Yangarra announces 2020 first quarter financial and operating results

April 29, 2020 CNW

CALGARY – Yangarra Resources Ltd. (“Yangarra” or the “Company“) (TSX:YGR) announces its financial and operating results for the three months ended March 31, 2020.

Annual General and Special Meeting of Shareholders

The Company’s Annual General and Special Meeting of Shareholders is scheduled for 10:00 AM on Thursday April 30, 2020.

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 conference call number will be utilized to allow registered shareholders to listen to the formal portion of the meeting:

Toll free (Canada/North America) dial in is 1-877-385-4099

Participant code is 2618233

The participant will dial in using the dial in number then they will enter the participant code and wait to be connected to conference call

First Quarter Highlights

Average production of 12,122 boe/d (47% liquids) during the quarter a 1% increase from the same period in 2019
Oil and gas sales were $27.4 million, a decrease of 31% from the same period in 2019
Funds flow from operations of $15.3 million ($0.18 per share – basic), a decrease of 45% from the same period in 2019
Adjusted EBITDA (which excludes changes in derivative financial instruments) was $17.1 million ($0.21 per share – basic)
Net income of $2.8 million ($0.03 per share – basic, $3.9 million before tax), a decrease of 76% from the same period in 2019 and represents the 13th consecutive quarter of net income
Operating costs were $6.67/boe (including $1.00/boe of transportation costs)
Field operating netbacks were $16.71/boe
Operating netbacks, which include the impact of commodity contracts, were $16.76/boe
Operating margins were 67% and funds flow from operations margins were 56%
G&A costs of $0.72/boe
Royalties were 6% of oil and gas revenue
All in cash costs were $11.06/boe
Capital expenditures (including $0.4 million on land) were $25.4 million
Net Debt to first quarter annualized funds flow from operations was 3.24 : 1
Retained earnings of $107 million
Corporate LMR is 11.0 with decommissioning liabilities of $16 million (discounted)
Yangarra drilled six wells and completed five wells in the first quarter of 2020 leaving four wells drilled and uncompleted at the end of the quarter. Yangarra elected to reduce first quarter activity as per the Company’s strategy of reducing capital spending when commodity pricing falls below internal thresholds for rates of return.

Operations Update

COVID-19 protocols remain in place and all personnel have remained on salary in both the head office and the field. Yangarra will qualify for 75% wage coverage from the federal government due to the significant reduction in revenue from 2019. The wage subsidy combined with very low G&A and operating costs has allowed the Company to avoid laying off any staff.

Yangarra did not nominate any sweet oil sales for May due to very high sweet oil differentials. Field inventory is currently low, and the company expects to utilize this storage until spot oil prices are at a more reasonable level. In addition, 30 low volume wells have been shut in as that production will continue to accumulate downhole for up to four months. Current production is approximately 11,000 boe/d.

Financial Summary


	2020		2019
	Q1		Q4		Q1
Statements of Comprehensive Income
Petroleum & natural gas sales	$	27,435	$	35,990	$	39,907

Net income (before tax)	$	3,877	$	9,405	$	16,386

Net income	$	2,835	$	7,020	$	11,514
Net income per share – basic	$	0.03	$	0.08	$	0.13
Net income per share – diluted	$	0.03	$	0.08	$	0.13

Statements of Cash Flow
Funds flow from operations	$	15,293	$	21,005	$	27,731
Funds flow from operations per share – basic	$	0.18	$	0.25	$	0.32
Funds flow from operations per share – diluted	$	0.18	$	0.25	$	0.32
Cash from operating activities	$	15,725	$	25,469	$	22,963

Statements of Financial Position
Property and equipment	$	558,956	$	541,799	$	511,113
Total assets	$	608,468	$	592,195	$	566,081
Working capital deficit (surplus)	$	9,278	$	(906)	$	18,699
Adjusted Net Debt	$	198,253	$	187,712	$	188,063
Shareholders equity	$	307,265	$	303,643	$	268,584

Weighted average number of shares – basic	85,380		85,370		85,359
Weighted average number of shares – diluted	85,524		85,708		86,772

Company Netbacks ($/boe)


