CALGARY, AB – Yangarra Resources Ltd. (“Yangarra” or the “Company“) (TSX: YGR) announces its financial and operating results for the three months ended March 31, 2021.
During the first quarter, Yangarra continued its disciplined approach to controlling costs on operations and capital spending by successfully drilling seven wells and completing eight wells below previous guidance on cost estimates. The emphasis on a profitable growth strategy resulted in delays to bringing these wells on stream as the Company purposefully maximized use of company owned services to minimize costs. As of April, all the wells completed in the first quarter are on production. Yangarra’s focus on cost reduction has established a cost base that will allow for significant improvements on profitability into the future. The Company expects these profits will maximize free cash flow which will initially reduce debt and ultimately translate into returns to shareholders.
Yangarra continues to make strides on its ESG initiatives as the Company executes on various methane reduction methodologies. Early results suggest the emissions reductions will be higher than initially estimated and as mandated by regulation, all at a cost lower than expected. The Company is mobilizing for a 2021 abandonment program, partially funded by the Government of Alberta’s Site Rehabilitation Program, that will result in the abandonment of the majority of Yangarra’s suspended wells. As well, new additions to the leadership structure has resulted in increased diversity at both the board and management level.
Annual General Meeting of Shareholders
The Company’s Annual General Meeting of Shareholders is scheduled for 10:00 AM on Thursday April 29, 2021.
As a precaution due to the COVID-19 pandemic, there will not be a corporate presentation at the conclusion of the meeting and the following Zoom conference information will be utilized to allow registered shareholders to listen to the formal portion of the meeting:
Zoom Link:
https://us02web.zoom.us/j/82111432509?pwd=YTQvRGdkd0RHZ1hvTGIwSzZuQms2dz09
Zoom Meeting ID: 821 1143 2509
Zoom Passcode: 752122
Participants will also be able to join with audio-only, using the following number
1-587-328-1099
First Quarter Highlights
Operations Summary
The Company drilled 7 wells and completed 8 wells during the quarter, with a majority of the wells brought onstream in late March, resulting in higher exit production for the quarter. Drilling operations have commenced on a five-well pad which is targeted to be brought on production before the end of the second quarter. Production during the quarter was negatively impacted by inclement weather and completions activity on adjacent pads. As part of the Company’s disciplined approach to costs, Yangarra continues to avoid expensive third-party takeaway options when mid-streamers shut down for maintenance.
Disciplined Approach to Cost structure
Yangarra continues to streamline and improve its field operations which periodically results in short-term delay bringing-on new wells. However, by utilizing its own field personnel and equipment, Yangarra’s costs are materially lower than third-party service providers. The cost to equip and tie-in wells has been reduced significantly as Company crews are handling all surface installations and pipeline construction. Surface equipment is rotated through the field to new pads efficiently, as wells
on older pads decline. Multi-disciplined field personnel and the addition of a full line of construction and commercial trucking equipment to augment the fluid trucking division allows Yangarra to allocate its field personnel to multiple tasks which creates efficient services with less staff.
ESG Initiatives
The project to reduce vented methane via pneumatic device retrofits or removal is nearing completion and the project to reduce methane venting via incineration has commenced. The Company has begun hook up of pad sites to the electric grid and, converting pump jacks to electric motors which significantly reduces carbon emissions while increasing profit as natural gas sold instead of being burned for fuel is net cash flow positive. Yangarra is also installing vapour recovery units to conserve solution gas on new pad sites.
Another abandonment program is set to commence targeting 15-20 standing wells, further reducing the $12.3 million decommissioning liability.
Financial Summary
2021 |
2020 |
|||||
Q1 |
Q4 |
Q1 |
||||
Statements of Income and Comprehensive Income |
||||||
Petroleum & natural gas sales |
$ |
28,475 |
$ |
23,064 |
$ |
27,435 |
Income before tax |
$ |
11,919 |
$ |
5,754 |
$ |
3,877 |
Net income |
$ |
9,117 |
$ |
4,276 |
$ |
2,835 |
Net income per share – basic |
$ |
0.11 |
$ |
0.05 |
$ |
0.03 |
Net income per share – diluted |
