CALGARY,
AB, July 28, 2022 /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, 2022.
During the second quarter of 2022, Yangarra generated funds flow
from operations of $50.0 million
($0.57 per basic share), while
generating net income of $30.6
million ($0.35 per basic
share). By maintaining a disciplined capital program, the Company
was able to reduce adjusted net debt by $23.1 million. The Company generated $24.02/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.
Second Quarter Highlights
- Funds flow from operations of $50.0
million ($0.57 per share –
basic), an increase of 190% from the same period in 2021
- $23.1 million of adjusted net
debt was repaid during the second quarter
- Oil and gas sales were $68.5
million, an increase of 140% from the same period in
2021
- Adjusted EBITDA (which excludes changes in derivative financial
instruments) was $52.1 million
($0.60 per share - basic), an
increase of 164% from the same period in 2021
- Net income of $30.6 million
($0.35 per share – basic,
$40.9 million before tax), an
increase of 295% from the same period in 2021
- Average production of 10,554 boe/d (42% liquids) during the
quarter, a 29% increase from the same period in 2021
- Operating costs were $7.19/boe
(including $1.24/boe of
transportation costs)
- Field operating netbacks were $58.34/boe
- Operating netbacks, which include the impact of commodity
contracts, were $55.52/boe
- Operating margins were 78% and funds flow from operations
margins were 73%
- G&A costs of $1.06/boe
- Royalties were 8% of oil and gas revenue
- All in cash costs were $16.54/boe
- Capital expenditures were $27.0
million
- Adjusted net debt (which excludes the current derivative
financial instruments) was $155.4
million
- Adjusted net debt to second quarter annualized funds flow from
operations was 0.78 : 1
- Retained earnings of $212
million
- Decommissioning liabilities of $13.4
million (discounted)
Operations Update
Yangarra drilled 9 wells and completed 8 wells during the second
quarter of 2022, of which three wells were brought onstream in
early June and four wells were brought onstream at the end of the
quarter. The Company's optimization program (replacing
pump-jacks with cheaper and more efficient plunger lifts and
performing chemical stimulations) continues to advance on legacy
wells.
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.
Debt Update
The Company completed its borrowing base review, and the
syndicated senior credit facility was confirmed at $210 million. Yangarra has revised its debt
target from $150 million to
$100 million due an expectation that
interest rates will continue to increase. Once this debt target is
achieved, Yangarra expects to return any excess cash to
shareholders via a return of capital strategy.
Financial Summary
|
|
|
|
|
|
|
|
2022
|
2021
|
|
Six Months
Ended
|
|
Q2
|
Q1
|
Q2
|
|
2022
|
2021
|
Statements of Income
and Comprehensive Income
|
|
|
|
|
|
|
Petroleum & natural
gas sales
|
$
68,545
|
$
51,428
|
$
28,529
|
|
$
119,973
|
$
57,004
|
|
|
|
|
|
|
|
Income before
tax
|
$
40,889
|
$
29,588
|
$
10,090
|
|
$
70,477
|
$
22,009
|
|
|
|
|
|
|
|
Net income
