CALGARY, Nov. 10, 2016 /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, 2016.
Third Quarter 2016 Highlights
- Production averaged 2,609 boe/d.
- Cash costs totaled $12.71/boe
- Operating costs of $6.97/boe.
- Transportation costs of $1.17/boe.
- Royalties of $1.14/boe (4% of revenue).
- G&A costs of $1.58/boe.
- Finance and interest costs of $1.85/boe.
- Oil and gas sales were $5.9 million with funds flow from operations of $3.3 million ($0.04 per share – basic).
- Net loss of $0.5 million ($0.01 per share – basic).
- Adjusted EBITDA (which excludes changes in derivative financial instruments) was $3.7 million ($0.05 per share – basic).
- Operating netbacks, which include the impact of commodity contracts, were $17.62 per boe. Field netbacks, excluding the impact of commodity contracts were $15.67.
- Total cash capital expenditures were $10.4 million.
- Yangarra completed its standing Duvernay well, drilled and completed a 1.6 mile horizontal well and drilled a 2 mile horizontal well.
- Land purchases totaled $1.4 million.
- Net debt (excluding the current value of derivative instruments) was $58.2 million, down from $60.9 million at 2015 year end.
Operations Update
Yangarra has finished drilling four extended reach Cardium wells in Willesden Green and Ferrier. Three of the wells have been completed and placed on-stream with the fourth well scheduled for completion in mid-November.
Cardium drilling costs have been reduced by 23% per meter in the 2016 program versus 2015 and completion costs have been decreased by 45% per stage. Drilling cost improvements are a result of optimized surface drilling procedures and re-designed drill string/bottom-hole assembly resulting in much quicker drill times. Significant savings have been realized in completion operations through more efficient supply and handling of water as well as improved coil design for sleeve completions.
Initial production over the first 30 days (“IP 30”) on the first well in the program was approximately 550 boe/d (83% oil), the other two completed wells have less than two weeks of production data. The drilling rig has now been racked due to current commodity price volatility and to allow the Company time to evaluate the results of changes made to the drilling and completion programs with drilling set to resume early in 2017.
The Company has continued to expand its Cardium acreage with additional lands added during the quarter and several deals currently pending. An update of future drilling locations will be provided upon completion of the pending transactions, likely after year end.
Yangarra has initiated work on its Duvernay pipeline to company owned facilities and expects its first Duvernay well to be tied-in and on production by year end. The pipeline construction has been delayed by extremely wet weather and routing issues.
Guidance Update
The $24 million budget is expected to increase the Company’s annual production for 2016 to 2,750 – 3,000 boe/d, which is a 15-25% increase from 2015, however cash flow from operations is now estimated at $14 – $16 million for 2016 which has been negatively impacted by lower than expected commodity pricing, delayed/reduced Cardium drilling program and delayed Duvernay well tie in.
