Yangarra Announces First Quarter 2012 Financial and Operating Results

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.

Operations Update

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.

Operations Summary

		2012		2011
		Q1		Q4		Q1
Daily production volumes
Natural gas (mcf/d)		6,018		4,740		2,978
Oil (bbl/d)		438		536		258
NGL's (bbl/d)		347		258		86
Royalty income
Natural gas (mcf/d)		1,481		545		61
Oil (bbl/d)		12		7		9
NGL's (bbl/d)		91		38		3
Combined (boe/d 6:1)		2,139		1,720		863
Product pricing (includes royalty income)
Oil ($/bbl)	$	90.95	$	93.54	$	86.66
NGL  ($/bbl)		64.96		55.18		62.53
Gas ($/mcf)		2.09		3.52		3.87
Combined ($/boe)	$	39.80	$	49.88	$	46.70
Revenue
Petroleum & natural gas sales - Gross	$	6,907,412	$	7,555,427	$	3,628,974
Royalty income		839,177		335,618		104,430
Total sales		7,746,589		7,891,045		3,733,404
Royalty expense		(446,817)		(563,262)		(143,368)
Petroleum & natural gas sales - Net	$	7,299,772	$	7,327,783	$	3,590,036

Operating Netbacks ($/boe)

		2012		2011
		Q1		Q4			Q1
Sales Price	$	35.49	$	46.09		$	45.35
Royalty income		4.31		3.79			1.34
Royalty expense		(2.30)		(3.56)			(1.85)
Production costs		(4.89)		(7.78)			(7.36)
Transportation costs		(0.76)		(0.45)			(0.90)
Operating netback		31.85		38.08			36.60
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
Finance expenses		(1.32)		0.04			(0.81)
Cash flow netback		26.44		36.69			32.62
Depletion and depreciation		(20.84)		(20.73)			(16.26)
Accretion		(0.12)		(0.15)			(0.42)
Stock-based compensation		(1.19)		(1.63)			(16.41)
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)

Financial Summary

		2012			2011
		Q1			Q4			Q1
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
Total assets	$	147,718,686		$	141,291,044		$	87,597,721
Working Capital (deficit), excluding MTM on commodity contracts and flow-through share obligation	$	(33,920,294)		$	(34,028,162)		$	(11,472,461)
Shareholders equity	$	77,613,288		$	76,627,244		$	64,023,392
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

Capital Expenditures

		2012		2011
		Q1		Q4		Q1
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
Equipment		651,953		3,104,371		2,327,862
	$	7,575,520	$	19,735,557	$	18,124,663

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).

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.

 

 

 

please contact James Glessing, Chief Financial Officer, at [phone].