Yangarra Announces 2020 Second Quarter Financial and Operating Results
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.
James Evaskevich, President & CEO 403-262-9558
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