CALGARY, AB, Nov. 3, 2021 /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, 2021.
Third Quarter Highlights
- Average production of 8,710 BOE/D (46% liquids) during the
quarter, a 4% increase from the same period in 2020
- Sales were $35.9 million, an
increase of 90% from the same period in 2020
- Funds flow from operations of $24.1
million ($0.28 per share –
basic), an increase of 140% from the same period in 2020
- Adjusted EBITDA was $26.6 million
($0.28 per share – basic)
- Net income of $13.5 million
($0.16 per share – basic,
$17.7 million before tax)
- Operating costs were $6.69/BOE
(including $0.98/BOE of
transportation costs)
- Field operating netbacks were $34.92/BOE
- Operating netbacks, which include the impact of commodity
contracts, were $34.58/BOE
- Operating margins were 77% and funds flow from operations
margins were 66%
- G&A costs were $0.95/BOE
- Royalties were 7% of revenue
- All in cash costs were $14.69/BOE
- Capital expenditures were $23.5
million
- Adjusted net debt was $201.8
million
- Adjusted net debt to third quarter annualized funds flow from
operations was 2.1: 1
- Retained earnings of $139.1
million
- Corporate LMR is 6.4 with decommissioning liabilities of
$12.7 million (discounted)
Strategic Update
Yangarra remains committed to being a low-cost producer in
Central Alberta with a focus on
return on capital employed by generating positive net income. The
Company strategically built out the oilfield services group ("OFS")
while equipment was favourably priced and quality operations staff
were available. The internally owned OFS group includes 50
staff, lease and pipeline construction, fluid hauling, rig-move,
pressure trucks, vac/combo trucks, crew trucks and trailers,
wireline, proprietary water completion access, three mechanics and
a fully equipped service facility. The OFS group will insulate
against inflationary pressures as oilfield activity ramps up and
will mitigate wait times for scarce services.
Also, because of improving drilling rig efficiencies, the
Company will only require one fully utilized rig to drill 30 gross
wells a year.
With prevailing commodity prices, Yangarra expects to generate
material free cash flow in 2022 and once the Company reaches a 1.0x
debt to cash flow, it expects to return a portion of the free cash
flow to shareholders via a dividend policy.
Operations Summary
Yangarra drilled seven wells and completed seven wells during
the third quarter and has continued to execute on the full-year
capital program with well costs averaging at or below previous
guidance. Q3 2021 production volumes were negatively impacted
by below type-curve initial flush performance at the Company's
Chedderville and O'Cheise pad sites. The wells took longer
than anticipated to clean up during flowback, however, the initial
underperformance is offset by the wells leveling out at a lower
decline rate relative to type curve.
In addition, several high-volume wells were shut in during the
quarter due to access issues caused by the drilling rig being on
location and workovers on recent wells were delayed while Yangarra
staff prioritized ongoing completions.
Four additional wells were recently completed at West Ferrier as
a follow-up to two confidential wells that were brought on in the
summer. These wells did not have the same low initial flush issues
during cleanup and as a result, Yangarra remains confident with the
corporate type-curve.
The Company has implemented initiatives on a sample of existing
wells to flatten declines, improve production profiles and maximize
recoveries. Initial results have been very positive and Yangarra
expects these initiatives can be applied through-out the inventory
of producing wells at a low-cost with short paybacks.
During the fourth quarter of 2021, the Company will drill and
complete a four well pad in the Chedderville area and then begin
drilling a fourteen well pad in West Ferrier, with completions
scheduled for early 2022.
