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Yangarra Resources Ltd.

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Yangarra Announces 2020 Second Quarter Financial and Operating Results

Canada NewsWire

CALGARY, AB, July 29, 2020 /CNW/ - Yangarra Resources Ltd. ("Yangarra" or the "Company") (TSX: YGR) announces its financial and operating results for the three and six months ended June 30, 2020.

Second Quarter Highlights

  • Average production of 9,875 boe/d (44% liquids) during the quarter, a 24% decrease from the same period in 2019   
  • Oil and gas sales were $16.2 million, a decrease of 56% from the same period in 2019
  • Funds flow from operations of $7.7 million ($0.09 per share – basic), a decrease of 68% from the same period in 2019 
  • Adjusted EBITDA (which excludes changes in derivative financial instruments) was $8.1 million ($0.09 per share - basic)
  • Net loss of $2.8 million ($0.03 per share – basic, $2.9 million before tax), a decrease of 115% from the same period in 2019
  • Operating costs were $6.33/boe (including $0.96/boe of transportation costs)
  • Field operating netbacks were $11.45/boe
  • Operating netbacks, which include the impact of commodity contracts, were $11.37/boe
  • Operating margins were 63% and funds flow from operations margins were 47% 
  • G&A costs of $0.66/boe
  • Royalties were 2% of oil and gas revenue
  • All in cash costs were $9.52/boe
  • Capital expenditures were $1.1 million
  • Net Debt of $192 million, a $6 million decrease from the first quarter
  • Completed its annual borrowing base review and the syndicated senior credit facility was been confirmed at $210 million
  • Net Debt to second quarter annualized funds flow from operations was 6.2 : 1
  • Retained earnings of $104 million
  • Corporate LMR is 10.1 with decommissioning liabilities of $16.5 million (discounted)

Financial Summary









2020

2019


Six Months Ended


Q2

Q1

Q2


2020

2019

Statements of Comprehensive Income







Petroleum & natural gas sales

$

16,290

$

27,435

$

36,473


$

43,725

$

76,380








Net (loss) income (before tax)

$

(2,933)

$

3,877

$

13,433


$

944

$

29,819








Net (loss) income

$

(2,801)

$

2,835

$

18,219


$

34

$

29,733

Net (loss) income per share - basic

$

(0.03)

$

0.03

$

0.21


$

0.00

$

0.35

Net (loss) income per share - diluted

$

(0.03)

$

0.03

$

0.21


$

0.00

$

0.34








Statements of Cash Flow







Funds flow from operations

$

7,733

$

15,293

$

24,445


$

23,026

$

52,176

Funds flow from operations per share - basic

$

0.09

$

0.18

$

0.29


$

0.27

$

0.61

Funds flow from operations per share - diluted

$

0.09

$

0.18

$

0.28


$

0.27

$

0.60

Cash from operating activities

$

1,544

$

15,725

$

22,005


$

17,269

$

44,968








Statements of Financial Position














Property and equipment

$

554,470

$

558,956

$

515,730


$

554,470

$

515,730













Total assets

$

604,096

$

608,468

$

561,986


$

604,096

$

561,986

Working capital deficit (surplus)

$

(2,181)

$

9,278

$

6,672


$

(2,181)

$

6,672













Adjusted Net Debt

$

192,067

$

198,253

$

177,821


$

192,067

$

177,821













Shareholders equity

$

306,629

$

307,265

$

288,027


$

306,629

$

288,027








Weighted average number of shares - basic

85,380

85,380

85,363


85,380

85,361

Weighted average number of shares - diluted

85,380

85,524

86,680


85,640

86,728








Company Netbacks ($/boe)









2020

2019


Six Months Ended


Q2

Q1

Q2


2020

2019








Sales price

$

18.13

$

24.87

$

30.76


$

21.83

$

33.77

Royalty expense

(0.35)

(1.49)

(2.35)


(0.98)

(2.56)

Production costs

(5.37)

(5.67)

(5.50)


(5.53)

(5.68)

Transportation costs

(0.96)

(1.00)

(0.79)


(0.98)

(0.87)

Field operating netback

11.45

16.71

22.12


14.34

24.66

Realized gain (loss) on commodity contract settlement

(0.08)

0.05

0.22


0.00

0.19

Operating netback

11.37

16.76

22.34


14.33

24.85

G&A

(0.66)

(0.72)

(0.50)


(0.69)

(0.41)

Cash Finance expenses

(2.11)

(2.17)

(1.49)


(3.96)

(1.72)

Depletion and depreciation

(8.46)

(8.36)

(8.53)


(8.41)

(8.51)

Non Cash - Finance expenses

(1.71)

