Second Quarter Highlights
- Average production of 8,205 boe/d (46% liquids) during the quarter, a 17% decrease from the same period in 2020
- Oil and gas sales were $28.5 million, an increase of 75% from the same period in 2020
- Funds flow from operations of $17.2 million ($0.20 per share – basic), an increase of 121% from the same period in 2020
- Adjusted EBITDA was $19.7 million ($0.23 per share – basic)
- Net income of $7.8 million ($0.09 per share – basic, $10.1 million before tax)
- Operating costs were $6.74/boe (including $1.26/boe of transportation costs)
- Field operating netbacks were $29.78/boe
- Operating netbacks, which include the impact of commodity contracts, were $27.71/boe
- Operating margins were 73% and funds flow from operations margins were 60%
- G&A costs of $0.85/boe
- Royalties were 4% of oil and gas revenue
- All in cash costs were $15.38/boe
- Capital expenditures were $19.5 million
- Completed its annual borrowing base review and the syndicated senior credit facility has been confirmed at $210 million
- Adjusted net debt was $202.7 million
- Adjusted net debt to second quarter annualized funds flow from operations was 2.94 : 1
- Retained earnings of $126 million
- Corporate LMR is 6.5 with decommissioning liabilities of $12.5 million (discounted)
Operations Summary
The Company drilled and completed seven wells during the quarter, including a five-well pad that was brought on production near the end of June and two wells that were brought on-stream in early July. Production during the quarter was negatively impacted by completion activity on the five well pad for adjacent wells and mid-stream maintenance disruptions downstream of Yangarra’s O’Chiese facility. 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.
Yangarra’s current production is approximately 10,000 boe/d with all seven wells now onstream. For the remainder of the third quarter, Yangarra is scheduled to drill & complete three wells at O’Chiese and four wells at West Ferrier. The Company expects to have these wells on production by the end of the third quarter.
Staff Changes
Yangarra has appointed Brett Booth to the role of Vice President, Land, replacing Randall Faminow who is retiring after over a 40-year highly successful career in the energy business. Mr. Faminow has been a key part of Yangarra’s business plan of building a top tier Cardium asset in Central Alberta. Yangarra would like to thank Mr. Faminow for his dedication over the last nine years in helping build Yangarra.
Mr. Booth has over 12 years of land experience in all aspects of oil and gas land work, including negotiations, acquisitions and divestments, mergers and contracts. He was previously VP Land at Prairie Thunder Resources, Banded Peak Energy, Petrus Resources and prior thereto held various other land positions at Bonavista Energy.
Corporate Budget
Yangarra Board has approved an increase in the capital budget from $60 million to $85 million which will keep one drilling rig fully utilized for the balance of the year.
Financial Summary
2021 |
2020 |
Six Months Ended |
|||||||||
Q2 |
Q1 |
Q2 |
2021 |
2020 |
|||||||
Statements of Income and Comprehensive Income |
|||||||||||
Petroleum & natural gas sales |
