CALGARY, AB, April 27, 2022 /CNW/ - Yangarra
Resources Ltd. ("Yangarra" or the
"Company") (TSX: YGR) announces its financial and operating
results for the three months ended March 31,
2022.
During the first quarter of 2022, Yangarra generated funds flow
from operations of $39.8 million
($0.46 per basic share), while
generating net income of $22.7
million ($0.26 per basic
share). By maintaining a disciplined capital program and only
spending $21.3 million, the Company
was able to reduce adjusted net debt by $18.3 million. The Company generated $20.20/boe of free funds flow. Yangarra expects
to maintain its previously guided capital budget for the remainder
of the year and at prevailing commodity prices, adjusted net debt
should continue to improve on a quarterly basis.
First Quarter Highlights
- Funds flow from operations of $39.8
million ($0.46 per share –
basic), an increase of 133% from the same period in 2021
- $18.3 million of adjusted net
debt was repaid during first quarter
- Oil and gas sales were $51.4
million, an increase of 81% from the same period in 2021
- Adjusted EBITDA (which excludes changes in derivative financial
instruments) was $42.0 million
($0.48 per share - basic)
- Net income of $22.7 million
($0.26 per share – basic,
$29.6 million before tax), an
increase of 149% from the same period in 2021
- Average production of 10,044 boe/d (44% liquids) during the
quarter, a 15% increase from the same period in 2021
- Operating costs were $6.39/boe
(including $1.24/boe of
transportation costs)
- Field operating netbacks were $47.62/boe
- Operating netbacks, which include the impact of commodity
contracts, were $47.63/boe
- Operating margins were 84% and funds flow from operations
margins were 77%
- G&A costs of $1.00/boe
- Royalties were 5% of oil and gas revenue
- All in cash costs were $12.58/boe
- Capital expenditures were $21.3
million
- Adjusted net debt (which excludes the current derivative
financial instruments) was $178.5
million
- Adjusted net debt to first quarter annualized funds flow from
operations was 1.1 : 1
- Retained earnings of $181.4
million
- Decommissioning liabilities of $13.5
million (discounted)
Operations Update
The Company has kept one rig drilling since commodity prices
rebounded, drilling 350 days during 2021 and all of Q1 2022.
This continuous drilling program provides maximum
efficiency and allows for significant cost reductions. In addition,
drilling on multi-well pad sites will typically allow the Company
to drill right through breakup.
The production declines that were experienced during COVID have
now been reversed, cashflow exceeds capital spending and the
Company is now positioned to reduce debt and ultimately return
capital to shareholders.
Yangarra drilled 7 (6.5 net) wells and completed 10 (7.0 net)
wells during the first quarter of 2022. The Company performed
an optimization program in 2021, replacing pump-jacks with cheaper
and more efficient plunger lifts and performed chemical
stimulations. The optimization program resulted in higher
production from existing wells, lower decline profiles and reduced
operating costs. Yangarra is now expanding the optimization
program to all existing wells. This program is expected to
substantially reduce declines on legacy wells during 2022.
Production for the first quarter 2022 was negatively impacted by
a force majeure outage at a third-party gas processing plant.
The third-party outage resulted in production being reduced by
approximately 1,500 boe/d in March or by approximately 500 boe/d
for the quarter. This production was back online as of
April 1, 2022.
As activity increases in Western
Canada, cost inflation on services and materials is becoming
more prevalent. The internal OFS group has helped mitigate the
impact of these inflationary pressures. The Company's established,
long-term relationships with drilling and completions partners and
continuous operations has limited the impact of service price
increases.
Staffing Update
Gurdeep Gill has been appointed
President of the Company; Jim
Evaskevich will retain the title of Chief Executive Officer.
The management committee structure remains in place and the title
changes reflect the evolution of duties within the
organization.
ESG
Yangarra continues to reduce the impact of non-producing wells
on the overall valuation of the Company and has $1.1 million of expenditures remaining to
completely abandon and reclaim all standing wells in the Company.
