Le Lézard
Classified in: Oil industry, Business
Subject: ERN

Yangarra Announces 2017 Year End Financial and Operating Results



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

Fourth Quarter Highlights

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). 

Forward looking information

Certain information regarding Yangarra set forth in this news release,  management's assessment of future plans, operations and operational results may constitute forward-looking statements under applicable securities law and necessarily involve risks associated with oil and gas exploration, production, marketing and transportation such as loss of market, volatility of prices, currency fluctuations, imprecision of reserves estimates, environmental risks, competition from other producers and ability to access sufficient capital from internal and external sources.  As a consequence, actual results may differ materially from those anticipated in the forward-looking statements.  Certain of these risks are set out in more detail in Yangarra's current Annual Information Form, which is available on Yangarra's SEDAR profile at www.sedar.com.  

Forward-looking statements are based on estimates and opinions of management of Yangarra at the time the statements are presented.  Yangarra may, as considered necessary in the circumstances, update or revise such forward-looking statements, whether as a result of new information, future events or otherwise, but Yangarra undertakes no obligation to update or revise any forward-looking statements, except as required by applicable securities laws.

The initial production rates discussed in this press release are not necessarily indicative of long-term performance or of ultimate recovery due to high initial decline rates.

Barrels of Oil Equivalent

Natural gas has been converted to a barrel of oil equivalent (Boe) using 6,000 cubic feet (6 Mcf) of natural gas equal to one barrel of oil (6:1), unless otherwise stated.  The Boe conversion ratio of 6 Mcf to 1 Bbl is based on an energy equivalency conversion method and does not represent a value equivalency; therefore Boe's may be misleading if used in isolation. References to natural gas liquids ("NGLs") in this news release include condensate, propane, butane and ethane and one barrel of NGLs is considered to be equivalent to one barrel of crude oil equivalent (Boe).  One ("BCF") equals one billion cubic feet of natural gas.  One ("Mmcf") equals one million cubic feet of natural gas.  Operating netbacks are calculated as revenue from all products less operating costs.

Finding and Development Costs ("F&D") and Recycle Ratios

F&D costs are calculated by dividing the identified capital expenditures by the applicable reserves additions. F&D costs can include or exclude changes to future development capital costs.

Recycle Ratio is calculated as operating netback divided by F&D costs.

Non-GAAP Financial Measures

This press release contains references to measures used in the oil and natural gas industry such as "funds flow from operations", "operating netback", "adjusted working capital deficit", and "net debt".  These measures do not have standardized meanings prescribed by generally accepted accounting principles ("GAAP") and, therefore should not be considered in isolation.  These reported amounts and their underlying calculations are not necessarily comparable or calculated in an identical manner to a similarly titled measure of other companies where similar terminology is used.  Where these measures are used they should be given careful consideration by the reader.  These measures have been described and presented in this press release in order to provide shareholders and potential investors with additional information regarding the Company's liquidity and its ability to generate funds to finance its operations.

Funds flow from operations should not be considered an alternative to, or more meaningful than, cash provided by operating, investing and financing activities or net income as determined in accordance with GAAP, as an indicator of Yangarra's performance or liquidity.  Funds flow from operations is used by Yangarra to evaluate operating results and Yangarra's ability to generate cash flow to fund capital expenditures and repay indebtedness.  Funds flow from operations denotes cash flow from operating activities as it appears on the Company's Statement of Cash Flows before decommissioning expenditures and changes in non-cash operating working capital. Funds flow from operations is also derived from net income (loss) plus non-cash items including deferred income tax expense, depletion and depreciation expense, impairment expense, stock-based compensation expense, accretion expense, unrealized gains or losses on financial instruments and gains or losses on asset divestitures.  Funds from operations netback is calculated on a per boe basis and funds from operations per share is calculated as funds from operations divided by the weighted average number of basic and diluted common shares outstanding.  Operating netback denotes petroleum and natural gas revenue and realized gains or losses on financial instruments less royalty expenses, operating expenses and transportation and marketing expenses calculated on a per boe basis.  Adjusted working capital deficit includes current assets less current liabilities excluding the current portion of the amount drawn on the credit facilities, the current portion of the fair value of financial instruments and the deferred premium on financial instruments.  Yangarra uses net debt as a measure to assess its financial position.  Net debt includes current assets less current liabilities excluding the current portion of the fair value of financial instruments and the deferred premium on financial instruments, plus the long-term financial obligation.

Readers should also note that Adjusted EBITDA is a non-GAAP financial measures and do not have any standardized meaning under GAAP and is therefore unlikely to be comparable to similar measures presented by other companies. Yangarra believes that Adjusted EBITDA is a useful supplemental measure, which provide an indication of the results generated by the Yangarra's primary business activities prior to consideration of how those activities are financed, amortized or taxed. Readers are cautioned, however, that Adjusted EBITDA should not be construed as an alternative to comprehensive income (loss) determined in accordance with GAAP as an indicator of Yangarra's financial performance.

All reference to $ (funds) are in Canadian dollars.

Neither the TSX nor its Regulation Service Provider (as that term is defined in the Policies of the TSX) accepts responsibility for the adequacy and accuracy of this release.  

SOURCE Yangarra Resources Ltd.


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