Yangarra Announces Second Quarter 2015 Financial and Operating Results

CALGARY, Aug. 11, 2015 /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, 2015.

Second Quarter Highlights

  • Adjusted EBITDA (which excludes changes in derivative financial instruments) was $4.1 million ($0.06 per share - basic).
  • Oil and gas sales, after royalties, were $5.8 million with funds flow from operations of $3.6 million ($0.06 per share - basic).  This represents a 57% and a 56% decrease, respectively, from the same period in 2014 due to reductions in commodity pricing and shut in production.
  • Production was negatively impacted by rolling TCPL sales line shut downs with daily production averaging 2,155 boe/d for the quarter, a 17% decrease from the same period in 2014 and a 18% decrease from the first quarter of 2015.  The Company estimates 650 boe/d was impacted by the shut downs during the quarter, consisting mainly of oil and representing approximately $2.5 million of lost revenue.
  • Net loss of $3.2 million ($0.05 per share - basic) or $2.4 million before tax ($0.04 per share - basic). The net loss was impacted by a $1.4 million one-time charge for the increase in the Alberta provincial corporate tax rate.
  • Operating costs were $9.93/boe (including $1.71/boe of transportation costs).
  • Operating netbacks, which include the impact of commodity contracts, were $24.04 per boe, a 37% decrease from 2014.  Field net backs, which do not include the impact of commodity contracts were $19.84, a decrease of 58% from 2014. 
  • G&A costs of $2.27/boe.
  • Royalties were 4% of oil and gas revenue excluding commodity contracts and 3% of oil and gas revenue including commodity contracts.
  • Total capital expenditures were $8.3 million. The Company drilled 3 gross (2.35 net) wells in the second quarter to earn 4 sections and acquired a 5.5% interest in a third party gas processing plant.
  • Net debt (which excludes the current derivative financial instruments) was $45.5 million down from $59.8 at 2014 year end.

Operations Update

Yangarra drilled three farm-in wells during the second quarter (one 1-mile lateral and two 1.5-mile laterals) and expects to complete and tie-in the first 1.5 mile well in August with the two remaining wells scheduled to be completed once pipeline right of ways are acquired. Upon completion of these wells Yangarra has satisfied the earn-in terms of the farm-in, additional wells on the farm-in property will be drilled at Yangarra's sole discretion.

With low commodity pricing and the uncertainty created by the outcome of the recent Alberta provincial election, Cardium land prices have dropped significantly. Yangarra has added approximately 2 years of drilling inventory in 2015.

Drilling and completion costs continue to improve with all wells completed with cemented liner and sliding sleeve technology. The Company also acquired a 5.5% interest in a third party gas processing plant with 50.0 mmcf/d of capacity during the quarter which alleviates shut-in production in north Willesden Green.

Second quarter production averaged 2,155 boe/d (18% decline from Q1) with approximately 650 boe/d shut in over the quarter primarily at the 2-4 Willesden Green gas processing facility. Production from the 2-4 facility is predominantly oil with relatively low rates of gas; however, with the gas shut in the oil is curtailed as well.

The reduced rig count over the past 6 months has helped create spare firm transportation and processing capacity. Arrangements have been made to divert the currently shut-in 650 boe/d to an alternate plant outside the James River gas infrastructure system. The production is expected to be online by mid-August with the costs to tie-in to the new plant low, as the pipeline access to the alternate plant crosses the 2-4 facility sales line. The alternate plant is a shallow cut facility which is currently advantageous to deep cut facilities as produced propane is left in the gas stream which will generate positive cash flow for the propane.

Subsequent to quarter end, Yangarra spud its first Duvernay strata-graphic vertical test well on the 54 section North block.

Financial Summary











2015


2014


Six Months Ended



Q2


Q2



2015


2014

Statements of Comprehensive Income










Petroleum & natural gas sales

$

6,010,973

$

13,876,299


$

13,164,147

$

29,571,278











Net income (loss) (before tax)

$

(2,390,401)

$

3,821,726


$

(1,023,089)

$

5,023,794











Net income (loss)

$

(3,202,592)

$

2,851,233


$

(2,257,475)

$

3,570,683

Net income (loss) per share - basic

$

(0.05)

$

0.05


$

(0.04)

$

0.07

Net income (loss) per share - diluted

$

(0.05)

$

0.05


$

(0.04)

$

0.07











Statements of Cash Flow










Funds flow from operations

$

3,627,985

$

8,180,361


$

13,019,339

$

18,640,053

Funds flow from operations per share - basic

$

0.06

$

0.15


$

0.22

$

0.36

Funds flow from operations per share - diluted

$

0.06

$

0.15


$

0.22

$

0.36

Cash from operating activities

$

4,464,139

$

6,386,075


$

10,495,061

$

12,394,854











Statements of Financial Position










Property and equipment

$

230,153,013

$

187,940,259


$

230,153,013

$

187,940,259

Total assets

$

253,348,412

$

212,513,340


$

253,348,412

$

212,513,340

Working capital deficit

$

44,608,443

$

48,493,987


$

44,608,443

$

48,493,987

Adjusted working capital deficit (which excludes
current derivative financial instruments)