As at March 31, 2022, Yangarra had
210 net producing wells and 16 net non-producing wells.
Yangarra is targeting a 40% reduction in methane emissions and a
20% reduction in C02e in emissions for 2022 over levels measured in
2020. Yangarra has enacted several programs to reduce pneumatic
devices, convert high-bleed pneumatics to low-bleed pneumatics,
install vapour recovery units on large emulsion facility tank
farms, install instrument air where electrical power is available
and install incinerators for tank vents where vapour recovery units
are not economical.
The Company continues to reduce flaring by moving to
pad-drilling and pre-building pipeline to pad sites. A direct
benefit of this process is Yangarra can now use company-produced
natural gas to power the drilling rig and frack spread via bi-fuel.
This will allow for lower overall emissions by reducing the use of
diesel fuel.
Annual General Meeting of Shareholders
The Company's Annual General Meeting of Shareholders is
scheduled for 10:00 AM on Thursday April 28,
2022 in the Tillyard Management Conference Centre, Main
Floor, 715 5th Avenue SW, Calgary,
AB.
Financial Summary
|
2022
|
2021
|
|
Q1
|
Q4
|
Q1
|
Statements of Income
and Comprehensive Income
|
|
|
|
Petroleum & natural
gas sales
|
$
|
51,428
|
$
|
47,405
|
$
|
28,475
|
|
|
|
|
Income before
tax
|
$
|
29,588
|
$
|
25,547
|
$
|
11,919
|
|
|
|
|
Net income
|
$
|
22,720
|
$
|
19,644
|
$
|
9,117
|
Net income per share -
basic
|
$
|
0.26
|
$
|
0.23
|
$
|
0.11
|
Net income per share -
diluted
|
$
|
0.25
|
$
|
0.22
|
$
|
0.10
|
|
|
|
|
Statements of Cash
Flow
|
|
|
|
Funds flow from
operations
|
$
|
39,758
|
$
|
32,425
|
$
|
17,091
|
Funds flow from
operations per share - basic
|
$
|
0.46
|
$
|
0.38
|
$
|
0.20
|
Funds flow from
operations per share - diluted
|
$
|
0.43
|
$
|
0.36
|
$
|
0.20
|
Cash from operating
activities
|
$
|
32,232
|
$
|
36,835
|
$
|
12,986
|
|
March 31,
2022
|
December 31,
2021
|
Statements of
Financial Position
|
|
|
Property and
equipment
|
$
|
640,305
|
$
|
627,948
|
Total assets
|
$
|
700,255
|
$
|
683,469
|
Working capital
(deficit) surplus
|
$
|
8,677
|
$
|
(3,729)
|
Adjusted net
debt
|
$
|
178,538
|
$
|
196,794
|
Shareholders
equity
|
$
|
387,981
|
$
|
364,959
|
|
|
|
Weighted average number
of shares - basic
|
86,671
|
86,449
|
Weighted average number
of shares - diluted
|
91,434
|
90,636
|
Company Netbacks ($/boe)
|
2022
|
2021
|
|
Q1
|
Q4
|
Q1
|
|
|
|
|
Sales price
|
$
|
56.89
|
$
|
51.22
|
$
|
36.22
|
Royalty
expense
|
(2.88)
|
(3.55)
|
(2.08)
|
Production
costs
|
(5.15)
|
(6.32)
|
(4.74)
|
Transportation costs
|
(1.24)
|
(1.09)
|
(1.10)
|
Field operating
netback
|
47.62
|
40.26
|
28.30
|
Realized gain
(loss) on commodity contract settlement
|
0.01
|
(0.94)
|
(2.35)
|
Operating
netback
|
47.63
|
39.32
|
25.95
|
G&A
|
(1.00)
|
(1.09)
|
(0.67)
|
Cash
Finance expenses
|
(2.32)
|
(3.53)
|
(3.79)
|
Depletion
and depreciation
|
(9.52)
|
(9.42)
|
(8.04)
|
Non Cash -
Finance expenses
|
(0.46)
|
1.67
|
3.42
|
Stock-based compensation
|
(0.17)
|
(0.40)
|
(0.28)
|
Unrealized
gain (loss) on financial instruments
|
(1.43)
|
1.04
|
(1.42)
|
Deferred
income tax
|
(7.60)
|
(6.38)
|
(3.56)
|
Net Income
netback
|
$
|
25.13
|
$
|
21.21
|
$
|
11.61
|
Business Environment
|
2022
|
2021
|
|
Q1
|
Q4
|
Q1
|
Realized Pricing
(Including realized commodity contracts)
|
|
|
|
Light
Crude Oil ($/bbl)
|
$
|
108.88
|
$
