CALGARY, March 8, 2018 /CNW/ – Yangarra Resources Ltd. (“Yangarra” or the “Company“) (TSX:YGR) announces its financial and operating results for the year ended December 31, 2017.
2017 Highlights
- Average production of 5,740 boe/d, an increase of 93% from 2016.
- Oil and gas sales were $77.9 million with funds flow from operations of $52.9 million ($0.66 per share – basic).
- Adjusted EBITDA (which excludes changes in derivative financial instruments) was $54.5 million ($0.68 per share – basic).
- Net income of $19.5 million ($0.24 per share – basic) or $27.3 million before tax.
- Operating costs were $7.77/boe (including $1.03/boe of transportation costs).
- Operating netbacks, which include the impact of commodity contracts, were $27.68 per boe.
- Operating margins were 74% and cash flow margins were 69%.
- G&A costs of $0.95/boe.
- Royalties were 8% of oil and gas revenue.
- Total capital expenditures were $83.5 million.
- Net debt (which excludes the current derivative financial instruments) was $93.5 million.
- Wells drilled in 2017 resulted in a corporate half cycle IRR of 105% and a full cycle IRR of 86%.
- Proved Developed Producing reserves increased by 52%, F&D costs were $13.36/boe, the recycle ratio was 2.1 and additions replaced 296% of 2017 production.
- Total Proved reserves increased by 53%, F&D costs were $10.41/boe, the recycle ratio was 2.7 and additions replaced 1025% of 2017 production.
- Proved plus Probable reserves increased by 45%, F&D costs were $9.18/boe, the recycle ratio was 3.1 and additions replaced 1398% of 2017 production.
- Corporate LMR is 8.08
Fourth Quarter Highlights
- Production of 6,721 boe/d (58% liquids), an increase of 109% from the fourth quarter of 2016.
- Oil and gas sales were $25.2 million with funds flow from operations of $17.6 million ($0.22 per share – basic).
- Adjusted EBITDA (which excludes changes in derivative financial instruments) was $17.5 million ($0.21 per share – basic).
- Net income of $4.7 million ($0.06 per share – basic) or $6.6 million net income before tax.
- Operating costs were $7.46/boe (including $0.97/boe of transportation costs).
- Operating netbacks, which include the impact of commodity contracts, were $30.39 per boe.
- Operating margins were 75% and cash flow margins were 70%.
- G&A costs of $1.44/boe, which includes year-end bonuses.
- Royalties were 9% of oil and gas revenue.
- Total capital expenditures were $31.2 million
- Net Debt to annualized fourth quarter funds flow from operations was 1.33 : 1
Operations Update
Yangarra has drilled five wells in 2018, two wells are currently drilling and three additional wells are planned before the end of March. Total wells expected to be drilled in the first quarter will be 10 gross (8.2 net) consisting of 5 gross (4.7 net) two-mile wells and 5 gross (3.5 net) one-mile wells. In addition, the two wells drilling over year-end 2017 were completed in January 2018. With significant snowfall over winter it is likely some of the first quarter wells will not be completed until after breakup.
Drilling and completion costs remain stable compared to Q4 2017 levels, however recent wells are being completed with 80 stages per mile. The Company will assess optimum frack spacing once results from the latest wells are analyzed.
The Company continues to test 100m inter-well spacing and will evaluate offset data from four horizontal well pairs into break-up. Initial frack data indicates no communication at 100m inter-well spacing implying a viable drilling density of 16 wells per section versus the existing inventory spacing assumption of 8-10 wells per section.
A second oil battery, including a truck service facility, has been in service since December 1, 2017; however, production has outgrown both oil batteries so additional capacity will be added with a third oil facility (which will include 12.0 mmcf/d of gas compression). A site has been chosen with target completion scheduled for June 2018.
Yangarra has compared data from the first 10 well bioturbated Cardium program to the second 10 well bioturbated Cardium program and observed average IP30 rates that were 12% higher on the second 10 well program. With the two wells currently drilling, the Company will have drilled 30 wells into the bioturbated Cardium.
