CALGARY, AB, July 28, 2021 /CNW/ - Yangarra
Resources Ltd. ("Yangarra" or the
"Company") (TSX: YGR) announces its financial and operating
results for the three and six months ended June 30, 2021.
Second Quarter Highlights
- Average production of 8,205 boe/d (46% liquids) during the
quarter, a 17% decrease from the same period in 2020
- Oil and gas sales were $28.5
million, an increase of 75% from the same period in
2020
- Funds flow from operations of $17.2
million ($0.20 per share –
basic), an increase of 121% from the same period in 2020
- Adjusted EBITDA was $19.7 million
($0.23 per share – basic)
- Net income of $7.8 million
($0.09 per share – basic,
$10.1 million before tax)
- Operating costs were $6.74/boe
(including $1.26/boe of
transportation costs)
- Field operating netbacks were $29.78/boe
- Operating netbacks, which include the impact of commodity
contracts, were $27.71/boe
- Operating margins were 73% and funds flow from operations
margins were 60%
- G&A costs of $0.85/boe
- Royalties were 4% of oil and gas revenue
- All in cash costs were $15.38/boe
- Capital expenditures were $19.5
million
- Completed its annual borrowing base review and the syndicated
senior credit facility has been confirmed at $210 million
- Adjusted net debt was $202.7
million
- Adjusted net debt to second quarter annualized funds flow from
operations was 2.94 : 1
- Retained earnings of $126
million
- Corporate LMR is 6.5 with decommissioning liabilities of
$12.5 million (discounted)
Operations Summary
The Company drilled and completed seven wells during the
quarter, including a five-well pad that was brought on production
near the end of June and two wells that were brought on-stream in
early July. Production during the quarter was negatively
impacted by completion activity on the five well pad for adjacent
wells and mid-stream maintenance disruptions downstream of
Yangarra's O'Chiese facility. As part of the Company's
disciplined approach to costs, Yangarra continues to avoid
expensive third-party takeaway options when mid-streamers shut down
for maintenance.
Yangarra's current production is approximately 10,000 boe/d with
all seven wells now onstream. For the remainder of the third
quarter, Yangarra is scheduled to drill & complete three wells
at O'Chiese and four wells at West Ferrier. The Company expects to
have these wells on production by the end of the third
quarter.
Staff Changes
Yangarra has appointed Brett
Booth to the role of Vice President, Land, replacing
Randall Faminow who is retiring
after over a 40-year highly successful career in the energy
business. Mr. Faminow has been a key part of Yangarra's business
plan of building a top tier Cardium asset in Central Alberta.
Yangarra would like to thank Mr. Faminow for his dedication over
the last nine years in helping build Yangarra.
Mr. Booth has over 12 years of land experience in all aspects of
oil and gas land work, including negotiations, acquisitions and
divestments, mergers and contracts. He was previously VP Land at
Prairie Thunder Resources, Banded Peak Energy, Petrus Resources and
prior thereto held various other land positions at Bonavista
Energy.
Corporate Budget
Yangarra Board has approved an increase in the capital budget
from $60 million to $85 million which will keep one drilling rig
fully utilized for the balance of the year.