$

45,531,303

$

41,022,416


$

45,531,303

$

41,022,416

Non-Current Liabilities

$

30,118,786

$

19,289,460


$

30,118,786

$

19,289,460

Shareholders equity

$

162,892,249

$

126,644,146


$

162,892,249

$

126,644,146











Weighted average number of shares - basic


62,118,881


53,558,093



59,949,395


51,359,650

Weighted average number of shares - diluted


62,118,881


55,898,462



59,949,395


51,359,650





















Company Netbacks ($/boe)








2015

2014


Six Months Ended


Q2

Q2


2015

2014







Sales price

$           30.65

$           58.53


$           30.34

$            60.51


Royalty income

0.26

0.97


0.26

1.11


Royalty expense

(1.15)

(3.66)


(1.44)

(3.69)


Production costs

(8.22)

(6.92)


(7.19)

(6.70)


Transportation costs

(1.71)

(1.88)


(1.48)

(1.59)

Field operating netback

19.84

47.04


20.50

49.63


Commodity contract settlement (1)

4.20

(8.81)


14.48

(7.80)

Operating netback

24.04

38.23


34.98

41.83


G&A and other (excludes non-cash items)

(2.27)

(1.36)


(2.21)

(1.33)


Finance expenses

(2.83)

(2.78)


(3.42)

(3.06)

Funds flow netback

18.94

34.10


29.35

37.44








Depletion and depreciation

(13.63)

(16.41)


(13.78)

(16.47)


Accretion

(0.20)

(0.17)


(0.19)

(0.17)


Stock-based compensation

(0.67)

(0.46)


(0.57)

(1.06)


Unrealized gain (loss) on financial instruments

(16.63)

(0.94)


(17.17)

(9.46)


Deferred income tax

(4.14)

(4.09)


(2.84)

(2.97)

Net Income (loss) netback

$          (16.33)

$           12.03


$           (5.20)

$              7.31



















(1) Includes $4 million relating to the monetization of certain commodity contracts in January 2015.

Operations Summary

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








2015

2014


Six Months Ended


Q2

Q2


2015

2014







Daily production volumes







Natural gas (mcf/d)

7,992

7,306


8,353

7,438


Oil (bbl/d)

554

1,003


668

1,019


NGL's (bbl/d)

238

309


300

361


Royalty income








Natural gas (mcf/d)

147

302


171

329



Oil (bbl/d)

0

1


0

1



NGL's (bbl/d)

7

26


9

25


Combined (boe/d 6:1)

2,155

2,606


2,397

2,700







Revenue






Petroleum & natural gas sales - Gross

$     6,010,973

$   13,876,299


$   13,164,147

$    29,571,278

Royalty income

51,428

229,838


114,278

543,255

Commodity contract settlement (1)

824,490

(2,088,038)


6,282,231

(3,811,377)

Total sales

6,886,891

12,018,099


19,560,656

26,303,156







Royalty expense

(225,059)

(867,916)


(624,203)

(1,805,472)

Total Revenue - Net of royalties

$     6,661,832

$   11,150,183


$   18,936,453

$    24,497,684













(1) Includes $4 million relating to the monetization of certain commodity contracts in January 2015.

Working Capital Summary

The following table summarizes the change in adjusted working capital (deficit) during the six months ended June 30, 2015 and the year ended December 31, 2014: 









2015


2014

Adjusted Working capital (deficit) - beginning of period

$

(59,766,933)

$

(36,794,243)






 Funds flow from operations


13,019,339


38,325,988

 Additions to property and equipment


(17,501,166)


(78,125,708)

 Additions to E&E Assets


-


(1,680,941)

 Issuance of shares


18,736,729


26,408,338

 Issuance (repayment) of Subordinated Debt


-


(7,786,632)

 Decommissioning costs incurred


-


(76,361)

 Other Debt


(19,272)


(37,374)

 Adjusted Working capital (deficit) - end of period 

$

(45,531,303)

$

(59,766,933)













Current Credit facility limit

$

80,000,000




Current Subordinated debt facility limit

$

10,000,000




Capital Spending

Capital spending is summarized as follows:













2015


2014


Six Months Ended

Cash additions


Q2


Q2



2015


2014











Land, acquisitions and lease rentals

$

515,989

$

1,037,155


$

574,491

$

2,009,288

Drilling and completion


4,045,835


15,973,721



10,593,367


34,347,461

Geological and geophysical


435,890


368,657



802,469


688,884

Equipment


3,094,615


2,056,234



5,355,984


4,381,182

Other asset additions


168,535


9,462



172,855


7,622


$

8,260,864

$

19,445,229


$

17,501,166

$

41,434,437































Exploration & evaluation assets additions

$

-

$

-


$

-

$

2,461,506

Disclosure Items

The Company's financial statements, notes to the financial statements and management's discussion and analysis have been filed on SEDAR (www.sedar.com) and are available on the Company's website (www.yangarra.ca). 

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.

Forward looking information

Certain information regarding Yangarra set forth in this news release, including 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.

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

SOURCE Yangarra Resources Ltd.

For further information: please contact James Evaskevich, President & CEO 403-262-9558.


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