CALGARY, May 9, 2018 /CNW/ – Yangarra Resources Ltd. (“Yangarra” or the “Company“) (TSX:YGR) announces its financial and operating results for the three months ended March 31, 2018.
First Quarter Highlights
- Production of 7,507 boe/d (59% liquids), an increase of 12% from the fourth quarter of 2017.
- Oil and gas sales were $29.7 million with funds flow from operations of $18.6 million ($0.22 per share – basic).
- Adjusted EBITDA (which excludes changes in derivative financial instruments) was $18.7 million ($0.23 per share – basic).
- Net income of $5.7 million ($0.07 per share – basic) or $8.0 million net income before tax.
- Operating costs were $8.05/boe (including $1.65/boe of transportation costs).
- Operating netbacks, which include the impact of commodity contracts, were $29.59 per boe.
- Operating margins were 67% and cash flow margins were 63%.
- G&A costs of $0.57/boe.
- Royalties were 9% of oil and gas revenue.
- Total capital expenditures were $31.3 million plus $5.1 million of land purchases
- Net debt (which excludes the current derivative financial instruments) was $108.0 million
- On April 6, 2018 the syndicated credit facility was increased to $150 million.
- Net Debt to annualized first quarter funds flow from operations was 1.45 : 1
Operations Update
The Company drilled 10 gross (8.2 net) wells in the first quarter consisting of 5 gross (4.7 net) two-mile horizontal wells and 5 gross (3.5 net) one-mile horizontal wells. Five of the ten wells were completed and placed onstream with the remaining five to be completed in May. The five wells being completed in May, together with an additional 500 boe/d of restricted volumes in the area, will be placed onstream with the commissioning of the 100% Yangarra owned West Ferrier facility, targeted for late June.
Well completions continue to evolve with the Company currently targeting 80 stages per mile with 20 tonnes of sand per stage.
With the 10 wells drilled in Q1, Yangarra has now drilled a total of 33 wells into bioturbated Cardium. The Company anticipates releasing average IP 30 results for wells 21-30 with its Q2 financial results. The Company expects to re-commence drilling operations in June with two rigs including a 5-well pad that is planned after breakup to evaluate cost savings from multi-well pad drilling.
Third party constraints on two wells and freeze-ups from colder than usual weather negatively impacted first quarter production and caused costs to increase by 8% on a per boe basis when compared to the fourth quarter of 2017. To alleviate third party constraints, Yangarra plans to tie in the two wells affected (~500 boe/d) into a Company owned facility in the area.
Financial Summary
2018 |
2017 |
|||||
Q1 |
Q4 |
Q1 |
||||
Statements of Comprehensive Income |
||||||
Petroleum & natural gas sales |
$ |
29,749,716 |
$ |
25,172,383 |
$ |
15,539,302 |
Net income (before tax) |
$ |
8,046,711 |
$ |
6,598,112 |
$ |
7,341,733 |
Net income |
$ |
5,658,059 |
$ |
4,681,958 |
$ |
5,216,545 |
Net income per share – basic |
$ |
0.07 |
$ |
0.06 |
$ |
0.07 |
Net income per share – diluted |
$ |
0.07 |
$ |
0.05 |
$ |
0.06 |
Statements of Cash Flow |
||||||
Funds flow from operations |
$ |
18,637,949 |
$ |
17,563,628 |
$ |
10,343,203 |
Funds flow from operations per share – basic |
$ |
0.22 |
$ |
0.22 |
$ |
0.13 |
Funds flow from operations per share – diluted |
$ |
0.22 |
$ |
0.20 |
$ |
0.12 |
Cash from operating activities |
$ |
14,988,928 |
$ |
20,541,872 |
$ |
8,610,412 |
Statements of Financial Position |
||||||
Property and equipment |
$ |
367,513,370 |
$ |
342,099,959 |
$ |
297,327,854 |
Total assets |
$ |
411,579,250 |
$ |
378,231,413 |
$ |
322,741,856 |
Working capital deficit |
$ |
18,844,775 |
$ |
11,210,245 |
$ |
77,233,927 |
Net Debt (which excludes current derivative financial instruments) |
$ |
108,019,791 |
$ |
93,533,252 |
$ |
77,646,963 |
Non-Current Liabilities, excluding bank debt |
$ |
47,626,159 |
$ |
44,366,746 |
$ |
36,541,365 |
Shareholders equity |
$ |
218,030,997 |
$ |
207,956,623 |
$ |
190,315,027 |
Weighted average number of shares – basic |
82,885,794 |
81,301,744 |
79,970,061 |
|||
Weighted average number of shares – diluted |
86,336,165 |
85,748,705 |
82,872,845 |
|||
Company Netbacks ($/boe)
2018 |
2017 |
||||||
Q1 |
Q4 |
Q1 |
|||||
Sales price |