Financial Summary
|
|
|
|
|
|
|
|
2021
|
2020
|
|
Six Months
Ended
|
|
Q2
|
Q1
|
Q2
|
|
2021
|
2020
|
Statements of
Income and Comprehensive Income
|
|
|
|
|
|
|
Petroleum &
natural gas sales
|
$
|
28,529
|
$
|
28,475
|
$
|
16,290
|
|
$
|
57,004
|
$
|
43,725
|
|
|
|
|
|
|
|
Income before
tax
|
$
|
10,090
|
$
|
11,919
|
$
|
(2,933)
|
|
$
|
22,009
|
$
|
944
|
|
|
|
|
|
|
|
Net income
|
$
|
7,753
|
$
|
9,117
|
$
|
(2,801)
|
|
$
|
16,870
|
$
|
34
|
Net income per share
- basic
|
$
|
0.09
|
$
|
0.11
|
$
|
(0.03)
|
|
$
|
0.20
|
$
|
0.00
|
Net income per share
- diluted
|
$
|
0.09
|
$
|
0.10
|
$
|
(0.03)
|
|
$
|
0.19
|
$
|
0.00
|
|
|
|
|
|
|
|
Statements of Cash
Flow
|
|
|
|
|
|
|
Funds flow from
operations
|
$
|
17,240
|
$
|
17,091
|
$
|
7,795
|
|
$
|
34,331
|
$
|
23,138
|
Funds flow from
operations per share - basic
|
$
|
0.20
|
$
|
0.20
|
$
|
0.09
|
|
$
|
0.40
|
$
|
0.27
|
Funds flow from
operations per share - diluted
|
$
|
0.19
|
$
|
0.20
|
$
|
0.09
|
|
$
|
0.39
|
$
|
0.27
|
Cash from operating
activities
|
$
|
19,367
|
$
|
12,986
|
$
|
1,606
|
|
$
|
32,353
|
$
|
17,381
|
|
|
|
|
|
|
|
Statements of
Financial Position
|
|
|
|
|
|
|
Property and
equipment
|
$
|
589,275
|
$
|
575,296
|
$
|
554,479
|
|
$
|
589,275
|
$
|
554,479
|
Total
assets
|
$
|
636,534
|
$
|
625,776
|
$
|
604,105
|
|
$
|
636,534
|
$
|
604,105
|
Working capital
(deficit) surplus
|
$
|
(6,667)
|
$
|
(1,656)
|
$
|
2,181
|
|
$
|
(6,667)
|
$
|
2,181
|
Adjusted net
debt
|
$
|
202,662
|
$
|
199,428
|
$
|
192,067
|
|
$
|
202,662
|
$
|
192,067
|
Shareholders
equity
|
$
|
330,039
|
$
|
321,784
|
$
|
306,638
|
|
$
|
330,039
|
$
|
306,638
|
|
|
|
|
|
|
|
Weighted average
number of shares - basic
|
85,637
|
85,416
|
85,380
|
|
85,527
|
85,380
|
Weighted average
number of shares - diluted
|
89,098
|
87,159
|
85,380
|
|
88,675
|
85,640
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company Netbacks ($/boe)
|
|
|
|
|
|
|
|
2021
|
2020
|
|
Six Months
Ended
|
|
Q2
|
Q1
|
Q2
|
|
2021
|
2020
|
|
|
|
|
|
|
|
Sales
price
|
$
|
38.21
|
$
|
36.22
|
$
|
18.13
|
|
$
|
37.19
|
$
|
21.83
|
Royalty
expense
|
(1.69)
|
(2.08)
|
(0.35)
|
|
(1.89)
|
(0.98)
|
Production
costs
|
(5.49)
|
(4.74)
|
(5.37)
|
|
(5.11)
|
(5.53)
|
Transportation
costs
|
(1.25)
|
(1.10)
|
(0.96)
|
|
(1.17)
|
(0.98)
|
Field operating
netback
|
29.78
|
28.30
|
11.45
|
|
29.02
|
14.34
|
Realized gain (loss)
on commodity contract settlement
|
(2.07)
|
(2.35)
|
(0.08)
|
|
(2.21)
|
0.00
|
Operating
netback
|
27.71
|
25.96
|
11.37
|
|
26.81
|
14.34
|
G&A
|
(0.85)
|
(0.67)
|
(0.66)
|
|
(0.76)
|
(0.69)
|
Cash Finance
expenses
|
(4.16)
|
(3.79)
|
(2.11)
|
|
(2.56)
|
(3.96)
|
Depletion and
depreciation
|
(8.09)
|
(8.04)
|
(8.46)
|
|
(8.07)
|
(8.41)
|
Non Cash - Finance
expenses
|
(0.79)
|
3.42
|
(1.71)
|
|
(0.04)
|
(0.05)
|
Stock-based
compensation
|
(0.45)
|
(0.28)
|
(1.68)
|
|
(0.36)
|
(1.04)
|
Unrealized gain (loss)
on financial instruments
|
0.15
|
(1.42)
|
(0.07)
|
|
(0.66)
|
0.28
|
Deferred income
tax
|
(3.13)
|
(3.56)
|
0.15
|
|
(3.35)
|
(0.45)
|
Net Income
netback
|
$
|
10.39
|
$
|
11.61
|
$
|
(3.17)
|
|
$
|
11.02
|
$
|
0.01
|
|
|
|
|
|
|
|
Business Environment
|
|
|
|
|
|
|
|
2021
|
2020
|
|
Six Months
Ended
|
|
Q2
|
Q1
|
Q2
|
|
2021
|
2020
|
Realized Pricing
(Including realized commodity contracts)
|
|
|
|
|
|
|
Oil ($/bbl)
|
$
|
67.01
|
$
|
60.80
|
$
|
31.31
|
|
$
|
64.29
|
$
|
44.36
|
NGL ($/bbl)
|
$
|
38.69
|
$
|
38.48
|
$
|
13.82
|
|
$
|
38.59
|
$
|
15.33
|
Gas ($/mcf)
|
$
|
3.44
|
$
|
3.07
|
$
|
2.24
|
|
$
|
3.20
|
$
|
2.10
|
|
|
|
|
|
|
|
Realized Pricing
(Excluding commodity contracts)
|
|
|
|
|
|
|
