
|
Combined (boe/d
6:1)
|
11,956
|
12,238
|
7,507
|
|
|
|
|
Revenue
|
|
|
|
Petroleum &
natural gas sales - Gross
|
$
|
39,907
|
$
|
30,174
|
$
|
29,750
|
Realized gain (loss)
on commodity contract settlement
|
170
|
1,104
|
(1,522)
|
Total
sales
|
40,077
|
31,278
|
28,228
|
Royalty
expense
|
(3,003)
|
(3,763)
|
(2,801)
|
Total Revenue - Net
of royalties
|
$
|
37,074
|
$
|
27,516
|
$
|
25,426
|
|
|
|
|
Working Capital Summary
The following table summarizes the change in working capital
during the three months ended March 31,
2019 and the year ended December 31,
2018:
|
|
|
|
March 31,
2019
|
December
31,2018
|
Net Debt - beginning
of period
|
$
|
(155,951)
|
$
|
(93,533)
|
|
|
|
Funds flow from
operations
|
27,731
|
82,265
|
Additions to
property and equipment
|
(58,004)
|
(141,060)
|
Decommissioning
costs incurred
|
(578)
|
(333)
|
Additions to
E&E Assets
|
(1,044)
|
(9,773)
|
Issuance of
shares
|
31
|
6,776
|
Other
|
(248)
|
(293)
|
Net Debt - end
of period
|
$
|
(188,063)
|
$
|
(155,951)
|
|
|
|
Credit facility
limit
|
$
|
225,000
|
$
|
175,000
|
Capital Spending
Capital spending is summarized as follows:
|
|
|
|
|
2019
|
2018
|
Cash
additions
|
Q1
|
Q4
|
Q1
|
|
|
|
|
Land, acquisitions
and lease rentals
|
$
|
38
|
$
|
340
|
$
|
57
|
Drilling and
completion
|
38,908
|
22,299
|
26,772
|
Geological and
geophysical
|
237
|
412
|
139
|
Equipment
|
18,320
|
11,991
|
4,341
|
Other asset
additions
|
500
|
214
|
3
|
|
$
|
58,004
|
$
|
35,256
|
$
|
31,312
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploration &
evaluation assets
|
$
|
1,044
|
$
|
1,690
|
$
|
5,048
|
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.
Quarter End Disclosure
The Company's financial statements, notes to the financial
statements and management's discussion and analysis for the year
ended December 31, 2018 and three
months ended March 31, 2019 have been
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.
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.
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", "adjusted working capital
deficit", 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. Adjusted
working capital deficit includes current assets less current
liabilities excluding the current portion of the amount drawn on
the credit facilities, the current portion of the fair value of
financial instruments and the deferred premium on financial
instruments. 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 earnings before
interest, taxes, depletion & depreciation, amortization
("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.