CALGARY, May 11, 2017 /CNW/ – Yangarra Resources Ltd. (“Yangarra” or the “Company“) (TSX:YGR) announces its financial and operating results for the three months ended March 31, 2017.
First Quarter Highlights
- Adjusted EBITDA (which excludes changes in derivative financial instruments) was $10.9 million ($0.13 per share – basic).
- Oil and gas sales were $15.5 million with funds flow from operations of $10.3 million ($0.13 per share – basic).
- Net income of $5.2 million ($0.07 per share – basic) or $7.3 million net income before tax.
- Production of 4,483 boe/d (59 % liquids).
- Operating costs were $7.93 /boe (including $0.94 /boe of transportation costs).
- Operating netbacks, which include the impact of commodity contracts, were $27.77 per boe.
- Operating margins were 72% and cash flow margins were 67%.
- G&A costs of $0.51/boe.
- Royalties were 8% of oil and gas revenue.
- Total capital expenditures were $23.5 million.
- Net debt (which excludes the current derivative financial instruments) was $77.6 million.
- Net Debt to annualized first quarter funds flow from operations was 1.88 : 1.
- Corporate LMR is 5.67
Operations Update
Yangarra has now completed the 10 well capital program that commenced in August of 2016 with all wells on-stream as of April 2017. The Company made significant changes to its drill and complete program over the 10 well program which resulted in higher flowing pressures, higher flow rates and better than expected internal rates of return (“IRR”). These changes included drilling deeper in the Cardium zone into the bioturbated section, increasing frack intensity to more than 50 stages per mile, reducing inter-well spacing and holding more back pressure on wells in their initial production phase. Several additional changes have been identified which will improve costs and productive capability for the next drilling program. Average drilling and completion costs for the 10 well program were approximately $1,280 per lateral meter.
The earliest wells in the 10 well program are now approaching 200 days of production, initial results indicate higher flow rates and lower declines than previous drill programs. Yangarra intends to revise its Cardium type curves in June 2017 and once that process is complete the Company will provide amended guidance for 2017.
IP rates on wells 7-10 of the 10 well program are as follows:
102/16-15-44-10W5 (1) (2.0 mile) |
IP 35 |
662 boe/d (38% liquids) |
||||
(102 stages & 1,533 tons of sand) |
||||||
100/01-34-39-8W5 (2.0 mile) |
IP 27 |
1,017 boe/d (80% liquids) |
||||
(105 stages & 1,535 tons of sand) |
||||||
100/05-19-41-7W5(2) (2.0 mile) |
Clean-up phase (Day 1-50) |
130 boe/d (98% liquids) |
||||
(109 stages & 1,640 tons of sand) |
Production phase (Day 51-65) |
173 boe/d (94% liquids) |
||||
100/03-23-37-8W5 (2.0 mile) |
IP 37 |
313 boe/d (69% liquids) |
||||
(104 stages & 1,565 tons of sand) |
||||||
(1) Well restricted due to capacity constraints |
|
(2) Well on pump, started flowing recently |
Current production, with flush volumes from new wells, is approximately 6,000 boe/d.
Yangarra continues its success in consolidating working interest in existing Cardium acreage. In addition, the Company has added 55 future locations on new lands (based on 1 mile laterals) to its inventory in 2017.