Financial Summary
|
|
|
|
|
|
|
|
2021
|
2020
|
|
Nine Months
Ended
|
|
Q3
|
Q2
|
Q3
|
|
2021
|
2020
|
Statements of
Income and Comprehensive Income
|
|
|
|
|
|
|
Petroleum &
natural gas sales
|
$
|
35,880
|
$
|
28,529
|
$
|
18,910
|
|
$
|
92,884
|
$
|
62,635
|
|
|
|
|
|
|
|
Income before
tax
|
$
|
17,657
|
$
|
10,090
|
$
|
691
|
|
$
|
39,666
|
$
|
1,635
|
|
|
|
|
|
|
|
Net income
|
$
|
13,500
|
$
|
7,753
|
$
|
537
|
|
$
|
30,370
|
$
|
571
|
Net income per share
- basic
|
$
|
0.16
|
$
|
0.09
|
$
|
0.01
|
|
$
|
0.35
|
$
|
0.01
|
Net income per share
- diluted
|
$
|
0.15
|
$
|
0.09
|
$
|
0.01
|
|
$
|
0.34
|
$
|
0.01
|
|
|
|
|
|
|
|
Statements of Cash
Flow
|
|
|
|
|
|
|
Funds flow from
operations
|
$
|
24,126
|
$
|
17,240
|
$
|
10,038
|
|
$
|
58,457
|
$
|
33,064
|
Funds flow from
operations per share - basic
|
$
|
0.28
|
$
|
0.20
|
$
|
0.12
|
|
$
|
0.68
|
$
|
0.39
|
Funds flow from
operations per share - diluted
|
$
|
0.27
|
$
|
0.19
|
$
|
0.12
|
|
$
|
0.66
|
$
|
0.39
|
Cash from operating
activities
|
$
|
22,078
|
$
|
19,367
|
$
|
7,411
|
|
$
|
54,431
|
$
|
24,680
|
|
|
|
|
|
|
|
Statements of
Financial Position
|
|
|
|
|
|
|
Property and
equipment
|
$
|
606,945
|
$
|
589,275
|
$
|
557,827
|
|
$
|
606,945
|
$
|
557,827
|
Total
assets
|
$
|
656,849
|
$
|
636,534
|
$
|
603,817
|
|
$
|
656,849
|
$
|
603,817
|
Working capital
(deficit) surplus
|
$
|
5,946)
|
$
|
6,667)
|
$
|
6,622)
|
|
$
|
(5,946)
|
$
|
6,622)
|
Adjusted net
debt
|
$
|
201,811
|
$
|
202,662
|
$
|
193,878
|
|
$
|
201,811
|
$
|
193,878
|
Shareholders
equity
|
$
|
344,397
|
$
|
330,039
|
$
|
307,322
|
|
$
|
344,397
|
$
|
307,322
|
|
|
|
|
|
|
|
Weighted average
number of shares - basic
|
86,051
|
85,637
|
85,380
|
|
85,704
|
85,380
|
Weighted average
number of shares - diluted
|
89,802
|
89,098
|
85,677
|
|
88,916
|
85,758
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company Netbacks ($/BOE)
|
|
|
|
|
|
|
|
2021
|
2020
|
|
Nine Months
Ended
|
|
Q3
|
Q2
|
Q3
|
|
2021
|
2020
|
|
|
|
|
|
|
|
Sales
price
|
$
|
44.78
|
$
|
38.21
|
$
|
24.44
|
|
$
|
39.79
|
$
|
22.57
|
Royalty
expense
|
(3.17)
|
(1.69)
|
(1.26)
|
|
(2.33)
|
(1.06)
|
Production costs
|
(5.71)
|
(5.49)
|
(4.83)
|
|
(5.31)
|
(5.34)
|
Transportation costs
|
(0.98)
|
(1.25)
|
(1.28)
|
|
(1.11)
|
(1.06)
|
Field operating
netback
|
34.92
|
29.78
|
17.08
|
|
31.04
|
15.11
|
Realized gain
(loss) on commodity contract settlement
|
(0.33)
|
(2.07)
|
(0.41)
|
|
