CALGARY, Nov. 9, 2015 /CNW/ - Yangarra Resources
Ltd. ("Yangarra" or the "Company") (TSX:YGR)
announces its financial and operating results for the three and
nine months ended September 30,
2015.
Third Quarter Highlights
- Adjusted EBITDA (which excludes changes in derivative financial
instruments) was $4.4 million
($0.07 per share - basic).
- Oil and gas sales, after royalties, were $5.3 million with funds flow from operations of
$4.2 million ($0.06 per share - basic). This represents a
64% and a 55% decrease, respectively, from the same period in 2014
due to reductions in commodity pricing and shut in production.
- Production was negatively impacted by rolling TransCanada
Pipelines Ltd. ("TCPL") sales line shut downs with daily production
averaging 2,158 boe/d for the quarter, a 29% decrease from the same
period in 2014 and a 1% increase from the second quarter of
2015.
- Net loss of $2.4 million
($0.03 per share - basic) or
$1.8 million before tax ($0.02 per share - basic) including a $5.4 million impairment of exploration &
evaluation assets in the North
Duvernay block.
- Operating costs were $8.78/boe
(including $1.38/boe of
transportation costs).
- Operating netbacks, which include the impact of commodity
contracts, were $24.79 per boe, a 33%
decrease from 2014. Field net backs, which do not include the
impact of commodity contracts were $17.97, a decrease of 58% from 2014.
- G&A costs of $1.30/boe.
- Royalties were 2% of oil and gas revenue excluding commodity
contracts and 2% of oil and gas revenue including commodity
contracts.
- Total capital expenditures were $11.7
million.
- Net debt (which excludes the current derivative financial
instruments) was $53.5 million down
from $59.8 million at 2014 year
end.
Cardium Development Update
Yangarra continues to focus on adding value and maximizing full
cycle returns, targeting the majority of the 2015 drilling program
to new Cardium lands or farm-in lands that were not in last year's
reserve report. Internal reserve estimates calculated using current
pricing indicate this strategy has more than offset the effect of
price erosion from the year end 2014 reserve report which provides
support for Yangarra's banking facilities.
With the substantially reduced drilling and completion
environment Yangarra estimates that it saved approximately
$8 million on the $22 million drilling and completion spending to
date in 2015 a 35% reduction from 2014. These savings were
experienced despite the fact that the company moved away from
drilling two wells on a pad which had improved drilling and
completion costs in previous years. With one well drilled on each
pad Yangarra can return to drill two to four additional wells on
these pads when commodity prices have improved and additional rigs
are employed.
TCPL maintenance continues to negatively affect production
however a substantial portion of shut-in production has recently
come back on-stream. Base production is estimated to be 2,500 boe/d
with four recently drilled Cardium HZ wells behind pipe (two 1 mile
wells in Ferrier, one 1.5 mile and one 1 mile in North Willesden
Green).
The cemented liner/sliding sleeve approach to completions
continues to evolve with the most recent completion utilizing 37
fracks over a 1 mile HZ well. Pressure data indicates that
communication between the fracks is not occurring even when the
spacing is reduced to 30 meters. Initial flow back results suggest
that tighter frack spacing's provide incremental production.
Yangarra expects that future wells will have up to 45 stages per
mile.
Yangarra continues to accumulate Cardium acreage as well as
consolidate ownership in existing acreage. The Company estimates
that it currently has 462 gross (270 net) future Cardium drilling
locations in inventory.
The Company estimates that it has reduced operating and G&A
costs by an annualized $1 million per
year as a result of various cost saving measures. These savings
have been realized without layoffs or salary reductions.
Yangarra`s corporate strategy for 2016 in the current commodity
environment is to target and maintain 2,500 – 2,750 boe/d while
spending within cash-flow at US$45/bbl WTI. Yangarra has 35% - 40% of
its oil production hedged for 2016 in a costless collar with a
$73.45 CDN/bbl floor and an
$85.00 CDN/bbl ceiling.
