CALGARY, Oct. 30, 2019 /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, 2019.
Third Quarter Highlights
- Average production of 12,724 boe/d (54% liquids) during the
quarter, a decrease of 2% from the second quarter of 2019 and a 23%
increase from the same period in 2018.
- Oil and gas sales were $31.6
million, a decrease of 30% from the same period in 2018, due
to a 43% reduction in the sales price.
- Funds flow from operations of $19.1
million ($0.22 per share –
basic), a decrease of 35% from the same period in
2018.
- Adjusted EBITDA was $20.4 million
($0.24 per share - basic).
- Net income of $6.6 million
($0.08 per share – basic,
$8.8 million before tax), a decrease
of 49% from the same period in 2018 and represents the 11th
consecutive quarter of net income.
- Return on capital employed ("ROCE") (12 months trailing) of
13%.
- Return on equity ("ROE") (12 months trailing) of 17%.
- Operating costs were $6.97/boe
(including $1.46/boe of
transportation costs).
- Field operating netbacks were $18.24/boe.
- Operating netbacks, which include the impact of commodity
contracts, were $18.58/boe.
- Operating margins were 69% and funds flow from operations
margins were 60%.
- G&A costs of $0.59/boe.
- Royalties were 7% of oil and gas revenue.
- Capital expenditures (including $3.2
million of land) were $26.6
million.
- Adjusted net debt was $185.8
million.
- Adjusted net debt to annualized current quarter funds flow from
operations was 2.4 : 1.
- Subsequent to September 30, 2019,
the borrowing base review was completed and remains at $225 million.
- Retained earnings of $96.8
million as at September 30,
2019.
- Corporate LMR is 13.17 with decommissioning liabilities of
$14.6 million (discounted).
Operations Update
The Company drilled 3 wells and completed 5 wells during the
quarter, with 2 wells drilled but not completed at the end of the
third quarter. As a result of issues with a third-party
contractor, production adds in the third quarter were delayed and
capital costs were higher than expected.
The Board of Directors has approved an increase in the capital
budget by $10 million ($110 million total for 2019). The
additional spending will be used to drill 2 wells and complete 4
wells in the fourth quarter.
The Company completed a statistical analysis of its bioturbated
Cardium wells drilled to date to determine the impact of a variety
of factors. Completion programs have been altered on the
last 5 wells based on the analysis with positive results
observed.
Yangarra has continued to take advantage of lower industry
capital programs to consolidate working interest ownerships and
acquire additional Crown land at compelling valuations.
2020 Capital Budget & Guidance
The Company's Board of Directors has approved a capital budget
of $120 million for 2020 predicated
on an average price of CDN$66.50/bbl
for Edmonton par and of
CDN$2.00/GJ for AECO natural gas. The
budget is expected to increase the Company's annual 2020 production
to 14,000 – 15,000 boe/d and be cash flow neutral.
Normal-Course Issuer Bid ("NCIB")
The Board of Directors have approved the implementation of a
NCIB to opportunistically repurchase shares of the Company if the
sell-off in energy stocks continues, to enhance Yangarra's per
share metrics. Any purchases made under the NCIB will be completed
in the context of Yangarra's full-cycle rate of return focus.
Financial Summary
|
|
|
|
|
|
2019
|
2018
|
|
Nine months
ended
|
|
Q3
|
Q2
|
Q3