(1.57)
|
(0.12)
|
Operating
netback
|
34.58
|
27.71
|
16.67
|
|
29.48
|
14.99
|
G&A
|
(0.95)
|
(0.85)
|
(0.28)
|
|
(0.83)
|
(0.58)
|
Cash
Finance expenses
|
(3.96)
|
(4.16)
|
(3.41)
|
|
(2.81)
|
(4.35)
|
Depletion and depreciation
|
(7.62)
|
(8.09)
|
(8.60)
|
|
(7.91)
|
(8.46)
|
Non Cash
- Finance expenses
|
0.60
|
(0.79)
|
(1.98)
|
|
(0.05)
|
(0.05)
|
Stock-based compensation
|
(0.49)
|
(0.45)
|
(0.13)
|
|
(0.41)
|
(0.78)
|
Unrealized gain (loss) on financial instruments
|
(0.12)
|
0.15
|
(1.37)
|
|
(0.47)
|
(0.18)
|
Deferred
income tax
|
(5.19)
|
(3.13)
|
(0.20)
|
|
(3.98)
|
(0.38)
|
Net Income
netback
|
$
|
16.85
|
$
|
10.39
|
$
|
0.69
|
|
$
|
13.02
|
$
|
0.21
|
|
|
|
|
|
|
|
Business Environment
|
|
|
|
|
|
|
|
2021
|
2020
|
|
Nine Months
Ended
|
|
Q3
|
Q2
|
Q3
|
|
2021
|
2020
|
Realized Pricing
(Including realized commodity contracts)
|
|
|
|
|
|
|
Light
Crude Oil ($/bbl)
|
$
|
84.78
|
$
|
67.01
|
$
|
49.49
|
|
$
|
71.26
|
$
|
45.71
|
NGL
($/bbl)
|
$
|
51.13
|
$
|
38.69
|
$
|
19.01
|
|
$
|
42.97
|
$
|
16.45
|
Natural
Gas ($/mcf)
|
$
|
3.71
|
$
|
3.44
|
$
|
2.47
|
|
$
|
3.37
|
$
|
2.17
|
|
|
|
|
|
|
|
Realized Pricing
(Excluding commodity contracts)
|
|
|
|
|
|
|
Light
Crude Oil ($/bbl)
|
$
|
84.90
|
$
|
75.55
|
$
|
49.49
|
|
$
|
76.58
|
$
|
45.65
|
NGL
($/bbl)
|
$
|
51.06
|
$
|
38.53
|
$
|
18.96
|
|
$
|
42.94
|
$
|
16.47
|
Natural
Gas ($/mcf)
|
$
|
3.81
|
$
|
3.42
|
$
|
2.47
|
|
$
|
3.43
|
$
|
2.21
|
|
|
|
|
|
|
|
Oil Price
Benchmarks
|
|
|
|
|
|
|
West
Texas Intermediate ("WTI") (US$/bbl)
|
$
|
70.62
|
$
|
66.09
|
$
|
40.89
|
|
$
|
64.83
|
$
|
38.35
|
Edmonton
Par ($/bbl)
|
$
|
81.39
|
$
|
75.26
|
$
|
48.66
|
|
$
|
75.83
|
$
|
42.92
|
Edmonton
Par to WTI differential (US$/bbl)
|
$
|
(6.02)
|
$
|
(4.81)
|
$
|
(4.35)
|
|
$
|
(4.24)
|
$
|
(6.50)
|
|
|
|
|
|
|
|
Natural Gas Price
Benchmarks
|
|
|
|
|
|
|
AECO gas
($/mcf)
|
$
|
3.41
|
$
|
3.14
|
$
|
2.28
|
|
$
|
3.18
|
$
|
2.07
|
|
|
|
|
|
|
|
Foreign
Exchange
|
|
|
|
|
|
|
Canadian
Dollar/U.S. Exchange
|
0.79
|
0.81
|
0.75
|
|
0.80
|
0.74
|
|
|
|
|
|
|
|
Operations Summary
Net petroleum and natural gas production, pricing and revenue
are summarized below:
|
|
|
|
|
|
|
|
2021
|
2020
|
|
Nine Months
Ended
|
|
Q3
|
Q2
|
Q3
|
|
2021
|
2020
|
|
|
|
|
|
|
|
Daily production
volumes
|
|
|
|
|
|
|
Natural
Gas (mcf/d)
|
27,965
|
26,558
|
27,445
|
|
27,515
|
33,103
|
Light
Crude Oil (bbl/d)
|
2,274
|
2,088
|
2,135
|
|
2,250
|
2,728