Financial Summary
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
2014
|
|
|
Nine Months
Ended
|
|
|
Q3
|
|
Q3
|
|
|
2015
|
|
2014
|
Statements of
Comprehensive Income
|
|
|
|
|
|
|
|
|
|
Petroleum &
natural gas sales
|
$
|
5,363,673
|
$
|
14,796,645
|
|
$
|
18,527,820
|
$
|
44,117,319
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
(before tax)
|
$
|
(1,782,406)
|
$
|
10,586,337
|
|
$
|
(2,805,495)
|
$
|
15,610,131
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
(2,353,636)
|
$
|
7,967,369
|
|
$
|
(4,611,111)
|
$
|
11,538,052
|
Net income (loss) per
share - basic and diluted
|
$
|
(0.03)
|
$
|
0.14
|
|
$
|
(0.07)
|
$
|
0.22
|
|
|
|
|
|
|
|
|
|
|
Statements of Cash
Flow
|
|
|
|
|
|
|
|
|
|
Funds flow from
operations
|
$
|
4,166,530
|
$
|
9,346,927
|
|
$
|
17,185,869
|
$
|
27,986,980
|
Funds flow from (used
in) operating activities per share - basic and diluted
|
$
|
0.06
|
$
|
0.16
|
|
$
|
0.27
|
$
|
0.52
|
Cash from operating
activities
|
$
|
4,599,582
|
$
|
8,910,365
|
|
$
|
15,094,643
|
$
|
21,305,219
|
|
|
|
|
|
|
|
|
|
|
Statements of
Financial Position
|
|
|
|
|
|
|
|
|
|
Property and
equipment
|
$
|
234,947,346
|
$
|
203,295,153
|
|
$
|
234,947,346
|
$
|
203,295,153
|
Total
assets
|
$
|
261,511,458
|
$
|
224,710,379
|
|
$
|
261,511,458
|
$
|
224,710,379
|
Working capital
deficit
|
$
|
50,687,278
|
$
|
53,791,373
|
|
$
|
50,687,278
|
$
|
53,791,373
|
Adjusted working
capital deficit (which excludes current derivative financial
instruments)
|
$
|
53,512,533
|
$
|
50,596,689
|
|
$
|
53,512,533
|
$
|
50,596,689
|
Non-Current
Liabilities
|
$
|
30,494,669
|
$
|
21,164,535
|
|
$
|
30,494,669
|
$
|
21,164,535
|
Shareholders
equity
|
$
|
160,913,054
|
$
|
134,826,579
|
|
$
|
160,913,054
|
$
|
134,826,579
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of shares - basic
|
|
67,681,804
|
|
57,746,877
|
|
|
62,555,188
|
|
53,512,122
|
Weighted average
number of shares - diluted
|
|
67,681,804
|
|
60,014,866
|
|
|
62,555,188
|
|
53,512,122
|
|
|
|
|
|
|
|
|
|
|
Company Netbacks ($/boe)
|
|
|
|
|
|
|
2015
|
2014
|
|
Nine Months
Ended
|
|
Q3
|
Q3
|
|
2015
|
2014
|
|
|
|
|
|
|
Sales
price
|
$
|
27.02
|
$
|
52.80
|
|
$
|
29.30
|
$
|
57.42
|
|
Royalty
income
|
0.34
|
0.90
|
|
0.29
|
1.03
|
|
Royalty
expense
|
(0.61)
|
(3.40)
|
|
(1.18)
|
(3.59)
|
|
Production
costs
|
(7.39)
|
(6.45)
|
|
(7.25)
|
(6.61)
|
|
Transportation
costs
|
(1.38)
|
(1.52)
|
|
(1.45)
|
(1.57)
|
Field operating
netback
|
17.97
|
42.33
|
|
19.71
|
46.69
|
|
Commodity contract
settlement (1)
|
6.81
|
(5.13)
|
|
12.07
|
(6.54)
|
Operating
netback
|
24.79
|
37.20
|
|
31.78
|
40.14
|
|
G&A and other
(excludes non-cash items)
|
(1.30)
|
(2.23)
|
|
(1.92)
|
(1.66)
|
|
Finance
expenses
|
(2.59)
|
(1.42)
|
|
(3.16)
|
(2.47)
|
Funds flow
netback
|
20.89
|
33.54
|
|
26.69
|
36.02
|
|
|
|
|
|
|
|
Depletion and
depreciation
|
(12.85)
|
(16.72)
|
|
(13.49)
|
(16.56)
|
|
E&E
Impairment
|
(27.26)
|
-
|
|
(8.56)
|
|
|
Accretion
|
(0.23)
|
(0.16)
|
|
(0.20)
|
(0.16)
|
|
Stock-based
compensation
|
(1.49)
|
(0.39)
|
|
(0.86)
|
(0.82)
|
|
Unrealized gain
(loss) on financial instruments
|
11.95
|
21.59
|
|
(8.03)
|
1.84
|
|
Deferred income
tax
|
(2.88)
|
(9.37)
|
|
(2.86)
|
(5.30)
|
Net Income (loss)
netback
|
$
|
(11.86)
|
$
|
28.49
|
|
$
|
(7.29)
|
$
|
15.02
|
|
|
(1)
|
Includes $4 million
relating to the monetization of certain commodity contracts in
January 2015.