Financial Summary
2016 |
2015 |
Nine Months Ended |
|||
Q3 |
Q3 |
2016 |
2015 |
||
Statements of Comprehensive Income |
|||||
Petroleum & natural gas sales |
$ 5,939,598 |
$ 5,363,673 |
$ 17,950,262 |
$ 18,527,820 |
|
Net (loss) income (before tax) |
$ (144,625) |
$ (1,782,406) |
$ 8,819,319 |
$ (2,805,495) |
|
Net (loss) income |
$ (470,783) |
$ (2,353,636) |
$ 10,507,948 |
$ (4,611,111) |
|
Net (loss) income per share – basic and diluted |
$ (0.01) |
$ (0.03) |
$ 0.14 |
$ (0.07) |
|
Statements of Cash Flow |
|||||
Funds flow from operations |
$ 3,331,966 |
$ 4,166,530 |
$ 9,482,426 |
$ 17,185,869 |
|
Funds flow from operating activities per share – basic and diluted |
$ 0.04 |
$ 0.06 |
$ 0.13 |
$ 0.27 |
|
Cash from operating activities |
$ 4,866,167 |
$ 4,599,582 |
$ 9,282,616 |
$ 15,094,643 |
|
Statements of Financial Position |
|||||
Property and equipment |
$ 270,291,202 |
$ 234,947,346 |
$ 270,291,202 |
$ 234,947,346 |
|
Total assets |
$ 289,495,918 |
$ 261,511,458 |
$ 289,495,918 |
$ 261,511,458 |
|
Working capital deficit |
$ 58,221,548 |
$ 50,687,278 |
$ 58,221,548 |
$ 50,687,278 |
|
Adjusted working capital deficit (which excludes current derivative financial instruments) |
$ 58,387,741 |
$ 53,512,533 |
$ 58,387,741 |
$ 53,512,533 |
|
Non-Current Liabilities |
$ 35,205,085 |
$ 30,494,669 |
$ 35,205,085 |
$ 30,494,669 |
|
Shareholders equity |
$ 183,627,034 |
$ 160,913,054 |
$ 183,627,034 |
$ 160,913,054 |
|
Weighted average number of shares – basic |
79,181,805 |
67,681,804 |
73,054,066 |
62,555,188 |
|
Weighted average number of shares – diluted |
79,181,805 |
67,681,804 |
73,433,974 |
62,555,188 |
|
Company Netbacks ($/boe)
2016 |
2015 |
Nine Months Ended |
||||
Q3 |
Q3 |
2016 |
2015 |
|||
Sales price |
$ 24.75 |
$ 27.02 |
$ 22.78 |
$ 29.30 |
||
Royalty income |
0.20 |
0.34 |
0.14 |
0.29 |
||
Royalty expense |
(1.14) |
(0.61) |
(0.79) |
(1.18) |
||
Production costs |
(6.97) |
(7.39) |
(7.09) |
(7.25) |
||
Transportation costs |
(1.17) |
(1.38) |
(1.41) |
(1.45) |
||
Field operating netback |
15.67 |
17.97 |
13.63 |
19.71 |
||
Realized gain on commodity contract settlement |
1.95 |
6.81 |
2.38 |
12.07 |
||
Operating netback |
17.62 |
24.79 |
16.01 |
31.78 |
||
G&A |
(1.58) |
(1.30) |
(1.71) |
(1.92) |
||
Finance expenses |
(1.85) |
(2.59) |
(2.01) |
(3.16) |
||
Funds flow netback |
14.19 |
20.89 |
12.29 |
26.69 |
||
Depletion and depreciation |
(13.37) |
(12.85) |
(13.18) |
(13.49) |
||
E&E Impairment |
– |
(27.26) |
(0.96) |
(8.56) |
||
Accretion |
(0.18) |
(0.23) |
(0.18) |
(0.20) |
||
Stock-based compensation |
(0.80) |
(1.49) |
(1.01) |
(0.86) |
||
Unrealized gain (loss) on financial instruments |
(0.44) |
1.95 |
(2.37) |
(8.03) |
||
Gain on Settlement of Lawsuit |
– |
– |
16.60 |
– |
||
Deferred income tax |
(1.36) |
(2.88) |
2.14 |
(2.86) |
||
Net Income netback |
$ (1.96) |
$ (11.86) |
$ 13.33 |
$ (7.29) |
||
Operations Summary
Net petroleum and natural gas production and revenue are summarized below:
2016 |
2015 |
Nine Months Ended |
||||||
Q3 |
Q3 |
2016 |
2015 |
|||||
Daily production volumes |
||||||||
Natural gas (mcf/d) |
9,373 |
6,477 |
9,918 |
7,711 |
||||
Oil (bbl/d) |
563 |
700 |
722 |
679 |
||||
NGL’s (bbl/d) |
460 |
320 |
475 |
307 |
||||
Royalty income |
||||||||
