CALGARY, March 5, 2020 /CNW/ - Yangarra
Resources Ltd. ("Yangarra" or the
"Company") (TSX:YGR) announces its financial and operating
results for the year ended December 31,
2019.
2019 Highlights
- Average Production of 12,572 boe/d (47% liquids) an increase of
33% from 2018
- Oil and gas sales were $145
million with funds flow from operations of $92 million ($1.08
per share - basic)
- Adjusted EBITDA (which excludes changes in derivative financial
instruments) was $95 million
($1.12 per share - basic), with
adjusted EBITDA margins of 66%
- Net income of $43 million
($0.51 per share - basic) or
$48 million before tax, resulting in
a net income margin of 30%
- Return on capital employed ("ROCE") of 10%
- Return on equity ("ROE") of 14%
- Operating costs were $6.85/boe
(including $1.08/boe of
transportation costs)
- Operating netbacks, which include the impact of commodity
contracts, were $22.43 per boe
- Operating margins were 71% and funds flow margins were 64%
- G&A costs of $0.65/boe
- Royalties were 7% of oil and gas revenue
- Capital expenditures (including $6
million of land) were $120
million
- Net debt (which excludes the current derivative financial
instruments) was $188 million
- Net Debt to funds flow from operations was 2.0 : 1
- Retained earnings of $104
million
- Corporate LMR is 11.92 with decommissioning liabilities of
$15 million (discounted)
- Proved Developed Producing ("PDP") reserves increased by 9%,
F&D costs were $18.10/boe, the
PDP recycle ratio was 1.2x and additions replaced 146% of 2019
production
- Total Proved reserves increased by 13%, F&D costs were
$10.74/boe, the Total Proved recycle
ratio was 2.1x and additions replaced 320% of 2019
production
- Proved plus Probable ("P+P") reserves increased by 15%, F&D
costs were $6.86/boe, the P+P recycle
ratio was 3.3x and additions replaced 522% of 2019
production.
Fourth Quarter Highlights
- Average production of 12,568 boe/d (45% liquids) during the
quarter, a decrease of 1% from the third quarter of 2019 and a 2%
increase from the same period in 2018
- Oil and gas sales were $36
million, an increase of 19% from the same period in
2018
- Funds flow from operations of $21
million ($0.25 per share –
basic), an increase of 22% from the same period in 2018
- Adjusted EBITDA (which excludes changes in derivative financial
instruments) was $21 million
($0.25 per share - basic)
- Net income of $7 million
($0.09 per share – basic,
$9 million before tax), a decrease of
47% from the same period in 2018 and represents the 12th
consecutive quarter of net income
- Operating costs were $7.30/boe
(including $1.11/boe of
transportation costs)
- Field operating netbacks were $21.34/boe
- Operating netbacks, which include the impact of commodity
contracts, were $21.59/boe
- Operating margins were 69% and funds flow from operations
margins were 58%
- G&A costs of $1.17/boe
- Royalties were 8% of oil and gas revenue
- Capital expenditures (including $0.5
million on land) were $21
million
- Net Debt to fourth quarter annualized funds flow from
operations was 2.2 : 1
Operations Update
Yangarra has drilled six wells and completed five wells in the
first quarter of 2020 leaving four wells drilled and uncompleted at
the end of the quarter. Yangarra elected to reduce first quarter
activity as per the Company's strategy of reducing capital spending
when commodity pricing falls below internal thresholds for rates of
return.
Yangarra's drilling in the first quarter was focused on
Chedderville, as that area currently generates the best rates of
return and scale in the Company's portfolio. In addition, the
Company has unused processing capacity along with several years of
future drilling locations.
The Company continues to refine drilling and completion
techniques to optimize best practices and returns as affirmed by
the improvements in the latest well results.
ESG Update
Yangarra has partnered with CleaResult within the Energy
Efficiency Alberta program to find opportunities to increase energy
efficiency while reducing greenhouse gas emissions. Carbon dioxide equivalent emissions were
estimated to be 98,629 tonnes in 2019 and a plan has been
formulated to significantly reduce the methane portion of these
emissions over the next 3 years.
2020 Capital Budget & Guidance
The capital budget and guidance have not formally changed.
However, first quarter capital spending and production will be
lower than originally forecast due to Yangarra's response to lower
commodity pricing. As demonstrated in the last three
quarters, the Company remains committed to being cash flow neutral
therefore 2020 capital spending will be dependent upon commodity
prices.