|
|
2019
|
2018
|
Statements of
Comprehensive Income
|
|
|
|
|
|
|
Petroleum &
natural gas sales
|
$
|
31,606
|
$
|
36,473
|
$
|
45,132
|
|
$
|
107,986
|
$
|
104,804
|
|
|
|
|
|
|
|
Net income (before
tax)
|
$
|
8,754
|
$
|
13,433
|
$
|
18,302
|
|
$
|
38,573
|
$
|
28,953
|
|
|
|
|
|
|
|
Net income
|
$
|
6,560
|
$
|
18,219
|
$
|
12,947
|
|
$
|
36,293
|
$
|
20,251
|
Net income per share
- basic
|
$
|
0.08
|
$
|
0.21
|
$
|
0.15
|
|
$
|
0.43
|
$
|
0.24
|
Net income per share
- diluted
|
$
|
0.08
|
$
|
0.21
|
$
|
0.15
|
|
$
|
0.42
|
$
|
0.23
|
|
|
|
|
|
|
|
Statements of Cash
Flow
|
|
|
|
|
|
|
Funds flow from
operations
|
$
|
19,055
|
$
|
24,445
|
$
|
29,524
|
|
$
|
71,231
|
$
|
65,167
|
Funds flow from
operations per share - basic
|
$
|
0.22
|
$
|
0.29
|
$
|
0.35
|
|
$
|
0.83
|
$
|
0.77
|
Funds flow from
operations per share - diluted
|
$
|
0.22
|
$
|
0.28
|
$
|
0.34
|
|
$
|
0.82
|
$
|
0.75
|
Cash from operating
activities
|
$
|
10,768
|
$
|
22,005
|
$
|
26,539
|
|
$
|
55,736
|
$
|
57,816
|
|
|
|
|
|
|
|
Statements of
Financial Position
|
|
|
|
|
|
|
Property and
equipment
|
$
|
530,389
|
$
|
515,730
|
$
|
426,745
|
|
$
|
530,389
|
$
|
426,745
|
Total
assets
|
$
|
581,426
|
$
|
561,986
|
$
|
479,397
|
|
$
|
581,426
|
$
|
479,397
|
Working capital
deficit (surplus)
|
$
|
(2,947)
|
$
|
6,672
|
$
|
23,528
|
|
$
|
(2,947)
|
$
|
23,529
|
Adjusted Net
Debt
|
$
|
185,752
|
$
|
177,821
|
$
|
135,712
|
|
$
|
185,752
|
$
|
135,712
|
Shareholders
equity
|
$
|
295,645
|
$
|
288,027
|
$
|
239,946
|
|
$
|
295,645
|
$
|
239,946
|
|
|
|
|
|
|
|
Weighted average
number of shares - basic
|
85,363
|
85,363
|
85,331
|
|
85,362
|
84,421
|
Weighted average
number of shares - diluted
|
85,936
|
86,680
|
87,614
|
|
86,518
|
86,783
|
|
|
|
|
|
|
|
Company Netbacks ($/boe)
|
|
|
|
|
|
|
|
2019
|
2018
|
|
Nine months
ended
|
|
Q3
|
Q2
|
Q3
|
|
2019
|
2018
|
|
|
|
|
|
|
|
Sales
price
|
$
|
27.00
|
$
|
30.76
|
$
|
47.52
|
|
$
|
31.46
|
$
|
45.29
|
|
|
|
|
|
|
|
Royalty
expense
|
(1.79)
|
(2.35)
|
(4.38)
|
|
(2.30)
|
(4.17)
|
Production
costs
|
(5.51)
|
(5.50)
|
(5.28)
|
|
(5.62)
|
(5.94)
|
Transportation
costs
|
(1.46)
|
(0.79)
|
(1.07)
|
|
(1.07)
|
(1.31)
|
Field operating
netback
|
18.24
|
22.12
|
36.79
|
|
22.47
|
33.87
|
Realized gain (loss)
on commodity contract settlement
|
0.34
|
0.22
|
(3.65)
|
|
0.24
|
(3.70)
|
Operating
netback
|
18.58
|
22.34
|
33.15
|
|
22.71
|
30.17
|
G&A
|
(0.59)
|
(0.50)
|
(0.61)
|
|
(0.47)
|
(0.58)
|
Finance
expenses
|
(1.75)
|
(1.49)
|
(1.30)
|
|
(1.73)
|
(1.32)
|
Depletion and
depreciation
|
(8.15)
|
(8.53)
|
(10.09)
|
|
(8.39)
|
(10.06)
|
Asset
Impairment
|
-
|
-
|
(0.85)
|
|
-
|
(0.35)
|
Accretion
|
(0.04)
|
(0.05)
|
(0.06)
|
|
(0.05)
|
(0.07)
|
Stock-based
compensation
|
(0.66)
|
(0.75)
|
(1.59)
|
|
(0.85)
|
(1.59)
|
Unrealized gain (loss)
on financial instruments
|
0.08
|
0.32
|
0.62
|
|
0.02
|
(3.69)
|
Deferred income
tax
|
(1.87)
|
4.04
|
(5.64)
|
|
(0.66)
|
(3.76)
|
Net Income
netback
|
$
|
5.60
|
$
|
15.38
|
$
|
13.63
|
|
$
|
10.57
|
$
|
8.75
|
Business Environment
|
|
|
|
|
|
2019
|
2018
|
|
Nine months
ended
|
|
Q3
|
Q2
|
Q3
|
|
2019
|
2018
|
Realized Pricing
(Including realized commodity contracts)
|
|
|
|
|
|
|
Oil ($/bbl)
|
$
|
69.83
|
$
|
73.77
|
$
|
74.84
|
|
$
|
69.81
|
$
|
72.02
|
NGL ($/bbl)
|
$
|
22.78
|
$
|
24.20
|
$
|
40.05
|
|
$
|
27.82
|
$
|
37.23
|
Gas ($/mcf)
|
$
|
1.06
|
$
|
1.24
|
$
|
1.38
|
|
$
|
1.56
|
$
|
1.56
|
|
|
|
|
|
|
|
Realized Pricing
(Excluding commodity contracts)