	2020		2019
	Q1		Q4		Q1

Sales price	$	24.87	$	31.13	$	37.09
Royalty expense	(1.49)		(2.49)		(2.79)
Production costs	(5.67)		(6.19)		(5.87)
Transportation costs	(1.00)		(1.11)		(0.96)
Field operating netback	16.71		21.34		27.46
Realized gain (loss) on commodity contract settlement	0.05		0.25		0.16
Operating netback	16.76		21.59		27.62
G&A	(0.72)		(1.17)		(0.32)
Cash Finance expenses	(2.17)		(1.58)		(1.53)
Depletion and depreciation	(8.36)		(8.33)		(8.48)
Non Cash – Finance expenses	(2.11)		0.02		(0.50)
Abandonment Expenses	–		(0.75)		–
Provision for Credit Losses	–		(0.57)		–
Stock-based compensation	(0.51)		(0.61)		(1.18)
Unrealized gain (loss) on financial instruments	0.57		(0.44)		(0.39)
Deferred income tax	(0.94)		(2.06)		(4.53)
Net Income netback	$	2.51	$	6.09	$	10.70

Business Environment


	2020		2019
	Q1		Q4		Q1
Realized Pricing (Including realized commodity contracts)
Oil ($/bbl)	$	52.19	$	67.06	$	66.00
NGL ($/bbl)	$	16.64	$	19.65	$	38.21
Gas ($/mcf)	$	2.11	$	2.48	$	2.56

Realized Pricing (Excluding commodity contracts)
Oil ($/bbl)	$	52.05	$	67.06	$	66.00
NGL ($/bbl)	$	16.59	$	18.03	$	37.18
Gas ($/mcf)	$	2.11	$	2.48	$	2.56

Oil Price Benchmarks
West Texas Intermediate (“WTI”) (US$/bbl)	$	46.17	$	56.95	$	54.90
Edmonton Par (C$/bbl)	$	51.44	$	68.05	$	66.48
Edmonton Par to WTI differential (US$/bbl)	$	(7.85)	$	(5.40)	$	(4.91)

Natural Gas Price Benchmarks
AECO gas (Cdn$/mcf)	$	2.03	$	2.48	$	1.94

Foreign Exchange

U.S./Canadian Dollar Exchange	0.75		0.76		0.75

Operations Summary

Net petroleum and natural gas production, pricing and revenue are summarized below:


	2020		2019
	Q1		Q4		Q1

Daily production volumes
Natural gas (mcf/d)	38,712		41,483		34,707
Oil (bbl/d)	3,550		3,712		4,343
NGL’s (bbl/d)	2,120		1,942		1,829
Combined (boe/d 6:1)	12,122		12,568		11,956

Revenue
Petroleum & natural gas sales – Gross	$	27,435	$	35,990	$	39,907
Realized gain (loss) on commodity contract settlement	53		290		170
Total sales	27,488		36,280		40,077
Royalty expense	(1,640)		(2,879)		(3,003)
Total Revenue – Net of royalties	$	25,848	$	33,401	$	37,074

Working Capital Summary

The following table summarizes the change in working capital during the months ended March 31, 2020 and December 31, 2019:


	Three months ended		Year ended
	March 31, 2020		December 31, 2019
Adjusted Net Debt – beginning of period	$	(187,711)	$	(155,882)

Funds flow from operations	15,293		92,236
Additions to property and equipment	(25,008)		(115,276)
Decommissioning costs incurred	–		(966)
Additions to E&E Assets	(426)		(5,723)
Issuance of shares	–		41
Other	(401)		(2,141)
Adjusted Net Debt – end of period	$	(198,253)	$	(187,711)

Credit facility limit	$	225,000	$	225,000

Capital Spending

Capital spending is summarized as follows:


	2020		2019
Cash additions	Q1		Q4		Q1

Land, acquisitions and lease rentals	$	104	$	38	$	38
Drilling and completion	22,563		16,997		38,908
Geological and geophysical	171		447		237
Equipment	1,968		2,503		18,320
Other asset additions	201		193		500
	$	25,008	$	20,178	$	58,004



Exploration & evaluation assets	$	426	$	480	$	1,044

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).