The Company's producing portfolio consists of 12 legacy vertical
wells, and 143 horizontal wells. One of the advantages of
this portfolio composition, when combined with less than 40
suspended wells, is a low Asset Retirement Obligation ("ARO").
However the Company's high-rate horizontal production rates
can dramatically affect quarterly and annual production rates
depending on the timing of when new wells are brought on
production. This increases forecasting risk when combined with the
Company's extensive partially developed pad inventory where
existing wells are shut in to accommodate new wells on a pad.
The Company's strategy of living within funds flow, which
limit's spending during depressed commodity prices and accelerates
spending in higher commodity pricing causes short-term production
numbers to be volatile. Yangarra's focus on full cycle rates of
returns ensures the Company will not destroy capital returns to
chase short-term growth.
Normal-Course Issuer Bid ("NCIB")
No purchases of stock under the NCIB plan have occurred to date
and any future purchases made under the NCIB will continue to be
evaluated in the context of Yangarra's full-cycle rate of return
focus.
Financial Summary
|
|
|
|
|
|
|
|
2019
|
2018
|
|
Year Ended
|
|
Q4
|
Q3
|
Q4
|
|
2019
|
2018
|
Statements of
Comprehensive Income
|
|
|
|
|
|
|
Petroleum &
natural gas sales
|
$
|
35,990
|
$
|
31,606
|
$
|
30,174
|
|
$
|
143,976
|
$
|
134,978
|
|
|
|
|
|
|
|
Net income (before
tax)
|
$
|
9,405
|
$
|
8,754
|
$
|
18,842
|
|
$
|
47,978
|
$
|
47,795
|
|
|
|
|
|
|
|
Net income
|
$
|
7,020
|
$
|
6,560
|
$
|
13,315
|
|
$
|
43,313
|
$
|
33,566
|
Net income per share
- basic
|
$
|
0.08
|
$
|
0.08
|
$
|
0.16
|
|
$
|
0.51
|
$
|
0.40
|
Net income per share
- diluted
|
$
|
0.08
|
$
|
0.08
|
$
|
0.15
|
|
$
|
0.51
|
$
|
0.39
|
|
|
|
|
|
|
|
Statements of Cash
Flow
|
|
|
|
|
|
|
Funds flow from
operations
|
$
|
21,005
|
$
|
19,055
|
$
|
17,167
|
|
$
|
92,236
|
$
|
82,335
|
Funds flow from
operations per share - basic
|
$
|
0.25
|
$
|
0.22
|
$
|
0.20
|
|
$
|
1.08
|
$
|
0.97
|
Funds flow from
operations per share - diluted
|
$
|
0.25
|
$
|
0.22
|
$
|
0.20
|
|
$
|
1.08
|
$
|
0.95
|
Cash from operating
activities
|
$
|
25,469
|
$
|
10,768
|
$
|
25,952
|
|
$
|
81,205
|
$
|
83,768
|
|
|
|
|
|
|
|
Statements of
Financial Position
|
|
|
|
|
|
|
Property and
equipment
|
$
|
541,799
|
$
|
530,389
|
$
|
454,772
|
|
$
|
541,799
|
$
|
454,772
|
Total
assets
|
$
|
592,195
|
$
|
581,426
|
$
|
501,974
|
|
$
|
592,195
|
$
|
501,974
|
Working capital
deficit (surplus)
|
$
|
(906)
|
$
|
(2,947)
|
$
|
20,775
|
|
$
|
(906)
|
$
|
20,775
|
Adjusted Net
Debt
|
$
|
187,712
|
$
|
185,752
|
$
|
155,882
|
|
$
|
187,712
|
$
|
155,882
|
Shareholders
equity
|
$
|
303,643
|
$
|
295,645
|
$
|
255,336
|
|
$
|
303,643
|
$
|
255,336
|
|
|
|
|
|
|
|
Weighted average