|
|
|
|
|
|
|
Oil ($/bbl)
|
$
|
69.83
|
$
|
73.77
|
$
|
82.54
|
|
$
|
69.81
|
$
|
78.79
|
NGL ($/bbl)
|
$
|
20.85
|
$
|
22.80
|
$
|
41.76
|
|
$
|
26.33
|
$
|
42.23
|
Gas ($/mcf)
|
$
|
1.06
|
$
|
1.24
|
$
|
1.30
|
|
$
|
1.56
|
$
|
1.53
|
|
|
|
|
|
|
|
Oil Price
Benchmarks
|
|
|
|
|
|
|
West Texas
Intermediate ("WTI") (US$/bbl)
|
$
|
56.43
|
$
|
59.56
|
$
|
69.50
|
|
$
|
56.99
|
$
|
66.75
|
Edmonton Par
(C$/bbl)
|
$
|
69.48
|
$
|
73.73
|
$
|
81.92
|
|
$
|
70.31
|
$
|
78.19
|
Edmonton Par to WTI
differential (US$/bbl)
|
$
|
(3.63)
|
$
|
(4.44)
|
$
|
(6.83)
|
|
$
|
(4.26)
|
$
|
(6.00)
|
|
|
|
|
|
|
|
Natural Gas Price
Benchmarks
|
|
|
|
|
|
|
AECO gas
(Cdn$/mcf)
|
$
|
0.90
|
$
|
1.04
|
$
|
1.19
|
|
$
|
1.55
|
$
|
1.48
|
|
|
|
|
|
|
|
Foreign
Exchange
|
|
|
|
|
|
|
U.S./Canadian Dollar
Exchange
|
0.76
|
0.75
|
0.77
|
|
0.75
|
0.78
|
Operations Summary
Net petroleum and natural gas production, pricing and revenue
are summarized below:
|
|
|
|
|
|
2019
|
2018
|
|
Nine months
ended
|
|
Q3
|
Q2
|
Q3
|
|
2019
|
2018
|
|
|
|
|
|
|
|
Daily production
volumes
|
|
|
|
|
|
|
Natural gas
(mcf/d)
|
41,068
|
41,304
|
24,378
|
|
39,049
|
20,439
|
Oil (bbl/d)
|
3,627
|
4,116
|
4,853
|
|
4,020
|
3,789
|
NGL's
(bbl/d)
|
2,253
|
2,032
|
1,406
|
|
2,045
|
1,282
|
Combined (boe/d
6:1)
|
12,724
|
13,032
|
10,323
|
|
12,574
|
8,477
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
Petroleum &
natural gas sales - Gross
|
$
|
31,606
|
$
|
36,473
|
$
|
45,132
|
|
$
|
107,986
|
$
|
104,804
|
Realized gain (loss)
on commodity contract settlement
|
402
|
260
|
(3,462)
|
|
832
|
(8,553)
|
Total
sales
|
32,008
|
36,733
|
41,670
|
|
108,818
|
96,251
|
Royalty
expense
|
(2,093)
|
(2,785)
|
(4,157)
|
|
(7,881)
|
(9,642)
|
Total Revenue - Net
of royalties
|
$
|
29,915
|
$
|
33,948
|
$
|
37,513
|
|
$
|
100,937
|
$
|
86,609
|
Working Capital Summary
The following table summarizes the change in working capital
during the nine months ended September 30,
2019 and the year ended December 31,
2018:
|
|
|
|
Nine months
ended
|
Year ended
|
|
September 30,
2019
|
December 31,
2018
|
Adjusted Net Debt -
beginning of period
|
$
|
(155,882)
|
$
|
(93,533)
|
|
|
|
Funds flow from
operations
|
71,231
|
82,334
|
Additions to
property and equipment
|
(94,223)
|
(141,060)
|
Decommissioning
costs incurred
|
(578)
|
(333)
|
Additions to
E&E Assets
|
(5,243)
|
(9,773)
|
Issuance of
shares
|
31
|
6,776
|
Other
|
(1,088)
|
(293)
|
Adjusted Net
Debt - end of period
|
$
|
(185,752)
|
$
|
(155,882)
|
|
|
|
Credit facility
limit
|
$
|
225,000
|
$
|
175,000
|
Capital Spending
Capital spending is
summarized as follows:
|
|
|
|
|
2019
|
2018
|
|
Nine months
ended
|
Cash
additions
|
Q3
|
Q2
|
Q3
|
|
2019
|
2018
|
|
|
|
|
|
|
|
Land, acquisitions
and lease rentals
|
$
|
170
|
$
|
98
|
$
|
79
|
|
$
|
306
|
$
|
229
|
Drilling and
completion
|
18,194
|
8,960
|
38,265
|
|
66,063
|
84,556
|
Geological and
geophysical
|
148
|
209
|
163
|
|
594
|
502
|
Equipment
|
4,807
|
3,346
|
9,893
|
|
26,474
|
20,346
|
Other asset
additions
|
104
|
182
|
82
|
|
786
|
171
|
|
$
|
23,423
|
$
|
12,794
|
$
|
48,482
|
|
$
|
94,223
|
$
|
105,804
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploration &
evaluation assets
|
$
|
3,180
|
$
|
1,019
|
$
|
1,563
|
|
$
|
5,243
|
$
|
8,083
|
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 and
nine months ended September 30, 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.
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.