Hedging Program Update
The Company’s oil hedge position for 2018 consists of 2,600 bbl/d at an average price of C$71.00/bbl for the first half of the year and 2,000 bbl/d at an average price of C$74.88/bbl for the second half of the year. The Company has also hedged 200 bbl/d of propane at US$32.34 for 2018.
Financial Summary
2017 |
2016 |
Year Ended |
|||||||||
Q4 |
Q3 |
Q4 |
2017 |
2016 |
|||||||
Statements of Comprehensive Income |
|||||||||||
Petroleum & natural gas sales |
$ |
25,172,383 |
$ |
17,663,925 |
$ |
11,128,298 |
$ |
77,913,091 |
$ |
29,213,872 |
|
Net income (before tax) |
$ |
6,598,112 |
$ |
5,511,977 |
$ |
1,365,339 |
$ |
27,345,553 |
$ |
10,184,658 |
|
Net income |
$ |
4,681,958 |
$ |
3,975,606 |
$ |
(339,197) |
$ |
19,485,327 |
$ |
10,168,751 |
|
Net income per share – basic |
$ |
0.06 |
$ |
0.05 |
$ |
(0.00) |
$ |
0.24 |
$ |
0.14 |
|
Net income per share – diluted |
$ |
0.05 |
$ |
0.05 |
$ |
(0.00) |
$ |
0.23 |
$ |
0.14 |
|
Statements of Cash Flow |
|||||||||||
Funds flow from operations |
$ |
17,563,628 |
$ |
12,948,149 |
$ |
6,781,301 |
$ |
52,902,651 |
$ |
16,263,727 |
|
Funds flow from operations per share – basic |
$ |
0.22 |
$ |
0.16 |
$ |
0.09 |
$ |
0.66 |
$ |
0.22 |
|
Funds flow from operations per share – diluted |
$ |
0.20 |
$ |
0.15 |
$ |
0.09 |
$ |
0.63 |
$ |
0.22 |
|
Cash from operating activities |
$ |
20,541,872 |
$ |
13,381,396 |
$ |
7,382,874 |
$ |
51,774,874 |
$ |
16,665,490 |
|
Statements of Financial Position |
|||||||||||
Property and equipment |
$ |
342,099,959 |
$ |
315,064,829 |
$ |
277,693,631 |
$ |
342,099,959 |
$ |
277,693,631 |
|
Total assets |
$ |
378,231,413 |
$ |
342,983,774 |
$ |
299,046,067 |
$ |
378,231,413 |
$ |
299,046,067 |
|
Working capital deficit |
$ |
11,210,245 |
$ |
79,069,633 |
$ |
66,185,217 |
$ |
11,210,245 |
$ |
66,185,217 |
|
Net Debt (which excludes current derivative financial instruments) |
$ |
93,533,252 |
$ |
80,449,394 |
$ |
65,005,805 |
$ |
93,533,252 |
$ |
65,005,805 |
|
Non-Current Liabilities, excluding bank debt |
$ |
44,366,746 |
$ |
40,523,942 |
$ |
34,156,921 |
$ |
44,366,746 |
$ |
34,156,921 |
|
Shareholders equity |
$ |
207,956,623 |
$ |
202,437,802 |
$ |
184,113,958 |
$ |
207,956,623 |
$ |
184,113,958 |
|
Weighted average number of shares – basic |
81,301,744 |
81,033,965 |
79,347,205 |
80,719,934 |
74,635,948 |
||||||
Weighted average number of shares – diluted |
85,748,705 |
84,772,793 |
79,347,205 |
84,156,682 |
75,123,266 |
Company Netbacks ($/boe)
2017 |
2016 |
Year Ended |
|||||||||
Q4 |
Q3 |
Q4 |
2017 |
2016 |
|||||||
Sales price |
$ |
40.71 |
$ |
31.87 |
$ |
37.93 |
$ |
37.19 |
$ |
27.00 |
|