|
Operations Summary
Net petroleum and natural gas production, pricing and revenue
are summarized below:
|
|
|
|
|
|
|
2015
|
2014
|
|
Nine Months
Ended
|
|
Q3
|
Q3
|
|
2015
|
2014
|
|
|
|
|
|
|
Daily production
volumes
|
|
|
|
|
|
|
Natural gas
(mcf/d)
|
6,477
|
9,219
|
|
7,711
|
8,038
|
|
Oil
(bbl/d)
|
700
|
1,004
|
|
679
|
1,014
|
|
NGL's
(bbl/d)
|
320
|
423
|
|
307
|
382
|
|
Royalty
income
|
|
|
|
|
|
|
|
Natural gas
(mcf/d)
|
232
|
287
|
|
191
|
315
|
|
|
Oil
(bbl/d)
|
0
|
9
|
|
0
|
3
|
|
|
NGL's
(bbl/d)
|
19
|
18
|
|
12
|
23
|
|
Combined (boe/d
6:1)
|
2,158
|
3,039
|
|
2,315
|
2,814
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
Petroleum &
natural gas sales - Gross
|
$
|
5,363,673
|
$
|
14,546,041
|
|
$
|
18,527,820
|
$
|
44,117,319
|
Royalty
income
|
66,770
|
250,604
|
|
181,048
|
793,859
|
Commodity contract
settlement (1)
|
1,352,383
|
(1,216,666)
|
|
7,634,614
|
(5,028,043)
|
Total
sales
|
6,782,826
|
13,579,979
|
|
26,343,482
|
39,883,135
|
Royalty
expense
|
(120,664)
|
(950,651)
|
|
(744,867)
|
(2,756,123)
|
Total Revenue - Net
of royalties
|
$
|
6,662,162
|
$
|
12,629,328
|
|
$
|
25,598,615
|
$
|
37,127,012
|
|
|
(1)
|
Includes $4 million
relating to the monetization of certain commodity contracts in
January 2015.
|
Working Capital Summary
The following table summarizes the change in adjusted working
capital (deficit) during the nine months ended September 30, 2015 and the year ended
December 31, 2014:
|
|
|
|
2015
|
2014
|
Adjusted Working
capital (deficit) - beginning of period
|
$
|
(59,766,933)
|
$
|
(36,794,243)
|
|
|
|
Funds flow from
operations
|
17,185,869
|
38,325,988
|
Additions to
property and equipment
|
(24,501,614)
|
(78,125,708)
|
Additions to
E&E Assets
|
(4,706,547)
|
(1,680,941)
|
Issuance of
shares
|
18,735,453
|
26,408,338
|
Issuance
(repayment) of Subordinated Debt
|
-
|
(7,786,632)
|
Decommissioning
costs incurred
|
-
|
(76,361)
|
Other
Debt
|
(458,761)
|
(37,374)
|
Adjusted
Working capital (deficit) - end of period
|
$
|
(53,512,533)
|
$
|
(59,766,933)
|
|
|
|
|
|
|
Current Credit
facility limit
|
$
|
80,000,000
|
|
Current Subordinated
debt facility limit
|
$
|
10,000,000
|
|
Capital Spending
Capital spending is summarized as follows:
|
|
|
|
|
|
|
2015
|
2014
|
|
Nine Months
Ended
|
Cash
additions
|
Q3
|
Q3
|
|
2015
|
2014
|
|
|
|
|
|
|
Land, acquisitions
and lease rentals
|
$
|
223,840
|
$
|
386,844
|
|
$
|
800,331
|
$
|
2,396,132
|
Drilling and
completion
|
4,779,372
|
14,923,634
|
|
15,372,738
|
49,271,094
|
Geological and
geophysical
|
181,791
|
458,608
|
|
984,260
|
1,147,492
|
Equipment
|
1,795,225
|
3,829,045
|
|
7,151,209
|
8,210,227
|
Other asset
additions
|
20,219
|
(9,272)
|
|
193,074
|
(1,649)
|
|
$
|
7,000,447
|
$
|
19,588,859
|
|
$
|
24,501,612
|
$
|
61,023,296
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploration &
evaluation assets additions
|
$
|
4,706,547
|
$
|
-
|
|
$
|
4,706,547
|
$
|
-
|
Disclosure Items
The Company's financial statements, notes to the financial
statements and management's discussion and analysis 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, including 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. Operating netbacks are calculated
as revenue from all products less operating 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", "adjusted working capital
deficit", and "net debt". These measures do not have
standardized meanings prescribed by generally accepted accounting
principles ("GAAP") an, 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 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 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 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.
SOURCE Yangarra Resources Ltd.