(2.11)

(0.05)


(0.05)

(0.05)

Stock-based compensation

(1.68)

(0.51)

(0.75)


(1.04)

(0.96)

Unrealized gain (loss) on financial instruments

(0.07)

0.57

0.32


0.28

(0.02)

Deferred income tax

0.15

(0.94)

4.04


(0.45)

(0.04)

Net Income netback

$

(3.18)

$

2.51

$

15.38


$

0.01

$

13.14

Business Environment









2020

2019


Six Months Ended


Q2

Q1

Q2


2020

2019

Realized Pricing (Including realized commodity contracts)







Oil ($/bbl)

$

31.31

$

52.19

$

73.77


$

44.36

$

69.81

NGL ($/bbl)

$

13.82

$

16.64

$

24.20


$

15.33

$

30.80

Gas ($/mcf)

$

2.24

$

2.11

$

1.24


$

2.10

$

1.84









Realized Pricing (Excluding commodity contracts)







Oil ($/bbl)

$

31.31

$

52.05

$

73.77


$

44.28

$

69.81

NGL ($/bbl)

$

13.98

$

16.59

$

22.80


$

15.38

$

29.57

Gas ($/mcf)

$

2.25

$

2.11

$

1.24


$

2.11

$

1.84








Oil Price Benchmarks







West Texas Intermediate ("WTI") (US$/bbl)

$

28.00

$

46.17

$

59.56


$

36.82

$

57.05

Edmonton Par (C$/bbl)

$

28.67

$

51.44

$

73.73


$

40.06

$

70.13

Edmonton Par to WTI differential (US$/bbl)

$

(7.31)

$

(7.85)

$

(4.44)


$

(7.47)

$

(4.42)








Natural Gas Price Benchmarks







AECO gas (Cdn$/mcf)

$

1.89

$

2.03

$

1.04


$

1.91

$

1.83








Foreign Exchange







U.S./Canadian Dollar Exchange

0.72

0.75

0.75


0.73

0.75

Operations Summary

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









2020

2019


Six Months Ended


Q2

Q1

Q2


2020

2019








Daily production volumes







Natural gas (mcf/d)

33,214

38,712

41,304


35,962

38,024

Oil (bbl/d)

2,513

3,550

4,116


3,029

4,223

NGL's (bbl/d)

1,827

2,120

2,032


1,976

1,937

Combined (boe/d 6:1)

9,875

12,122

13,032


10,999

12,497








Revenue







Petroleum & natural gas sales - Gross

$

16,290

$

27,435

$

36,473


$

43,725

$

76,380

Realized gain (loss) on commodity contract settlement

(69)

53

260


(16)

430

Total sales

16,221

27,488

36,733


43,709

76,810

Royalty expense

(314)

(1,640)

(2,785)


(1,954)

(5,788)

Total Revenue - Net of royalties

$

15,907

$

25,848

$

33,948


$

41,755

$

71,022








Working Capital Summary

The following table summarizes the change in working capital during the six months ended June 30, 2020 and December 31, 2019: 





Six months ended

Year ended


June 30, 2020

December 31, 2019

Adjusted Net Debt - beginning of period

$

(187,711)

$

(155,882)




 Funds flow from operations

23,026

92,236

 Additions to property and equipment

(26,092)

(115,276)

 Decommissioning costs incurred

-

(966)

 Additions to E&E Assets

(426)

(5,723)

 Issuance of shares

-

41

 Other

(864)

(2,141)

 Adjusted Net Debt - end of period

$

(192,067)

$

(187,711)




Credit facility limit

$

210,000

$

225,000

Capital Spending

Capital spending is summarized as follows:









2020

2019


Six Months Ended

Cash additions

Q2

Q1

Q2


2020

2019








Land, acquisitions and lease rentals

$

36

$

104

$

98


$

140

$

136

Drilling and completion

372

22,563

8,960


22,935

47,870

Geological and geophysical

145

171

209


316

446

Equipment

273

1,968

3,346


2,241

21,667

Other asset additions

258

201

182


459

682


$

1,084

$

25,008

$

12,794


$

26,092

$

70,800






















Exploration & evaluation assets

$

-

$

426

$

1,019


$

426

$

2,063

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).

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.

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.

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 earnings before interest, taxes, depletion & depreciation, amortization ("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.

Please refer to the management discussion and analysis for the three and six month period ended June 30, 2020 for Non-GAAP financial measure reconciliation tables.

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.

Cision View original content: http://www.newswire.ca/en/releases/archive/July2020/29/c6073.html

James Evaskevich, President & CEO 403-262-9558Copyright CNW Group 2020

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