|
89.49
|
$
|
60.80
|
NGL
($/bbl)
|
$
|
69.16
|
$
|
51.54
|
$
|
38.48
|
Natural
Gas ($/mcf)
|
$
|
4.80
|
$
|
4.67
|
$
|
3.07
|
|
|
|
|
Realized Pricing
(Excluding commodity contracts)
|
|
|
|
Light
Crude Oil ($/bbl)
|
$
|
108.88
|
$
|
89.49
|
$
|
68.33
|
NGL
($/bbl)
|
$
|
69.09
|
$
|
51.61
|
$
|
38.60
|
Natural
Gas ($/mcf)
|
$
|
4.80
|
$
|
4.95
|
$
|
3.14
|
|
|
|
|
Oil Price
Benchmarks
|
|
|
|
West Texas
Intermediate ("WTI") (US$/bbl)
|
$
|
94.37
|
$
|
77.45
|
$
|
57.91
|
Edmonton
Par ($/bbl)
|
$
|
113.22
|
$
|
91.70
|
$
|
68.79
|
Edmonton
Par to WTI differential (US$/bbl)
|
$
|
(4.97)
|
$
|
(4.67)
|
$
|
(3.57)
|
|
|
|
|
Natural Gas Price
Benchmarks
|
|
|
|
AECO gas
($/mcf)
|
$
|
4.48
|
$
|
4.41
|
$
|
2.99
|
|
|
|
|
Foreign
Exchange
|
|
|
|
Canadian
Dollar/U.S. Exchange
|
0.79
|
0.79
|
0.79
|
Operations Summary
Net petroleum and natural gas production, pricing and revenue
are summarized below:
|
2022
|
2021
|
|
Q1
|
Q4
|
Q1
|
|
|
|
|
Daily production
volumes
|
|
|
|
Natural
Gas (mcf/d)
|
33,687
|
33,774
|
28,022
|
Light
Crude Oil (bbl/d)
|
2,606
|
2,744
|
2,414
|
NGL's
(bbl/d)
|
1,824
|
1,687
|
1,652
|
Combined
(BOE/d 6:1)
|
10,044
|
10,060
|
8,736
|
|
|
|
|
Revenue
|
|
|
|
Petroleum & natural
gas sales - Gross
|
$
|
51,428
|
$
|
47,405
|
$
|
28,475
|
Realized gain (loss) on
commodity contract settlement
|
11
|
(872)
|
(1,845)
|
Total sales
|
51,439
|
46,533
|
26,630
|
Royalty
expense
|
(2,605)
|
(3,287)
|
(1,633)
|
Total Revenue - Net of
royalties
|
$
|
48,834
|
$
|
43,246
|
$
|
24,997
|
Working Capital Summary
The following table summarizes the change in adjusted net debt
during the three months ended March 31,
2022 and year December 31,
2021:
|
Three months
ended
|
Year ended
|
|
March 31,
2022
|
December 31,
2021
|
Adjusted net debt -
beginning of period
|
$
|
(196,794)
|
$
|
(197,414)
|
|
|
|
Funds flow from
operations
|
39,758
|
90,921
|
Additions to
property and equipment
|
(21,266)
|
(88,153)
|
Decommissioning
costs incurred
|
-
|
(881)
|
Additions to
E&E Assets
|
(74)
|
(387)
|
Issuance of
shares
|
122
|
1,132
|
Other
|
(283)
|
(2,012)
|
Adjusted net debt
- end of period
|
$
|
(178,537)
|
$
|
(196,794)
|
|
|
|
|
|
|
Credit facility
limit
|
$
|
210,000
|
$
|
210,000
|
Capital Spending
Capital spending is summarized as follows:
|
2022
|
2021
|
Cash
additions
|
Q1
|
Q4
|
Q1
|
|
|
|
|
Land, acquisitions and
lease rentals
|
$
|
161
|
$
|
(89)
|
$
|
(121)
|
Drilling and
completion
|
18,339
|
23,994
|
16,527
|
Geological and
geophysical
|
123
|
114
|
271
|
Equipment
|
2,452
|
2,349
|
1,770
|
Other asset
additions
|
191
|
255
|
140
|
|
$
|
21,266
|
$
|
26,623
|
$
|
18,587
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploration &
evaluation assets
|
$
|
74
|
$
|
212
|
$
|
-
|
Quarter End Disclosure
The Company's March 31, 2022
unaudited condensed interim consolidated 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).
Oil and Gas Advisories
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.
All reserve references in this press release are "Company
share gross reserves". Company share gross reserves are the
Company's total working interest reserves (operating or
non-operating) before the deduction of any royalty obligation s but
including royalty interests payable the Company. It should not be
assumed that the present worth of estimated future cash flow
presented in the tables above represents the fair market value of