|
NGL's
(bbl/d)
|
1,776
|
1,691
|
1,700
|
|
1,715
|
1,884
|
Combined
(BOE/d 6:1)
|
8,710
|
8,205
|
8,409
|
|
8,550
|
10,129
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
Petroleum &
natural gas sales - Gross
|
$
|
35,880
|
$
|
28,529
|
$
|
18,910
|
|
$
|
92,884
|
$
|
62,635
|
Realized gain (loss)
on commodity contract settlement
|
(267)
|
(1,545)
|
(319)
|
|
(3,657)
|
(335)
|
Total
sales
|
35,613
|
26,984
|
18,591
|
|
89,227
|
62,300
|
Royalty
expense
|
(2,539)
|
(1,263)
|
(976)
|
|
(5,435)
|
(2,930)
|
Total Revenue - Net
of royalties
|
$
|
33,074
|
$
|
25,721
|
$
|
17,615
|
|
$
|
83,792
|
$
|
59,370
|
|
|
|
|
|
|
|
Working Capital Summary
The following table summarizes the change in adjusted net debt
during the three and nine months ended September 30, 2021:
|
|
|
|
|
Three months
ended
|
Nine months
ended
|
Year ended
|
|
September 30,
2021
|
September 30,
2021
|
December 31,
2020
|
Adjusted net debt -
beginning of period
|
$
|
(202,662)
|
$
|
(197,414)
|
$
|
(187,711)
|
|
|
|
|
Funds flow from
operations
|
24,126
|
58,457
|
45,524
|
Additions to
property and equipment
|
(23,474)
|
(61,529)
|
(51,093)
|
Decommissioning
costs incurred
|
(121)
|
(465)
|
(389)
|
Additions to
E&E Assets
|
(41)
|
(175)
|
(426)
|
Issuance of
shares
|
406
|
623
|
-
|
Other
|
(45)
|
(1,308)
|
(3,319)
|
Adjusted net
debt - end of period
|
$
|
(201,811)
|
$
|
(201,811)
|
$
|
(197,414)
|
|
|
|
|
|
|
|
|
Credit facility
limit
|
$
|
210,000
|
$
|
210,000
|
$
|
210,000
|
Capital Spending
Capital spending is summarized as follows:
|
|
|
|
|
|
|
|
2021
|
2020
|
|
Nine Months
Ended
|
Cash
additions
|
Q3
|
Q2
|
Q3
|
|
2021
|
2020
|
|
|
|
|
|
|
|
Land, acquisitions
and lease rentals
|
$
|
327
|
$
|
(63)
|
$
|
258
|
|
$
|
143
|
$
|
398
|
Drilling and
completion
|
19,847
|
17,621
|
8,036
|
|
53,997
|
30,971
|
Geological and
geophysical
|
42
|
121
|
190
|
|
433
|
506
|
Equipment
|
3,136
|
1,616
|
1,232
|
|
6,522
|
3,473
|
Other asset
additions
|
122
|
173
|
281
|
|
434
|
740
|
|
$
|
23,474
|
$
|
19,468
|
$
|
9,997
|
|
$
|
61,529
|
$
|
36,089
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploration &
evaluation assets
|
$
|
41
|
$
|
134
|
$
|
-
|
|
$
|
175
|
$
|
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 light crude 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 light crude 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,
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.