$ |
44.03 |
$ |
40.71 |
$ |
38.54 |
|
Royalty expense |
(4.15) |
(3.80) |
(3.05) |
||||
Production costs |
(6.40) |
(5.95) |
(6.30) |
||||
Transportation costs |
(1.65) |
(1.51) |
(1.63) |
||||
Field operating netback |
31.84 |
29.45 |
27.56 |
||||
Realized gain (loss) on commodity contract settlement |
(2.25) |
0.93 |
0.21 |
||||
Operating netback |
29.59 |
30.39 |
27.77 |
||||
G&A |
(0.57) |
(1.44) |
(0.51) |
||||
Finance expenses |
(1.29) |
(0.32) |
(1.59) |
||||
Funds flow netback |
27.73 |
28.63 |
25.67 |
||||
Depletion and depreciation |
(10.07) |
(9.63) |
(10.85) |
||||
Accretion |
(0.07) |
(0.74) |
(0.11) |
||||
Stock-based compensation |
(1.21) |
(0.66) |
(0.82) |
||||
Unrealized gain (loss) on financial instruments |
(4.47) |
(6.92) |
4.31 |
||||
Deferred income tax |
(3.54) |
(3.10) |
(5.27) |
||||
Net Income netback |
$ |
8.37 |
$ |
7.57 |
$ |
12.93 |
Business Environment
2018 |
2017 |
||||||
Q1 |
Q4 |
Q1 |
|||||
Realized Pricing (Including realized commodity contracts) |
|||||||
Oil ($/bbl) |
$ |
68.51 |
$ |
72.70 |
$ |
64.67 |
|
NGL ($/bbl) |
$ |
40.50 |
$ |
40.63 |
$ |
30.43 |
|
Gas ($/mcf) |
$ |
2.21 |
$ |
2.06 |
$ |
3.09 |
|
Realized Pricing (Excluding commodity contracts) |
|||||||
Oil ($/bbl) |
$ |
72.04 |
$ |
72.33 |
$ |
64.35 |
|
NGL ($/bbl) |
$ |
45.24 |
$ |
40.29 |
$ |
29.96 |
|
Gas ($/mcf) |
$ |
2.21 |
$ |
1.77 |
$ |
3.09 |
|
Oil Price Benchmarks |
|||||||
West Texas Intermediate (“WTI”) (US$/bbl) |
$ |
62.87 |
$ |
55.40 |
$ |
51.91 |
|
Edmonton Par (C$/bbl) |
$ |
72.06 |
$ |
69.30 |
$ |
64.25 |
|
Edmonton Par to WTI differential (US$/bbl) |
$ |
(5.87) |
$ |
0.04 |
$ |
(3.34) |
|
Natural Gas Price Benchmarks |
|||||||
AECO gas (Cdn$/mcf) |
$ |
1.85 |
$ |
1.70 |
$ |
2.94 |
|
Foreign Exchange |
|||||||
U.S./Canadian Dollar Exchange |
$ |
0.79 |
$ |
0.80 |
$ |
0.76 |
Operations Summary
Net petroleum and natural gas production, pricing and revenue are summarized below:
2018 |
2017 |
||||||
Q1 |
Q4 |
Q1 |
|||||
Daily production volumes |
|||||||
Natural gas (mcf/d) |
18,538 |
16,782 |
11,019 |
||||
Oil (bbl/d) |
3,352 |
2,687 |
1,836 |
||||
NGL’s (bbl/d) |
1,066 |
1,237 |
809 |
||||
Combined (boe/d 6:1) |
7,507 |
6,721 |
4,483 |
||||
Revenue |
|||||||
Petroleum & natural gas sales – Gross |
$ |
29,749,716 |
$ |
25,172,383 |
$ |
15,539,302 |
|
Realized gain(loss) on commodity contract settlement |
(1,522,025) |
577,551 |
85,918 |
||||
Total sales |
28,227,691 |
25,749,934 |
15,635,306 |
||||
Royalty expense |
(2,801,221) |
(2,348,635) |
(1,231,175) |
||||
Total Revenue – Net of royalties |
$ |
25,426,470 |
$ |
23,401,299 |
$ |
14,404,131 |
Working Capital Summary
The following table summarizes the change in working capital during the three months ended March 31, 2018 and the year ended December 31, 2017:
2018 |
2017 |
||||
Net Debt – beginning of period |
$ |
(93,533,252) |
$ |
(65,005,805) |
|
Funds flow from operations |
18,637,949 |
52,902,650 |
|||
Additions to property and equipment |
(31,312,146) |
(83,472,094) |
|||
Decommissioning costs incurred |
– |
(95,433) |
|||
Additions to E&E Assets |
(5,048,211) |
– |
|||
Issuance of shares |
3,307,797 |
2,179,593 |
|||
Other |
(71,928) |
(42,163) |
|||
Net Debt – end of period |
$ |
(108,019,791) |
$ |
(93,533,252) |
|
Credit facility limit |
$ |
120,000,000 |
$ |
120,000,000 |
|
On April 6, 2018 the syndicated credit facility was increased to $150 million. |
Capital Spending
Capital spending is summarized as follows:
2018 |
2017 |
|||||
Cash additions |
Q1 |
Q4 |
Q1 |
|||
Land, acquisitions and lease rentals |
$ |
57,142 |
$ |
1,163,261 |
$ |
770,915 |
Drilling and completion |
26,771,512 |
25,406,328 |
19,664,385 |
|||
Geological and geophysical |
139,091 |
262,675 |
143,792 |
|||
Equipment |
4,340,961 |
4,311,988 |
2,910,272 |
|||
Other asset additions |
3,439 |
20,023 |
6,898 |
|||
$ |
31,312,145 |
$ |
31,164,275 |
$ |
23,496,262 |
|
Exploration & evaluation assets |
$ |
5,048,211 |
$ |
(729,600) |
$ |
– |
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.
Quarter End Disclosure
The Company’s financial statements, notes to the financial statements and management’s discussion and analysis for the year ended December 31, 2017 and three months ended March 31, 2018 have been filed on SEDAR (www.sedar.com) and are available on the Company’s website (www.yangarra.ca).