$ |
28,529 |
$ |
28,475 |
$ |
16,290 |
$ |
57,004 |
$ |
43,725 |
|
Income before tax |
$ |
10,090 |
$ |
11,919 |
$ |
(2,933) |
$ |
22,009 |
$ |
944 |
|
Net income |
$ |
7,753 |
$ |
9,117 |
$ |
(2,801) |
$ |
16,870 |
$ |
34 |
|
Net income per share – basic |
$ |
0.09 |
$ |
0.11 |
$ |
(0.03) |
$ |
0.20 |
$ |
0.00 |
|
Net income per share – diluted |
$ |
0.09 |
$ |
0.10 |
$ |
(0.03) |
$ |
0.19 |
$ |
0.00 |
|
Statements of Cash Flow |
|||||||||||
Funds flow from operations |
$ |
17,240 |
$ |
17,091 |
$ |
7,795 |
$ |
34,331 |
$ |
23,138 |
|
Funds flow from operations per share – basic |
$ |
0.20 |
$ |
0.20 |
$ |
0.09 |
$ |
0.40 |
$ |
0.27 |
|
Funds flow from operations per share – diluted |
$ |
0.19 |
$ |
0.20 |
$ |
0.09 |
$ |
0.39 |
$ |
0.27 |
|
Cash from operating activities |
$ |
19,367 |
$ |
12,986 |
$ |
1,606 |
$ |
32,353 |
$ |
17,381 |
|
Statements of Financial Position |
|||||||||||
Property and equipment |
$ |
589,275 |
$ |
575,296 |
$ |
554,479 |
$ |
589,275 |
$ |
554,479 |
|
Total assets |
$ |
636,534 |
$ |
625,776 |
$ |
604,105 |
$ |
636,534 |
$ |
604,105 |
|
Working capital (deficit) surplus |
$ |
(6,667) |
$ |
(1,656) |
$ |
2,181 |
$ |
(6,667) |
$ |
2,181 |
|
Adjusted net debt |
$ |
202,662 |
$ |
199,428 |
$ |
192,067 |
$ |
202,662 |
$ |
192,067 |
|
Shareholders equity |
$ |
330,039 |
$ |
321,784 |
$ |
306,638 |
$ |
330,039 |
$ |
306,638 |
|
Weighted average number of shares – basic |
85,637 |
85,416 |
85,380 |
85,527 |
85,380 |
||||||
Weighted average number of shares – diluted |
89,098 |
87,159 |
85,380 |
88,675 |
85,640 |
||||||
Company Netbacks ($/boe)
2021 |
2020 |
Six Months Ended |
|||||||||
Q2 |
Q1 |
Q2 |
2021 |
2020 |
|||||||
Sales price |
$ |
38.21 |
$ |
36.22 |
$ |
18.13 |
$ |
37.19 |
$ |
21.83 |
|
Royalty expense |
(1.69) |
(2.08) |
(0.35) |
(1.89) |
(0.98) |
||||||
Production costs |
(5.49) |
(4.74) |
(5.37) |
(5.11) |
(5.53) |
||||||
Transportation costs |
(1.25) |
(1.10) |
(0.96) |
(1.17) |
(0.98) |
||||||
Field operating netback |
29.78 |
28.30 |
11.45 |
29.02 |
14.34 |
||||||
Realized gain (loss) on commodity contract settlement |
(2.07) |
(2.35) |
(0.08) |
(2.21) |
0.00 |
||||||
Operating netback |
27.71 |
25.96 |
11.37 |
26.81 |
14.34 |
||||||
G&A |
(0.85) |
(0.67) |
(0.66) |
(0.76) |
(0.69) |
||||||
Cash Finance expenses |
(4.16) |
(3.79) |
(2.11) |
(2.56) |
(3.96) |
||||||
Depletion and depreciation |
(8.09) |
(8.04) |
(8.46) |
(8.07) |
(8.41) |
||||||
Non Cash – Finance expenses |
(0.79) |
3.42 |
(1.71) |
(0.04) |
(0.05) |
||||||
Stock-based compensation |
(0.45) |
(0.28) |
(1.68) |
(0.36) |
(1.04) |
||||||
Unrealized gain (loss) on financial instruments |
0.15 |
(1.42) |
(0.07) |
(0.66) |
0.28 |
||||||
Deferred income tax |
(3.13) |
(3.56) |
0.15 |
(3.35) |
(0.45) |
||||||
Net Income netback |
$ |
10.39 |
$ |
11.61 |
$ |
(3.17) |
$ |
11.02 |
$ |
0.01 |
|
Business Environment
2021 |
2020 |
Six Months Ended |
|||||||||
Q2 |
Q1 |
Q2 |
2021 |
2020 |
|||||||
Realized Pricing (Including realized commodity contracts) |
|||||||||||
Oil ($/bbl) |
$ |
67.01 |
$ |
60.80 |
$ |
31.31 |
$ |
64.29 |
$ |
44.36 |
|
NGL ($/bbl) |
$ |
38.69 |
$ |
38.48 |
$ |
13.82 |
$ |
38.59 |
$ |
15.33 |
|
Gas ($/mcf) |
$ |
3.44 |
$ |
3.07 |
$ |
2.24 |
$ |
3.20 |
$ |
2.10 |