Royalty expense |
(3.80) |
(2.43) |
(1.21) |
(3.06) |
(0.90) |
||||||
Production costs |
(6.49) |
(5.41) |
(7.28) |
(6.74) |
(7.14) |
||||||
Transportation costs |
(0.97) |
(1.45) |
(1.04) |
(1.03) |
(1.31) |
||||||
Field operating netback |
29.45 |
22.58 |
28.47 |
26.36 |
17.65 |
||||||
Realized gain on commodity contract settlement |
0.93 |
2.95 |
0.77 |
1.32 |
1.94 |
||||||
Operating netback |
30.39 |
25.53 |
29.23 |
27.68 |
19.59 |
||||||
G&A |
(1.44) |
(0.74) |
(2.34) |
(0.95) |
(1.88) |
||||||
Finance expenses |
(0.32) |
(0.71) |
(2.76) |
(1.07) |
(2.22) |
||||||
Funds flow netback |
28.63 |
24.07 |
24.13 |
25.66 |
15.49 |
||||||
Depletion and depreciation |
(9.63) |
(10.95) |
(13.06) |
(10.47) |
(13.15) |
||||||
E&E Impairment |
– |
– |
– |
– |
(0.70) |
||||||
Accretion |
(0.74) |
(0.08) |
(0.14) |
(0.29) |
(0.17) |
||||||
Stock-based compensation |
(0.66) |
(0.71) |
(0.85) |
(0.72) |
(0.96) |
||||||
Unrealized gain (loss) on financial instruments |
(6.92) |
(2.39) |
(5.36) |
(1.13) |
(3.18) |
||||||
Gain on Settlement of Lawsuit |
– |
– |
– |
– |
12.09 |
||||||
Deferred income tax |
(3.10) |
(2.77) |
(5.80) |
(3.75) |
(0.01) |
||||||
Net Income netback |
$ |
7.57 |
$ |
7.17 |
$ |
(1.08) |
$ |
9.30 |
$ |
9.40 |
Business Environment
2017 |
2016 |
Year Ended |
|||||
Q4 |
Q3 |
Q4 |
2017 |
2016 |
|||
Realized Pricing (Including realized commodity contracts) |
|||||||
Oil ($/bbl) |
$ 72.70 |
$ 60.41 |
$ 64.57 |
$ 65.61 |
$ 58.37 |
||
NGL ($/bbl) |
$ 40.63 |
$ 37.52 |
$ 30.07 |
$ 35.15 |
$ 27.08 |
||
Gas ($/mcf) |
$ 2.06 |
$ 1.88 |
$ 3.15 |
$ 2.46 |
$ 2.29 |
||
Realized Pricing (Excluding commodity contracts) |
|||||||
Oil ($/bbl) |
$ 72.33 |
$ 56.51 |
$ 63.39 |
$ 64.23 |
$ 54.35 |
||
NGL ($/bbl) |
$ 40.29 |
$ 33.39 |
$ 28.31 |
$ 33.74 |
$ 22.51 |
||
Gas ($/mcf) |
$ 1.77 |
$ 1.60 |
$ 3.15 |
$ 2.25 |
$ 2.29 |
||
Oil Price Benchmarks |
|||||||
West Texas Intermediate (“WTI”) (US$/bbl) |
$ 55.40 |
$ 48.20 |
$ 49.35 |
$ 50.84 |
$ 43.35 |
||
Edmonton Par (C$/bbl) |
$ 69.30 |
$ 57.05 |
$ 62.00 |
$ 63.20 |
$ 51.90 |
||
Edmonton Par to WTI differential (US$/bbl) |
$ (0.04) |
$ 2.56 |
$ 2.85 |
$ 2.18 |
$ 4.43 |
||
Natural Gas Price Benchmarks |
|||||||
AECO gas (Cdn$/mcf) |
$ 1.70 |
$ 1.45 |
$ 3.10 |
$ 2.15 |
$ 2.15 |
||
Foreign Exchange |
|||||||
U.S./Canadian Dollar Exchange |
$ 0.80 |
$ 0.80 |
$ 0.75 |
$ 0.77 |
$ 0.75 |
Operations Summary
Net petroleum and natural gas production, pricing and revenue are summarized below:
2017 |
2016 |
Year Ended |
||||||||||
Q4 |
Q3 |
Q4 |
2017 |
2016 |
||||||||
Daily production volumes |
||||||||||||
Natural gas (mcf/d) |
16,782 |
16,142 |
8,342 |
14,901 |
9,586 |
|||||||