Oil ($/bbl)
|
$
|
75.55
|
$
|
68.33
|
$
|
31.31
|
|
$
|
72.30
|
$
|
44.28
|
NGL ($/bbl)
|
$
|
38.53
|
$
|
38.60
|
$
|
13.98
|
|
$
|
38.57
|
$
|
15.38
|
Gas ($/mcf)
|
$
|
3.42
|
$
|
3.14
|
$
|
2.25
|
|
$
|
3.23
|
$
|
2.11
|
|
|
|
|
|
|
|
Oil Price
Benchmarks
|
|
|
|
|
|
|
West Texas
Intermediate ("WTI") (US$/bbl)
|
$
|
66.09
|
$
|
57.91
|
$
|
28.00
|
|
$
|
61.94
|
$
|
36.82
|
Edmonton Par
($/bbl)
|
$
|
75.26
|
$
|
68.79
|
$
|
28.67
|
|
$
|
72.03
|
$
|
40.06
|
Edmonton Par to WTI
differential (US$/bbl)
|
$
|
(4.81)
|
$
|
(3.57)
|
$
|
(7.31)
|
|
$
|
(4.19)
|
$
|
(7.47)
|
|
|
|
|
|
|
|
Natural Gas Price
Benchmarks
|
|
|
|
|
|
|
|
AECO gas
($/mcf)
|
$
|
3.14
|
$
|
2.99
|
$
|
1.89
|
|
$
|
2.95
|
$
|
1.91
|
|
|
|
|
|
|
|
Foreign
Exchange
|
|
|
|
|
|
|
Canadian Dollar/U.S.
Exchange
|
0.81
|
0.79
|
0.72
|
|
0.80
|
0.73
|
|
|
|
|
|
|
|
Operations Summary
Net petroleum and natural gas production, pricing and revenue
are summarized below:
|
|
|
|
|
|
|
|
2021
|
2020
|
|
Six Months
Ended
|
|
Q2
|
Q1
|
Q2
|
|
2021
|
2020
|
|
|
|
|
|
|
|
Daily production
volumes
|
|
|
|
|
|
|
Natural gas
(mcf/d)
|
26,558
|
28,022
|
33,214
|
|
27,286
|
35,962
|
Oil (bbl/d)
|
2,088
|
2,414
|
2,513
|
|
2,240
|
3,029
|
NGL's
(bbl/d)
|
1,691
|
1,652
|
1,827
|
|
1,682
|
1,976
|
Combined (boe/d
6:1)
|
8,205
|
8,736
|
9,875
|
|
8,469
|
10,999
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
Petroleum &
natural gas sales - Gross
|
$
|
28,529
|
$
|
28,475
|
$
|
16,290
|
|
$
|
57,004
|
$
|
43,725
|
Realized gain (loss)
on commodity contract settlement
|
(1,545)
|
(1,845)
|
(69)
|
|
(3,390)
|
(16)
|
Total
sales
|
26,984
|
26,630
|
16,221
|
|
53,614
|
43,709
|
Royalty
expense
|
(1,263)
|
(1,633)
|
(314)
|
|
(2,896)
|
(1,954)
|
Total Revenue - Net
of royalties
|
$
|
25,721
|
$
|
24,997
|
$
|
15,907
|
|
$
|
50,718
|
$
|
41,755
|
|
|
|
|
|
|
|
Working Capital Summary
The following table summarizes the change in adjusted net debt
during the six months ended June 30,
2021 and year December 31,
2020:
|
|
|
|
Six months
ended
|
Year ended
|
|
June 30,
2021
|
December 31,
2020
|
Adjusted net debt -
beginning of period
|
$
|
(197,414)
|
$
|
(187,711)
|
|
|
|
Funds flow from
operations
|
34,331
|
45,524
|
Additions to
property and equipment
|
(38,055)
|
(51,093)
|
Decommissioning
costs incurred
|
(344)
|
(389)
|
Additions to
E&E Assets
|
(134)
|
(426)
|
Issuance of
shares
|
217
|
-
|
Other
|
(1,263)
|
(3,319)
|
Adjusted net
debt - end of period
|
$
|
(202,662)
|
$
|
(197,414)
|
|
|
|
Credit facility
limit
|
$
|
210,000
|
$
|
210,000
|
Capital Spending
Capital spending is summarized as follows:
|
|
|
|
|
|
|
|
2021
|
2020
|
|
Six Months
Ended
|
Cash
additions
|
Q2
|
Q1
|
Q2
|
|
2021
|
2020
|
|
|
|
|
|
|
|
Land, acquisitions
and lease rentals
|
$
|
(63)
|
$
|
(121)
|
$
|
36
|
|
$
|
(184)
|
$
|
140
|
Drilling and
completion
|
17,621
|
16,527
|
372
|
|
34,149
|
22,935
|
Geological and
geophysical
|
121
|
271
|
145
|
|
391
|
316
|
Equipment
|
1,616
|
1,770
|
273
|
|
3,386
|
2,241
|
Other asset
additions
|
173
|
140
|
258
|
|
312
|
459
|
|
$
|
19,468
|
$
|
18,587
|
$
|
1,084
|
|
$
|
38,055
|
$
|
26,092
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploration &
evaluation assets
|
$
|
134
|
$
|
-
|
$
|
-
|
|
$
|
134
|
$
|
426
|
Quarter End Disclosure
The Company's financial statements, notes to the financial
statements and management's discussion and analysis will be filed
on SEDAR (www.sedar.com) and are available on the Company's website
(www.yangarra.ca).
Forward looking information
This press release contains forward-looking statements and
forward-looking information (collectively "forward-looking