|
Realized Pricing (Excluding commodity contracts) |
|||||||||||
Oil ($/bbl) |
$ |
75.55 |
$ |
68.33 |
$ |
31.31 |
$ |
72.30 |
$ |
44.28 |
|
NGL ($/bbl) |
$ |
38.53 |
$ |
38.60 |
$ |
13.98 |
$ |
38.57 |
$ |
15.38 |
|
Gas ($/mcf) |
$ |
3.42 |
$ |
3.14 |
$ |
2.25 |
$ |
3.23 |
$ |
2.11 |
|
Oil Price Benchmarks |
|||||||||||
West Texas Intermediate (“WTI”) (US$/bbl) |
$ |
66.09 |
$ |
57.91 |
$ |
28.00 |
$ |
61.94 |
$ |
36.82 |
|
Edmonton Par ($/bbl) |
$ |
75.26 |
$ |
68.79 |
$ |
28.67 |
$ |
72.03 |
$ |
40.06 |
|
Edmonton Par to WTI differential (US$/bbl) |
$ |
(4.81) |
$ |
(3.57) |
$ |
(7.31) |
$ |
(4.19) |
$ |
(7.47) |
|
Natural Gas Price Benchmarks |
|||||||||||
AECO gas ($/mcf) |
$ |
3.14 |
$ |
2.99 |
$ |
1.89 |
$ |
2.95 |
$ |
1.91 |
|
Foreign Exchange |
|||||||||||
Canadian Dollar/U.S. Exchange |
0.81 |
0.79 |
0.72 |
0.80 |
0.73 |
||||||
Operations Summary
Net petroleum and natural gas production, pricing and revenue are summarized below:
2021 |
2020 |
Six Months Ended |
|||||||||
Q2 |
Q1 |
Q2 |
2021 |
2020 |
|||||||
Daily production volumes |
|||||||||||
Natural gas (mcf/d) |
26,558 |
28,022 |
33,214 |
27,286 |
35,962 |
||||||
Oil (bbl/d) |
2,088 |
2,414 |
2,513 |
2,240 |
3,029 |
||||||
NGL’s (bbl/d) |
1,691 |
1,652 |
1,827 |
1,682 |
1,976 |
||||||
Combined (boe/d 6:1) |
8,205 |
8,736 |
9,875 |
8,469 |
10,999 |
||||||
Revenue |
|||||||||||
Petroleum & natural gas sales – Gross |
$ |
28,529 |
$ |
28,475 |
$ |
16,290 |
$ |
57,004 |
$ |
43,725 |
|
Realized gain (loss) on commodity contract settlement |
(1,545) |
(1,845) |
(69) |
(3,390) |
(16) |
||||||
Total sales |
26,984 |
26,630 |
16,221 |
53,614 |
43,709 |
||||||
Royalty expense |
(1,263) |
(1,633) |
(314) |
(2,896) |
(1,954) |
||||||
Total Revenue – Net of royalties |
$ |
25,721 |
$ |
24,997 |
$ |
15,907 |
$ |
50,718 |
$ |
41,755 |
|
Working Capital Summary
The following table summarizes the change in adjusted net debt during the six months ended June 30, 2021 and year December 31, 2020:
Six months ended |
Year ended |
|||
June 30, 2021 |
December 31, 2020 |
|||
Adjusted net debt – beginning of period |
$ |
(197,414) |
$ |
(187,711) |
Funds flow from operations |
34,331 |
45,524 |
||
Additions to property and equipment |
(38,055) |
(51,093) |
||
Decommissioning costs incurred |
(344) |
(389) |
||
Additions to E&E Assets |
(134) |
(426) |
||
Issuance of shares |
217 |
– |
||
Other |
(1,263) |
(3,319) |
||
Adjusted net debt – end of period |
$ |
(202,662) |
$ |
(197,414) |
Credit facility limit |
$ |
210,000 |
$ |
210,000 |
Capital Spending
Capital spending is summarized as follows:
2021 |
2020 |
Six Months Ended |
|||||||||
Cash additions |
Q2 |
Q1 |
Q2 |
2021 |
2020 |
||||||
Land, acquisitions and lease rentals |
$ |
(63) |
$ |
(121) |
$ |
36 |
$ |
(184) |
$ |
140 |
|
Drilling and completion |
17,621 |
16,527 |
372 |
34,149 |
22,935 |
||||||
Geological and geophysical |
121 |
271 |
145 |
391 |
316 |
||||||
Equipment |
1,616 |
1,770 |
273 |
3,386 |
2,241 |
||||||
Other asset additions |
173 |
140 |
258 |
312 |
459 |
||||||
$ |
19,468 |
$ |
18,587 |
$ |
1,084 |
$ |
38,055 |
$ |
26,092 |
||
Exploration & evaluation assets |
$ |
134 |
$ |
– |
$ |
– |
$ |
134 |
$ |
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).