number of shares - basic
|
85,370
|
85,363
|
85,340
|
|
85,364
|
84,653
|
Weighted average
number of shares - diluted
|
85,708
|
85,936
|
86,981
|
|
85,701
|
86,860
|
|
|
|
|
|
|
|
Company Netbacks ($/boe)
|
|
|
|
|
|
|
|
2019
|
2018
|
|
Year Ended
|
|
Q4
|
Q3
|
Q4
|
|
2019
|
2018
|
|
|
|
|
|
|
|
Sales
price
|
$
|
31.13
|
$
|
27.00
|
$
|
26.80
|
|
$
|
31.37
|
$
|
39.24
|
Royalty
expense
|
(2.49)
|
(1.79)
|
(3.34)
|
|
(2.34)
|
(3.90)
|
Production
costs
|
(6.19)
|
(5.51)
|
(5.57)
|
|
(5.76)
|
(5.82)
|
Transportation
costs
|
(1.11)
|
(1.46)
|
(1.31)
|
|
(1.08)
|
(1.31)
|
Field operating
netback
|
21.34
|
18.24
|
16.58
|
|
22.19
|
28.21
|
Realized gain (loss)
on commodity contract settlement
|
0.25
|
0.34
|
0.98
|
|
0.24
|
(2.17)
|
Operating
netback
|
21.59
|
18.58
|
17.56
|
|
22.43
|
26.04
|
G&A
|
(1.17)
|
(0.59)
|
(1.01)
|
|
(0.65)
|
(0.72)
|
Finance
expenses
|
(1.53)
|
(1.75)
|
(1.72)
|
|
(1.68)
|
(1.45)
|
Depletion and
depreciation
|
(8.33)
|
(8.15)
|
(7.61)
|
|
(8.37)
|
(9.26)
|
Asset
Impairment
|
-
|
-
|
-
|
|
-
|
(0.23)
|
Accretion
|
(0.04)
|
(0.04)
|
(0.06)
|
|
(0.05)
|
(0.07)
|
Abandonment
Expenses
|
(0.75)
|
-
|
-
|
|
(0.19)
|
-
|
Provision for Credit
Losses
|
(0.57)
|
-
|
-
|
|
(0.14)
|
-
|
Stock-based
compensation
|
(0.61)
|
(0.66)
|
(1.37)
|
|
(0.79)
|
(1.52)
|
Unrealized gain (loss)
on financial instruments
|
(0.44)
|
0.08
|
10.94
|
|
(0.10)
|
1.10
|
Deferred income
tax
|
(2.06)
|
(1.87)
|
(4.91)
|
|
(1.02)
|
(4.14)
|
Net Income
netback
|
$
|
6.09
|
$
|
5.60
|
$
|
11.82
|
|
$
|
9.44
|
$
|
9.76
|
Business Environment
|
|
|
|
|
|
|
|
2019
|
2018
|
|
Year Ended
|
|
Q4
|
Q3
|
Q4
|
|
2019
|
2018
|
Realized Pricing
(Including realized commodity contracts)
|
|
|
|
|
|
|
Oil ($/bbl)
|
$
|
67.06
|
$
|
69.83
|
$
|
44.46
|
|
$
|
69.46
|
$
|
63.42
|
NGL ($/bbl)
|
$
|
19.65
|
$
|
22.78
|
$
|
30.91
|
|
$
|
25.83
|
$
|
35.03
|
Gas ($/mcf)
|
$
|
2.48
|
$
|
1.06
|
$
|
1.64
|
|
$
|
1.80
|
$
|
1.59
|
|
|
|
|
|
|
|
Realized Pricing
(Excluding commodity contracts)
|
|
|
|
|
|
|
Oil ($/bbl)
|
$
|
67.06
|
$
|
69.83
|
$
|
42.58
|
|
$
|
69.46
|
$
|
67.48
|
NGL ($/bbl)
|
$
|
18.03
|
$
|
20.85
|
$
|
29.73
|
|
$
|
24.31
|
$
|
37.87
|
Gas ($/mcf)
|
$
|
2.48
|
$
|
1.06
|
$
|
1.64
|
|
$
|
1.80
|
$
|
1.57
|
|
|
|
|
|
|
|
Oil Price
Benchmarks
|
|
|
|
|
|
|
West Texas
Intermediate ("WTI") (US$/bbl)
|
$
|
56.95
|
$
|
56.43
|
$
|
61.05
|
|
$
|
57.03
|
$
|
64.98
|
Edmonton Par
(C$/bbl)
|
$
|
68.05
|
$
|
69.48
|
$
|
42.71
|
|
$
|
69.16
|
$
|
69.35
|
Edmonton Par to WTI
differential (US$/bbl)
|
$
|
(5.40)
|
$
|
(3.63)
|
$
|
(28.77)
|
|
$
|
(4.90)
|
$
|
(11.48)
|
|
|
|
|
|
|
|
Natural Gas Price
Benchmarks
|
|
|
|
|
|
|
AECO gas
(Cdn$/mcf)
|
$
|
2.48
|
$
|
0.90
|
$
|
1.59
|
|
$
|
1.71
|
$
|
1.51
|
|
|
|
|
|
|
|
Foreign
Exchange
|
|
|
|
|
|
|
U.S./Canadian Dollar
Exchange
|
0.76
|
0.76
|
0.76
|
|
0.75
|
0.77
|
|
|
|
|
|
|
|
Operations Summary