Financial Summary
2017 |
2016 |
|||||
Q1 |
Q4 |
Q1 |
||||
Statements of Comprehensive Income |
||||||
Petroleum & natural gas sales |
$ |
15,539,302 |
$ |
11,128,298 |
$ |
6,315,833 |
Net income (before tax) |
$ |
7,341,733 |
$ |
1,365,339 |
$ |
11,631,203 |
Net income |
$ |
5,216,545 |
$ |
(339,197) |
$ |
11,878,454 |
Net income per share – basic |
$ |
0.07 |
$ |
(0.00) |
$ |
0.18 |
Net income per share – diluted |
$ |
0.06 |
$ |
(0.00) |
$ |
0.18 |
Statements of Cash Flow |
||||||
Funds flow from operations |
$ |
10,343,203 |
$ |
6,781,301 |
$ |
3,359,129 |
Funds flow from operations per share – basic |
$ |
0.13 |
$ |
0.09 |
$ |
0.05 |
Funds flow from operations per share – diluted |
$ |
0.12 |
$ |
0.09 |
$ |
0.05 |
Cash from operating activities |
$ |
8,610,412 |
$ |
7,382,874 |
$ |
2,090,799 |
Statements of Financial Position |
||||||
Property and equipment |
$ |
297,327,854 |
$ |
277,693,631 |
$ |
263,236,648 |
Total assets |
$ |
322,741,856 |
$ |
299,046,067 |
$ |
284,196,765 |
Working capital deficit |
$ |
77,233,927 |
$ |
66,185,217 |
$ |
60,242,082 |
Adjusted working capital deficit (which excludes current derivative financial instruments) |
$ |
77,646,963 |
$ |
65,005,805 |
$ |
62,450,536 |
Non-Current Liabilities |
$ |
36,541,365 |
$ |
34,156,921 |
$ |
36,322,622 |
Shareholders equity |
$ |
190,315,027 |
$ |
184,113,958 |
$ |
173,434,409 |
Weighted average number of shares – basic |
79,970,061 |
79,347,205 |
67,681,804 |
|||
Weighted average number of shares – diluted |
82,872,845 |
79,347,205 |
67,681,804 |
|||
Net income for the three months ended March 31, 2016 includes $13,082,687 for a gain on settlement of lawsuit.
Company Netbacks ($/boe)
2017 |
2016 |
||||||
Q1 |
Q4 |
Q1 |
|||||
Sales price |
$ |
38.52 |
$ |
37.85 |
$ |
21.87 |
|
Royalty income |
0.02 |
0.07 |
0.11 |
||||
Royalty expense |
(3.05) |
(1.21) |
(0.81) |
||||
Production costs |
(6.99) |
(7.28) |
(7.28) |
||||
Transportation costs |
(0.94) |
(1.04) |
(1.62) |
||||
Field operating netback |
27.56 |
28.39 |
12.27 |
||||
Realized gain on commodity contract settlement |
0.21 |
0.77 |
3.44 |
||||
Operating netback |
27.77 |
29.16 |
15.71 |
||||
G&A |
(0.51) |
(2.34) |
(2.02) |
||||
Finance expenses |
(1.59) |
(2.76) |
(1.87) |
||||
Funds flow netback |
25.67 |
24.05 |
11.82 |
||||
Depletion and depreciation |
(10.85) |
(13.06) |
(13.31) |
||||
E&E Impairment |
– |
– |
(2.62) |
||||
Accretion |
(0.11) |
(0.14) |
(0.17) |
||||
Stock-based compensation |
(0.82) |
(0.85) |
(1.12) |
||||
Unrealized gain (loss) on financial instruments |
4.31 |
(5.36) |
0.37 |
||||
Gain on Settlement of Lawsuit |
– |
– |
45.31 |
||||
Deferred income tax |
(5.27) |
(5.80) |
0.86 |
||||
Net Income netback |
$ |
12.93 |
$ |
(1.15) |
$ |
41.14 |
Business Environment
2017 |
2016 |
||||||
Q1 |
Q4 |
Q1 |
|||||
Realized Pricing (Including realized commodity contracts) |
|||||||
Oil ($/bbl) |
$ |
64.67 |
$ |
64.57 |
$ |
43.70 |
|
NGL ($/bbl) |
$ |
30.43 |
$ |
30.07 |
$ |
22.99 |
|
Gas ($/mcf) |
$ |
3.09 |
$ |
3.15 |
$ |
2.55 |
|
Realized Pricing (Excluding commodity contracts) |
|||||||
Oil ($/bbl) |
$ |
64.35 |
$ |
63.39 |
$ |
35.57 |
|
NGL ($/bbl) |
$ |
29.96 |
$ |
28.31 |
$ |
16.99 |
|