the reserves. There is no assurance that the forecast prices and
costs assumptions will be attained, and variances could be
material. The recovery and reserve estimates of Yangarra's crude
oil, natural gas liquids and natural gas reserves provided herein
are estimates only and there is no guarantee that the estimated
reserves will be recovered. Actual crude oil, natural gas and
natural gas liquids reserves may be greater than or less than the
estimates provided herein.
This press release contains metrics commonly used in the oil
and natural gas industry which have been prepared by management,
such as "recycle ratio", "operating netback", "finding and
development costs", "reserve life index" and "net asset value".
These terms do not have a standardized meaning and may not be
comparable to similar measures presented by other companies and,
therefore, should not be used to make such comparisons.
Management uses these oil and gas metrics for its own
performance measurements and to provide shareholders with measures
to compare Yangarra's operations over time. Readers are cautioned
that the information provided by these metrics, or that can be
derived from metrics presented in this press release, should not be
relied upon for investment or other purposes.
All amounts in this news release are stated in Canadian
dollars unless otherwise specified.
Non-IFRS 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", and "adjusted net debt".
These measures do not have standardized meanings prescribed by
International Financial Reporting Standards ("IFRS") 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 IFRS, 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.
Yangarra uses adjusted net debt as a measure to assess its
financial position. Adjusted 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 and depreciation, amortization
("Adjusted EBITDA") is a non-IFRS financial measures and do not
have any standardized meaning under IFRS 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 IFRS as an indicator of Yangarra's
financial performance.
Please refer to the management discussion and analysis for
the three months ended March 31, 2022
for Non- IFRS financial measure reconciliation tables.
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 production and cashflow
guidance, expectations regarding debt repayments and return of
capital strategies as well as our, plans, objectives, priorities
and focus, growth plans; our estimations on future costs;
volatility of commodity prices, expectations on well economics,
availability and use of cash flow, well performance expectations,
availability of funding and capital plans, expectations regarding
our ESG initiatives and currency fluctuations. Statements relating
to "reserves" are also deemed to be forward-looking statements, as
they involve the implied assessment, based on certain estimates and
assumptions, that the reserves described exist in the quantities
predicted or estimated and that the reserves can be profitably
produced in the future.
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; benefits to
shareholders of our programs and initiatives, 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 efficiently integrate assets and
employees acquired through acquisitions, 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.
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.