$ |
0.10 |
$ |
0.05 |
$ |
0.03 |
Statements of Cash Flow |
||||||
Funds flow from operations |
$ |
17,091 |
$ |
12,460 |
$ |
15,293 |
Funds flow from operations per share – basic |
$ |
0.20 |
$ |
0.15 |
$ |
0.18 |
Funds flow from operations per share – diluted |
$ |
0.20 |
$ |
0.15 |
$ |
0.18 |
Cash from operating activities |
$ |
12,986 |
$ |
19,192 |
$ |
15,725 |
Statements of Financial Position |
||||||
Property and equipment |
$ |
575,296 |
$ |
563,290 |
$ |
558,956 |
Total assets |
$ |
625,776 |
$ |
609,989 |
$ |
608,468 |
Working capital (deficit) surplus |
$ |
(1,656) |
$ |
6 |
$ |
(9,278) |
Adjusted net debt |
$ |
199,428 |
$ |
197,379 |
$ |
198,253 |
Shareholders equity |
$ |
321,784 |
$ |
312,260 |
$ |
307,265 |
Weighted average number of shares – basic |
85,416 |
85,380 |
85,380 |
|||
Weighted average number of shares – diluted |
87,159 |
85,588 |
85,524 |
|||
Company Netbacks ($/boe)
2021 |
2020 |
|||||
Q1 |
Q4 |
Q1 |
||||
Sales price |
$ |
36.22 |
$ |
27.34 |
$ |
24.87 |
Royalty expense |
(2.08) |
(1.52) |
(1.49) |
|||
Production costs |
(4.74) |
(5.02) |
(5.67) |
|||
Transportation costs |
(1.10) |
(1.03) |
(1.00) |
|||
Field operating netback |
28.30 |
19.77 |
16.71 |
|||
Realized gain (loss) on commodity contract settlement |
(2.35) |
(0.38) |
0.05 |
|||
Operating netback |
25.96 |
19.39 |
16.76 |
|||
G&A |
(0.67) |
(0.89) |
(0.72) |
|||
Cash Finance expenses |
(3.79) |
(3.73) |
(2.17) |
|||
Depletion and depreciation |
(8.04) |
(8.04) |
(8.36) |
|||
Non Cash – Finance expenses |
3.42 |
(0.06) |
(2.11) |
|||
Stock-based compensation |
(0.28) |
(0.61) |
(0.51) |
|||
Unrealized gain (loss) on financial instruments |
(1.42) |
0.96 |
0.57 |
|||
Deferred income tax |
(3.56) |
(1.75) |
(0.94) |
|||
Net Income netback |
$ |
11.61 |
$ |
5.06 |
$ |
2.51 |
Business Environment
2021 |
2020 |
|||||
Q1 |
Q4 |
Q1 |
||||
Realized Pricing (Including realized commodity contracts) |
||||||
Oil ($/bbl) |
$ |
60.80 |
$ |
55.13 |
$ |
52.19 |
NGL ($/bbl) |
$ |
38.48 |
$ |
24.32 |
$ |
16.64 |
Gas ($/mcf) |
$ |
3.07 |
$ |
2.64 |
$ |
2.11 |
Realized Pricing (Excluding commodity contracts) |
||||||
Oil ($/bbl) |
$ |
68.33 |
$ |
55.13 |
$ |
52.05 |
NGL ($/bbl) |
$ |
38.60 |
$ |
24.43 |
$ |
16.59 |
Gas ($/mcf) |
$ |
3.14 |
$ |
2.75 |
$ |
2.11 |
Oil Price Benchmarks |
||||||
West Texas Intermediate (“WTI”) (US$/bbl) |
$ |
57.91 |
$ |
42.66 |
$ |
46.17 |
Edmonton Par ($/bbl) |
$ |
68.79 |
$ |
50.24 |
$ |
51.44 |
Edmonton Par to WTI differential (US$/bbl) |
$ |
(3.57) |
$ |
(4.01) |
$ |
(7.85) |
Natural Gas Price Benchmarks |
||||||
AECO gas ($/mcf) |
$ |
2.99 |
$ |
2.64 |
$ |
2.03 |
Foreign Exchange |
||||||
U.S./Canadian Dollar Exchange |
0.79 |
0.77 |
0.75 |
|||
Operations Summary
Net petroleum and natural gas production, pricing and revenue are summarized below:
2021 |
2020 |
|||||
Q1 |
Q4 |
Q1 |
||||
Daily production volumes |
||||||
Natural gas (mcf/d) |
28,022 |
30,322 |
38,712 |
|||
Oil (bbl/d) |
2,414 |
2,269 |
3,550 |
|||
NGL’s (bbl/d) |
1,652 |
1,846 |
2,120 |
|||
Combined (boe/d 6:1) |
8,736 |
9,169 |
12,122 |
|||
Revenue |
||||||
Petroleum & natural gas sales – Gross |
$ |
28,475 |
$ |
23,064 |
$ |
27,435 |
Realized gain (loss) on commodity contract settlement |
(1,845) |
(323) |
53 |
|||
Total sales |
26,630 |
22,741 |
27,488 |
|||
Royalty expense |
(1,633) |
(1,283) |
(1,640) |
|||
Total Revenue – Net of royalties |
$ |
24,997 |
$ |
21,458 |
$ |
25,848 |
Working Capital Summary
The following table summarizes the change in adjusted net debt during the three months ended March 31, 2021 and year December 31, 2020:
Three months ended |
Year ended |
|||
March 31, 2020 |
December 31, 2020 |
|||
Adjusted net debt – beginning of period |
$ |
(197,379) |
$ |
(187,711) |
Funds flow from operations |
17,091 |
45,524 |
||
Additions to property and equipment |
(18,587) |
(51,093) |
||
Decommissioning costs incurred |
– |
(389) |
||
Additions to E&E Assets |
– |
(426) |
||
Issuance of shares |
113 |
– |
||
Other |
(570) |
(3,284) |
||
Adjusted net debt – end of period |
$ |
(199,332) |
$ |
(197,379) |
Credit facility limit |
$ |
210,000 |
$ |
210,000 |
Capital Spending
Capital spending is summarized as follows:
2021 |
2020 |
|||||
Cash additions |
Q1 |
Q4 |
Q1 |
|||
Land, acquisitions and lease rentals |
$ |
(121) |
$ |
(75) |
$ |
104 |
Drilling and completion |
16,527 |
14,030 |
22,564 |
|||
Geological and geophysical |
271 |
134 |
171 |
|||
Equipment |
1,770 |
753 |
1,968 |
|||
Other asset additions |
140 |
347 |
201 |
|||
$ |
18,587 |
$ |
15,189 |
$ |
25,008 |
|
Exploration & evaluation assets |
$ |
– |
$ |
– |
$ |
426 |
Quarter End Disclosure
The Company’s financial statements, notes to the 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).
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