Gas ($/mcf) |
$ |
3.09 |
$ |
3.15 |
$ |
2.55 |
|
Oil Price Benchmarks |
|||||||
West Texas Intermediate (“WTI”) (US$/bbl) |
$ |
51.91 |
$ |
49.35 |
$ |
33.45 |
|
Edmonton Par (C$/bbl) |
$ |
64.25 |
$ |
62.00 |
$ |
34.50 |
|
Edmonton Par to WTI differential (US$/bbl) |
$ |
3.34) |
$ |
2.85) |
$ |
(8.27) |
|
Natural Gas Price Benchmarks |
|||||||
AECO gas (Cdn$/mcf) |
$ |
2.94 |
$ |
3.10 |
$ |
2.11 |
|
Foreign Exchange |
|||||||
U.S./Canadian Dollar Exchange |
$ |
0.76 |
$ |
0.75 |
$ |
0.73 |
Operations Summary
Net petroleum and natural gas production, pricing and revenue are summarized below:
2017 |
2016 |
|||||||
Q1 |
Q4 |
Q1 |
||||||
Daily production volumes |
||||||||
Natural gas (mcf/d) |
10,984 |
8,272 |
10,366 |
|||||
Oil (bbl/d) |
1,836 |
1,248 |
971 |
|||||
NGL’s (bbl/d) |
806 |
548 |
449 |
|||||
Royalty income |
||||||||
Natural gas (mcf/d) |
35 |
70 |
95 |
|||||
Oil (bbl/d) |
– |
0 |
1 |
|||||
NGL’s (bbl/d) |
3 |
9 |
8 |
|||||
Combined (boe/d 6:1) |
4,483 |
3,195 |
3,173 |
|||||
Revenue |
||||||||
Petroleum & natural gas sales – Gross |
$ |
15,539,302 |
$ |
11,128,298 |
$ |
6,315,833 |
||
Royalty income |
10,086 |
21,393 |
30,370 |
|||||
Realized gain on commodity contract settlement |
85,918 |
225,697 |
992,420 |
|||||
Total sales |
15,635,306 |
11,375,388 |
7,338,623 |
|||||
Royalty expense |
(1,231,175) |
(356,186) |
(233,391) |
|||||
Total Revenue – Net of royalties |
$ |
14,404,131 |
$ |
11,019,202 |
$ |
7,105,232 |
Working Capital Summary
The following table summarizes the change in working capital during the three months ended March 31, 2017 and the year ended December 31, 2016:
2017 |
2016 |
|||
Adjusted Working capital (deficit) – beginning of period |
$ |
(65,005,805) |
$ |
(60,886,556) |
Funds flow from operations |
10,343,203 |
16,263,727 |
||
Additions to property and equipment |
(23,496,262) |
(27,672,766) |
||
Property Acquisition |
– |
(3,707,693) |
||
Decommissioning costs incurred |
– |
(180,862) |
||
Issuance of shares |
522,307 |
11,218,610 |
||
Other Debt |
(10,406) |
(40,265) |
||
Adjusted Working capital (deficit) – end of period |
$ |
(77,646,963) |
$ |
(65,005,805) |
Credit facility limit |
$ |
80,000,000 |
$ |
80,000,000 |
Capital Spending
Capital spending is summarized as follows:
2017 |
2016 |
|||||
Cash additions |
Q1 |
Q4 |
Q1 |
|||
Land, acquisitions and lease rentals |
$ |
770,915 |
$ |
385,257 |
$ |
301,113 |
Cash property acquisitions |
– |
– |
3,707,693 |
|||
Drilling and completion |
19,664,385 |
10,714,791 |
510,244 |
|||
Geological and geophysical |
143,792 |
184,458 |
208,147 |
|||
Equipment |
2,910,272 |
2,359,067 |
113,388 |
|||
Other asset additions |
6,898 |
29,419 |
72,537 |
|||
$ |
23,496,262 |
$ |
13,672,992 |
$ |
4,913,122 |
|
Annual General Meeting of Shareholders
The Company’s Annual General Meeting of Shareholders is scheduled for 10:00 AM on Monday May 15, 2017 in the Tillyard Management Conference Centre, Main Floor, 715 5th Avenue SW, Calgary, AB.
Disclosure Items
The Company’s financial statements, notes to the financial statements and management’s discussion and analysis have been filed on SEDAR (www.sedar.com) and are available on the Company’s website (www.yangarra.ca).