Oil (bbl/d) |
2,687 |
2,380 |
1,248 |
2,295 |
856 |
|||||||
NGL’s (bbl/d) |
1,237 |
955 |
557 |
962 |
503 |
|||||||
Combined (boe/d 6:1) |
6,721 |
6,025 |
3,216 |
5,740 |
2,982 |
|||||||
Revenue |
||||||||||||
Petroleum & natural gas sales – Gross |
$ |
25,172,383 |
$ |
17,663,925 |
$ |
11,149,691 |
$ |
77,913,091 |
$ |
29,213,872 |
||
Realized gain on commodity contract settlement |
577,551 |
1,632,783 |
225,697 |
2,773,986 |
2,102,795 |
|||||||
Total sales |
25,749,934 |
19,296,708 |
11,375,388 |
80,687,077 |
31,316,667 |
|||||||
Royalty expense |
(2,348,635) |
(1,344,746) |
(356,186) |
(6,411,927) |
(979,164) |
|||||||
Total Revenue – Net of royalties |
$ |
23,401,299 |
$ |
17,951,962 |
$ |
11,019,202 |
$ |
74,275,150 |
$ |
30,337,503 |
Working Capital Summary
The following table summarizes the change in working capital during the year ended December 31, 2017 and December 31, 2016:
2017 |
2016 |
||||
Net Debt – beginning of period |
$ |
(65,005,805) |
$ |
(60,886,556) |
|
Funds flow from operations |
52,902,650 |
16,263,727 |
|||
Additions to property and equipment |
(83,472,094) |
(27,672,766) |
|||
Property Acquisition |
– |
(3,707,693) |
|||
Decommissioning costs incurred |
(95,433) |
(180,862) |
|||
Issuance of shares |
2,179,593 |
11,218,610 |
|||
Other Debt |
(42,163) |
(40,265) |
|||
Net Debt – end of period |
$ |
(93,533,252) |
$ |
(65,005,805) |
|
Credit facility limit |
$ |
120,000,000 |
$ |
80,000,000 |
Capital Spending
Capital spending is summarized as follows:
2017 |
2016 |
Year Ended |
||||
Cash additions |
Q4 |
Q3 |
Q4 |
2017 |
2016 |
|
Land, acquisitions and lease rentals |
$ 1,163,261 |
$ 3,503,852 |
$ 385,257 |
$ 7,164,597 |
$ 2,079,149 |
|
Cash property acquisitions |
– |
– |
– |
– |
1,400,000 |
|
Drilling and completion |
25,406,328 |
14,939,137 |
10,714,791 |
64,309,093 |
19,075,429 |
|
Geological and geophysical |
262,675 |
134,283 |
184,458 |
824,760 |
913,996 |
|
Equipment |
4,311,988 |
2,248,622 |
2,359,067 |
10,853,654 |
4,085,067 |
|
Other asset additions |
20,023 |
84,631 |
29,419 |
319,990 |
119,125 |
|
$ 31,164,275 |
$ 20,910,525 |
$ 13,672,992 |
$ 83,472,094 |
$ 27,672,766 |
Annual General Meeting of Shareholders
The Company’s Annual General Meeting of Shareholders is scheduled for 10:00 AM on Thursday May 10, 2018 in the Tillyard Management Conference Centre, Main Floor, 715 5th Avenue SW, Calgary, AB.
Year End Disclosure
The Company’s financial statements, notes to the financial statements, management’s discussion and analysis and annual information form will be filed on SEDAR (www.sedar.com) and are available on the Company’s website (www.yangarra.ca).