|
$
30,631
|
$
22,720
|
$
7,753
|
|
$
53,351
|
$
16,870
|
Net income per share -
basic
|
$
0.35
|
$
0.26
|
$
0.09
|
|
$
0.61
|
$
0.20
|
Net income per share -
diluted
|
$
0.33
|
$
0.25
|
$
0.09
|
|
$
0.58
|
$
0.19
|
|
|
|
|
|
|
|
Statements of Cash
Flow
|
|
|
|
|
|
|
Funds flow from
operations
|
$
50,028
|
$
39,758
|
$
17,240
|
|
$
89,784
|
$
34,331
|
Funds flow from
operations per share - basic
|
$
0.57
|
$
0.46
|
$
0.20
|
|
$
1.03
|
$
0.40
|
Funds flow from
operations per share - diluted
|
$
0.54
|
$
0.43
|
$
0.19
|
|
$
0.98
|
$
0.39
|
Cash flow from
operating activities
|
$
49,317
|
$
32,232
|
$
19,367
|
|
$
81,548
|
$
32,353
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2022
|
December 31,
2021
|
Statements of
Financial Position
|
|
|
Property and
equipment
|
$
658,103
|
$
627,948
|
Total assets
|
$
724,910
|
$
683,469
|
Working capital
(deficit) surplus
|
$
5,973
|
$
(3,729)
|
Adjusted net
debt
|
$
155,389
|
$
196,794
|
Shareholders'
equity
|
$
419,848
|
$
364,959
|
|
|
|
Weighted average number
of shares - basic
|
87,095
|
86,449
|
Weighted average number
of shares - diluted
|
92,087
|
90,636
|
|
|
|
|
|
|
Company Netbacks ($/boe)
|
|
|
|
|
|
|
|
2022
|
2021
|
|
Six Months
Ended
|
|
Q2
|
Q1
|
Q2
|
|
2022
|
2021
|
|
|
|
|
|
|
|
Sales price
|
$
71.37
|
$
56.89
|
$
38.21
|
|
$
64.35
|
$
37.19
|
Royalty
expense
|
(5.84)
|
(2.88)
|
(1.69)
|
|
(4.40)
|
(1.89)
|
Production
costs
|
(5.95)
|
(5.15)
|
(5.49)
|
|
(5.56)
|
(5.11)
|
Transportation costs
|
(1.24)
|
(1.24)
|
(1.25)
|
|
(1.24)
|
(1.17)
|
Field operating
netback
|
58.34
|
47.62
|
29.78
|
|
53.15
|
29.02
|
Realized gain
(loss) on commodity contract settlement
|
(2.82)
|
0.01
|
(2.07)
|
|
(1.45)
|
(2.21)
|
Operating
netback
|
55.52
|
47.63
|
27.71
|
|
51.70
|
26.81
|
G&A
|
(1.06)
|
(1.00)
|
(0.85)
|
|
(1.03)
|
(0.76)
|
Cash
Finance expenses
|
(2.46)
|
(2.32)
|
(4.16)
|
|
(2.67)
|
(2.56)
|
Depletion
and depreciation
|
(9.48)
|
(9.52)
|
(8.09)
|
|
(9.50)
|
(8.07)
|
Non Cash -
Finance expenses
|
(0.25)
|
(0.46)
|
(0.79)
|
|
(0.07)
|
(0.04)
|
Stock-based compensation
|
(0.19)
|
(0.17)
|
(0.45)
|
|
(0.18)
|
(0.36)
|
Unrealized
gain (loss) on financial instruments
|
0.49
|
(1.43)
|
0.15
|
|
(0.44)
|
(0.66)
|
Deferred
income tax
|
(10.68)
|
(7.60)
|
(3.13)
|
|
(9.19)
|
(3.35)
|
Net Income
netback
|
$
31.89
|
$
25.13
|
$
10.39
|
|
$
28.63
|
$
11.01
|
|
|
|
|
|
|
|
Business Environment
|
|
|
|
|
|
|
|
2022
|
2021
|
|
Six Months
Ended
|
|
Q2
|
Q1
|
Q2
|
|
2022
|
2021
|
Realized Pricing
(Including realized commodity contracts)
|
|
|
|
|
|
Light
Crude Oil ($/bbl)
|
$
130.38
|
$
108.88
|
$
67.01
|
|
$
119.49
|
$
64.29
|
NGL
($/bbl)
|
$
70.70
|
$
69.16
|
$
38.69
|
|
$
69.99
|
$
38.59
|
Natural
Gas ($/mcf)
|
$
7.50
|
$
4.80
|
$
3.44
|
|
$
6.18
|
$
3.20
|
|
|
|
|
|
|
|
Realized Pricing
(Excluding commodity contracts)
|
|
|
|
|
|
|
Light
Crude Oil ($/bbl)
|
$
137.95
|
$
108.88
|
$
75.55
|
|
$
123.03
|
$
72.30
|
NGL
($/bbl)
|
$
70.46
|
$
69.09
|
$
38.53
|
|
$
69.84
|
$
38.57
|
Natural
Gas ($/mcf)
|
$
7.86
|
$
4.80
|
$
3.42
|
|
$
6.37
|
$
3.23
|
|
|
|
|
|
|
|
Oil Price
Benchmarks
|
|
|
|
|
|
|
West Texas
Intermediate ("WTI") (US$/bbl)
|
$
108.40
|