information") within the meaning of applicable securities laws
relating to the Company's plans and other aspects of our
anticipated future operations, management focus, strategies,
financial, operating and production results and business
opportunities. Forward-looking information typically uses words
such as "anticipate", "believe", "continue", "sustain", "project",
"expect", "forecast", "budget", "goal", "guidance", "plan",
"objective", "strategy", "target", "intend" or similar words
suggesting future outcomes, statements that actions, events or
conditions "may", "would", "could" or "will" be taken or occur in
the future, including statements about our strategy, plans,
objectives, priorities and focus, growth plans; our estimations on
future costs; volatility of commodity prices, and currency
fluctuations.
The forward-looking information is based on certain key
expectations and assumptions made by our management, including
expectations and assumptions concerning prevailing commodity
prices, exchange rates, interest rates, applicable royalty rates
and tax laws; future production rates and estimates of operating
costs; performance of existing and future wells; reserve volumes;
anticipated timing and results of capital expenditures; the success
obtained in drilling new wells; the sufficiency of budgeted capital
expenditures in carrying out planned activities; the timing,
location and extent of future drilling operations; the state of the
economy and the exploration and production business; results of
operations; performance; business prospects and opportunities; the
availability and cost of financing, labour and services; the impact
of increasing competition; ability to market oil and natural gas
successfully and our ability to access capital.
Although we believe that the expectations and assumptions on
which such forward-looking information is based are reasonable,
undue reliance should not be placed on the forward-looking
information because Yangarra can give no assurance that they will
prove to be correct. Since forward-looking information addresses
future events and conditions, by its very nature they involve
inherent risks and uncertainties. Our actual results, performance
or achievement could differ materially from those expressed in, or
implied by, the forward-looking information and, accordingly, no
assurance can be given that any of the events anticipated by the
forward-looking information will transpire or occur, or if any of
them do so, what benefits that we will derive therefrom. Management
has included the above summary of assumptions and risks related to
forward-looking information provided in this press release in order
to provide security holders with a more complete perspective on our
future operations and such information may not be appropriate for
other purposes.
Readers are cautioned that the foregoing lists of factors are
not exhaustive. Additional information on these and other factors
that could affect our operations or financial results are included
in reports on file with applicable securities regulatory
authorities and may be accessed through the SEDAR website
(www.sedar.com).
These forward-looking statements are made as of the date of
this press release and we disclaim any intent or obligation to
update publicly any forward-looking information, whether as a
result of new information, future events or results or otherwise,
other than 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 six-month period ended June 30,
2021 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.