Natural gas (mcf/d) |
56 |
232 |
86 |
191 |
||||
Oil (bbl/d) |
5 |
0 |
2 |
0 |
||||
NGL’s (bbl/d) |
9 |
19 |
10 |
12 |
||||
Combined (boe/d 6:1) |
2,609 |
2,158 |
2,876 |
2,315 |
||||
Revenue |
||||||||
Petroleum & natural gas sales – Gross |
$ 5,939,598 |
$ 5,363,673 |
$ 17,950,262 |
$ 18,527,820 |
||||
Royalty income |
48,712 |
66,770 |
113,919 |
181,048 |
||||
Realized gain on commodity contract settlement |
468,105 |
1,352,383 |
1,877,098 |
7,634,614 |
||||
Total sales |
6,456,415 |
6,782,826 |
19,941,279 |
26,343,482 |
||||
Royalty expense |
(272,840) |
(120,664) |
(622,978) |
(744,867) |
||||
Total Revenue – Net of royalties |
$ 6,183,575 |
$ 6,662,162 |
$ 19,318,301 |
$ 25,598,615 |
||||
Pricing Summary
Net petroleum and natural gas pricing is summarized below:
2016 |
2015 |
Nine Months Ended |
||||
Q3 |
Q3 |
2016 |
2015 |
|||
Realized Pricing (Including realized commodity contracts) |
||||||
Oil ($/bbl) |
$ 59.21 |
$ 62.54 |
$ 54.79 |
$ 66.49 |
||
NGL ($/bbl) |
$ 28.22 |
$ 23.48 |
$ 25.92 |
$ 32.86 |
||
Gas ($/mcf) |
$ 2.47 |
$ 3.27 |
$ 2.05 |
$ 3.31 |
||
Realized Pricing (Excluding commodity contracts) |
||||||
Oil ($/bbl) |
$ 57.88 |
$ 49.93 |
$ 49.11 |
$ 55.06 |
||
NGL ($/bbl) |
$ 18.98 |
$ 14.80 |
$ 20.27 |
$ 24.74 |
||
Gas ($/mcf) |
$ 2.47 |
$ 2.84 |
$ 2.05 |
$ 2.94 |
||
Oil Price Benchmarks |
||||||
West Texas Intermediate (“WTI”) (US$/bbl) |
$ 44.95 |
$ 46.45 |
$ 41.35 |
$ 51.00 |
||
Edmonton Par (C$/bbl) |
$ 55.10 |
$ 52.35 |
$ 50.90 |
$ 57.50 |
||
Edmonton Par to WTI differential (US$/bbl) |
$ (2.52) |
$ (6.66) |
$ (2.67) |
$ (5.58) |
||
Natural Gas Price Benchmarks |
||||||
AECO gas (Cdn$/mcf) |
$ 2.30 |
$ 2.90 |
$ 1.85 |
$ 2.75 |
||
Foreign Exchange |
||||||
U.S./Canadian Dollar Exchange |
$ 0.77 |
$ 0.76 |
$ 0.76 |
$ 0.79 |
||
Working Capital Summary
The following table summarizes the change in working capital during nine months ended September 30, 2016 and the year ended December 31, 2015:
2016 – YTD |
2015 |
|
Adjusted Working capital (deficit) – beginning of period |
$ (60,886,556) |
$ (59,766,933) |
Funds flow from operations |
9,482,426 |
21,413,401 |
Additions to property and equipment |
(17,643,829) |
(36,025,121) |
Decommissioning costs incurred |
(63,638) |
(64,178) |
Additions to E&E Assets |
– |
(4,706,547) |
Issuance of shares |
10,754,031 |
18,731,470 |
Other Debt |
(30,175) |
(468,648) |
Adjusted Working capital (deficit) – end of period |
$ (58,387,741) |
$ (60,886,556) |
Credit facility limit |
$ 80,000,000 |
$ 80,000,000 |
Capital Spending
Capital spending is summarized as follows:
2016 |
2015 |
Nine Months Ended |
|||
Cash additions |
Q3 |
Q3 |
2016 |
2015 |
|
Land, acquisitions and lease rentals |
$ 1,405,870 |
$ 223,840 |
$ 1,693,892 |
$ 800,331 |
|
Cash property acquisitions |
– |
– |
3,707,693 |
– |
|
Drilling and completion |
8,360,031 |
4,779,373 |
9,760,638 |
15,372,740 |
|
Geological and geophysical |
136,404 |
181,791 |
729,538 |
984,260 |
|
Equipment |
517,188 |
1,795,225 |
1,726,000 |
7,151,209 |
|
Other asset additions |
16,579 |
20,219 |
89,706 |
193,074 |
|
$ 10,436,072 |
$ 7,000,448 |
$ 17,707,467 |
$ 24,501,614 |
||
Exploration & evaluation assets additions |
$ – |
$ 4,706,547 |
$ – |
$ 4,706,547 |
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).