Net petroleum and natural gas production, pricing and revenue
are summarized below:
|
|
|
|
|
|
|
|
2019
|
2018
|
|
Year Ended
|
|
Q4
|
Q3
|
Q4
|
|
2019
|
2018
|
|
|
|
|
|
|
|
Daily production
volumes
|
|
|
|
|
|
|
Natural gas
(mcf/d)
|
41,483
|
41,068
|
30,573
|
|
39,663
|
22,993
|
Oil (bbl/d)
|
3,712
|
3,627
|
5,111
|
|
3,941
|
4,120
|
NGL's
(bbl/d)
|
1,942
|
2,253
|
2,032
|
|
2,020
|
1,473
|
Combined (boe/d
6:1)
|
12,568
|
12,724
|
12,238
|
|
12,572
|
9,425
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
Petroleum &
natural gas sales - Gross
|
$
|
35,990
|
$
|
31,606
|
$
|
30,174
|
|
$
|
143,976
|
$
|
134,978
|
Realized gain (loss)
on commodity contract settlement
|
290
|
402
|
1,104
|
|
1,122
|
(7,449)
|
Total
sales
|
36,280
|
32,008
|
31,278
|
|
145,098
|
127,529
|
Royalty
expense
|
(2,879)
|
(2,093)
|
(3,763)
|
|
(10,760)
|
(13,405)
|
Total Revenue - Net
of royalties
|
$
|
33,401
|
$
|
29,915
|
$
|
27,515
|
|
$
|
134,338
|
$
|
114,124
|
Working Capital Summary
The following table summarizes the change in working capital
during the year ended December 31,
2019 and December 31,
2018:
|
|
|
|
Year ended
|
Year ended
|
|
December 31,
2019
|
December 31,
2018
|
Adjusted Net Debt -
beginning of period
|
$
|
(155,882)
|
$
|
(93,533)
|
|
|
|
Funds flow from
operations
|
92,236
|
82,334
|
Additions to
property and equipment
|
(115,276)
|
(141,060)
|
Decommissioning
costs incurred
|
(966)
|
(333)
|
Additions to
E&E Assets
|
(5,723)
|
(9,773)
|
Issuance of
shares
|
41
|
6,776
|
Other
|
(2,141)
|
(293)
|
Adjusted Net
Debt - end of period
|
$
|
(187,712)
|
$
|
(155,882)
|
|
|
|
Credit facility
limit
|
$
|
225,000
|
$
|
175,000
|
Capital Spending
Capital spending is summarized as follows:
|
|
|
|
|
|
|
|
2019
|
2018
|
|
Year Ended
|
Cash
additions
|
Q4
|
Q3
|
Q4
|
|
2019
|
2018
|
|
|
|
|
|
|
|
Land, acquisitions
and lease rentals
|
$
|
38
|
$
|
170
|
$
|
340
|
|
$
|
344
|
$
|
569
|
Drilling and
completion
|
16,997
|
18,194
|
22,299
|
|
83,060
|
106,855
|
Geological and
geophysical
|
447
|
148
|
412
|
|
1,041
|
913
|
Equipment
|
2,503
|
4,807
|
11,991
|
|
28,977
|
32,337
|
Other asset
additions
|
193
|
104
|
214
|
|
979
|
385
|
|
$
|
20,178
|
$
|
23,423
|
$
|
35,256
|
|
$
|
114,401
|
$
|
141,060
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploration &
evaluation assets
|
$
|
480
|
$
|
3,180
|
$
|
1,690
|
|
$
|
5,723
|
$
|
9,773
|
Annual General Meeting of Shareholders
The Company's Annual General Meeting of Shareholders is
scheduled for 10:00 AM on Thursday April 30,
2020 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.
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.
Please refer to the management discussion and analysis for
the nine month period ended September 30,
2019 for Non-GAAP financial measure reconciliation
tables.
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.