CALGARY, May 24, 2012 /CNW/ - Yangarra Resources Ltd. ("Yangarra" or the "Company") (TSXV:YGR) is pleased to announce its financial and operating results for the three months ended March 31, 2012.
Highlights and accomplishments in the first quarter of 2012 included:
- Production was 2,139 boe/d (42% oil and NGL's), which is a 24% increase from the fourth quarter 2011. Production rates and the natural gas split were higher than forecast due to higher than expected natural gas flush rates on two Glauconite wells and lower than expected declines.
- Oil and gas sales, including royalty income, was $7.7 million with cash flow from operations of $5.1 million ($0.04 per share - basic) a 2% and 9% decrease from the fourth quarter of 2011, respectively.
- Operating costs for the first quarter, including $0.76/boe of transportation costs, were $5.65/boe this represents a 16% decrease from the fourth quarter of 2011.
- The Q1 2012 netback of $31.85 per boe is a 16% decrease from the $38.08 per boe reported in the fourth quarter or 2011. Realized prices were $39.80/boe down 20% from $49.88/boe in the fourth quarter of 2011 (realized natural gas prices decreased by 41%).
- Capital expenditures of $7.6 million focused on drilling wells in Central Alberta
- $6.6 million spent on the drilling and completion of 4 gross (1.6 net) wells as well as the completion and tie in of 3.0 (0.8 net) wells from the 2011 drilling program.
- $1.0 million spent on land, geological work, equipment purchases and infrastructure development during the quarter.
- As at March 31, 2012, the Company had a working capital deficit of $34 million (excluding mark to market on commodity contracts) resulting in a debt to annualized trailing quarter cash flow ratio of 1.6 to 1.
- The increase in the debt to cash flow is a result of lower natural gas prices, realized hedging losses and unusually high Edmonton par vs. WTI differentials which negatively affected cash flow in the quarter.
- Yangarra expects debt to cash flow ratios to improve markedly in the second quarter with minimal capital spending due to spring breakup.
- As at March 31, 2012, the $10,000,000 of qualifying flow-through expenditures related to the flow-through shares issued in June 2011 had been fully spent.
The Company is currently in spring breakup with the Company's contracted drilling rig presently in the shop being recertified. Drilling operations are expected to resume late June or early July. Given the current natural gas price environment the Company will execute a capital plan for the remainder of the 2012 that is focused on oil targets and funded with cash flow.
Yangarra is proceeding with the installation of compression facilities in the Ferrier area at an existing third party facility which will result in four wells being placed on production that are currently tied into the facility but not producing due to facility constraints. The Company expects significant incremental liquids production from these wells which were recently completed and tested. In addition, Yangarra expects to tie two additional producing wells into the facility that are currently shut in due to facility constraints at a different third party facility. The Company expects incremental net volumes to Yangarra of approximately 500 boe/d with this project.
In addition to the volumes above, the Company has approximately 300 boe/d of behind pipe volume in a Glauconite well which is expected to be on-stream in Q3 together with 200 boe/d of dry gas production which has been shut in until natural gas prices improve in the Medicine Hat and Jaslan areas.
Current production, including royalty income, is approximately 2,050 boe/d.
|Daily production volumes|
|Natural gas (mcf/d)||6,018||4,740||2,978|
|Natural gas (mcf/d)||1,481||545||61|
|Combined (boe/d 6:1)||2,139||1,720||863|
|Product pricing (includes royalty income)|
|Petroleum & natural gas sales - Gross||$||6,907,412||$||7,555,427||$||3,628,974|
|Petroleum & natural gas sales - Net||$||7,299,772||$||7,327,783||$||3,590,036|
Operating Netbacks ($/boe)
|G&A and other (excludes non-cash items)||(1.90)||(2.46)||(3.55)|
|Realized gain (loss) on financial instruments||(2.19)||1.02||0.38|
|Cash flow netback||26.44||36.69||32.62|
|Depletion and depreciation||(20.84)||(20.73)||(16.26)|
|Unrealized gain (loss) on financial instruments||(9.35)||(34.04)||(10.89)|
|Deferred income tax||(4.15)||6.24||(17.35)|
|Net loss netback||$||(9.20)||$||(13.62)||$||(28.72)|
|Statements of Comprehensive (Loss) Income|
|Net income (loss) for the period (before tax)||$||(983,334)||$||(3,142,348)||$||(882,666)|
|Net income (loss) for the period||$||(1,790,789)||$||(2,155,583)||$||(2,230,631)|
|Net income (loss) per share - basic||$||(0.02)||$||(0.02)||$||(0.03)|
|Net income (loss) per share - fully diluted||$||(0.02)||$||(0.02)||$||(0.02)|
|Statements of Cash Flow|
|Cash flow from (used in) operating activities||$||5,146,554||$||5,686,411||$||2,535,251|
|Cash flow from (used in) operating activities per share - basic||$||0.04||$||0.05||$||0.03|
|Cash flow from (used in) operating activities per share - fully diluted||$||0.04||$||0.05||$||0.03|
|Statements of Financial Position|
|Property and equipment||$||122,891,333||$||119,374,220||$||80,990,090|
| Working Capital (deficit), excluding MTM on commodity contracts and flow-through share
|Weighted average number of shares - basic||117,494,735||116,336,405||85,987,807|
|Weighted average number of shares - fully diluted||118,962,415||123,740,262||93,649,398|
|Land and lease rentals||$||147,489||$||740,630||$||1,339,435|
|Drilling and completion||6,621,898||15,727,731||14,286,734|
|Geological and geophysical||154,180||162,825||170,632|
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).
The Company's Annual General Meeting of Shareholders is scheduled for 10:00 AM on Thursday May 24, 2012 in the Plaza Room - Metropolitan Centre, 333-4th Avenue SW, Calgary, AB.
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.
Neither the TSX Venture Exchange nor its Regulation Service Provider (as that term is defined in the Policies of the TSX Venture Exchange) accepts responsibility for the adequacy and accuracy of this release.
For further information:
please contact James Glessing, Chief Financial Officer, at (403) 262-9558.