$
94.45
|
$
66.09
|
|
$
101.43
|
$
61.94
|
Edmonton
Par ($/bbl)
|
$
136.20
|
$
117.32
|
$
75.26
|
|
$
126.76
|
$
72.03
|
Edmonton
Par to WTI differential (US$/bbl)
|
$
(1.70)
|
$
(1.80)
|
$
(4.81)
|
|
$
(1.73)
|
$
(4.19)
|
|
|
|
|
|
|
|
Natural Gas Price
Benchmarks
|
|
|
|
|
|
|
AECO gas
($/mcf)
|
$
6.68
|
$
4.48
|
$
3.14
|
|
$
5.58
|
$
2.95
|
|
|
|
|
|
|
|
Foreign
Exchange
|
|
|
|
|
|
|
Canadian
Dollar/U.S. Exchange
|
0.78
|
0.79
|
0.81
|
|
0.79
|
0.80
|
|
|
|
|
|
|
|
Operations Summary
Net petroleum and natural gas production, pricing and revenue
are summarized below:
|
|
|
|
|
|
|
|
2022
|
2021
|
|
Six Months
Ended
|
|
Q2
|
Q1
|
Q2
|
|
2022
|
2021
|
|
|
|
|
|
|
|
Daily production
volumes
|
|
|
|
|
|
|
Natural
Gas (mcf/d)
|
36,874
|
33,687
|
26,558
|
|
35,289
|
27,286
|
Light
Crude Oil (bbl/d)
|
2,271
|
2,606
|
2,088
|
|
2,432
|
2,240
|
NGL's
(bbl/d)
|
2,138
|
1,824
|
1,691
|
|
1,987
|
1,682
|
Combined
(BOE/d 6:1)
|
10,554
|
10,044
|
8,205
|
|
10,301
|
8,469
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
Petroleum & natural
gas sales - Gross
|
$
68,545
|
$
51,428
|
$
28,529
|
|
$
119,973
|
$
57,004
|
Realized gain (loss) on
commodity contract settlement
|
(2,712)
|
11
|
(1,545)
|
|
(2,701)
|
(3,390)
|
Total sales
|
65,833
|
51,439
|
26,984
|
|
117,272
|
53,614
|
Royalty
expense
|
(5,605)
|
(2,605)
|
(1,263)
|
|
(8,210)
|
(2,896)
|
Total Revenue - Net of
royalties
|
$
60,228
|
$
48,834
|
$
25,721
|
|
$
109,062
|
$
50,718
|
|
|
|
|
|
|
|
Adjusted Net Debt Summary
The following table summarizes the change in adjusted net debt
during the six months ended June 30,
2022 and year December 31,
2021:
|
|
|
|
Six months
ended
|
Year ended
|
|
June 30,
2022
|
December 31,
2021
|
Adjusted net debt -
beginning of period
|
$
(196,794)
|
$
(197,414)
|
|
|
|
Funds flow from
operations
|
89,784
|
90,921
|
Additions to
property and equipment
|
(48,226)
|
(88,153)
|
Decommissioning
costs incurred
|
-
|
(881)
|
Additions to
E&E Assets
|
(308)
|
(387)
|
Issuance of
shares
|
1,040
|
1,132
|
Other
|
(885)
|
(2,012)
|
Adjusted net debt
- end of period
|
$
(155,389)
|
$
(196,794)
|
|
|
|
|
|
|
Credit facility
limit
|
$
210,000
|
$
210,000
|
Capital Spending
Capital spending is summarized as follows:
|
|
|
|
|
|
|
|
2022
|
2021
|
|
Six Months
Ended
|
Cash
additions
|
Q2
|
Q1
|
Q2
|
|
2022
|
2021
|
|
|
|
|
|
|
|
Land, acquisitions and
lease rentals
|
$
40
|
$
161
|
$
(63)
|
|
$
201
|
$
(184)
|
Drilling and
completion
|
$
23,806
|
18,339
|
17,621
|
|
42,146
|
34,150
|
Geological and
geophysical
|
$
191
|
123
|
121
|
|
313
|
391
|
Equipment
|
$
2,808
|
2,452
|
1,616
|
|
5,259
|
3,386
|
Other asset
additions
|
$
116
|
191
|
173
|
|
307
|
312
|
|
$
26,961
|
$
21,266
|
$
19,468
|
|
$
48,226
|
$
38,055
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploration &
evaluation assets
|
$
308
|
$
74
|
$
134
|
|
$
382
|
$
134
|
Quarter End Disclosure
The Company's June 30, 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.
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 and six months ended June 30,
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.
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.