Yangarra Announces Second Quarter 2013 Financial and Operating Results
CALGARY, Aug. 28, 2013 /CNW/ - Yangarra Resources Ltd. ("Yangarra" or the "Company") (TSXV:YGR) announces its financial and operating results for the three and six months ended June 30, 2013.
Highlights are as follows:
- Q2 2013 production averaged 2,005 boe/d (44% oil and NGL's) with production negatively impacted by approximately 200 boe/d shut-in due to the drilling of new wells on existing pad sites and turn-arounds at 3rd party processing facilities.
- Q2 2013 oil and gas sales including royalty income and realized commodity contracts was $8.9 million with funds flow from operations of $6.5 million ($0.05 per share - basic).
- 2013 first half year funds flow from operations was $11 million; therefore, with the anticipated increase in production for the second half of 2013, the Company expects to achieve its annual targeted funds flow of $24 million.
- Net income for Q2 2013 was $2.1 million ($2.9 million before future income tax).
- Operating costs for Q2 2013, including $1.29/boe of transportation costs, were $7.13/boe which represents a 21% decrease from Q1 of 2013.
- The Q2 2013 netback of $40.30 per boe is a 69% increase from the $23.81 per boe reported in the second quarter of 2012. Realized prices were $46.94/boe up 57% from $29.84/boe in the second quarter of 2012.
- G&A expenses for Q2 2013 were $1.96/boe which represents a 23% decrease from the first quarter of 2013.
- Q2 2013 capital expenditures of $3.7 million focused on drilling and infrastructure in Central Alberta.
- As at June 30, 2013, the Company was in a net debt position of $40 million compared to $34 million at December 31, 2012.
- The debt to annualized second quarter cash flow ratio was 1.5 : 1.
- Yangarra completed construction of an 11 mmcf/d gas processing facility (100% working interest) and the facility came online April 10, 2013 which brought on eight previously standing wells.
Operations Update
Following spring breakup, the Company has drilled 3 gross (1.5 net) Cardium wells at Ferrier. Productivity from the wells is exceeding expectations. The Company is continuing to improve drilling and completion costs due to pad drilling and reductions in drilling and completion times.
Starting in 2010, Yangarra has drilled 53 horizontal wells in the Deep Basin using horizontal multi-stage fracture technology. In that period, Yangarra has made significant advancement in drilling, completion and logistics which have significantly increased the Company's returns. The Company now expects the return from the combined 2013 drilling program to be approximately 100% and the average well payout is forecasted to be 14 months.
| Average HZ Well Cost (1) | Average Forecast IRR (2) | ||
| 2010 Wells | $4,312,000 | 24% | |
| 2011 Wells | $5,112,000 | 41% | |
| 2012 Wells | $3,883,000 | 67% | |
| 2013 Wells | $2,845,000 | 100% | |
| (1) Drill, Complete & Equipping costs | |||
| (2) Half cycle economics based on actual costs combined with reserve report and type curve projected recoveries | |||
Financial Summary
| 2013 | 2012 | Six Months Ended | |||||||||||||
| Q2 | Q1 | Q2 | 2013 | 2012 | |||||||||||
| Statements of Comprehensive Income (Loss) | |||||||||||||||
| Petroleum & natural gas sales | $ | 7,747,389 | $ | 6,518,381 | $ | 5,265,664 | $ | 14,265,770 | $ | 12,173,076 | |||||
| Net income (loss) for the period (before tax) | $ | 2,923,438 | $ | (393,286) | $ | 6,451,923 | $ | 2,530,152 | $ | 5,468,589 | |||||
| Net income (loss) for the period | $ | 2,082,942 | $ | (259,424) | $ | 3,305,628 | $ | 1,823,518 | $ | 1,514,839 | |||||
| Net income (loss) per share - basic and diluted | $ | 0.02 | $ | 0.00 | $ | 0.03 | $ | 0.01 | $ | 0.01 | |||||
| Statements of Cash Flow | |||||||||||||||
| Funds flow from (used in) operating activities | $ | 6,480,689 | $ | 4,814,183 | $ | 3,493,003 | $ | 11,294,871 | $ | 8,639,557 | |||||
| Funds flow from (used in) operating activities per share - basic and diluted |
$ | 0.05 | $ | 0.04 | $ | 0.03 | $ | 0.09 | $ | 0.07 | |||||
| Cash from (used in) operating activities | $ | 8,183,515 | $ | 4,452,879 | $ | 5,012,962 | $ | 12,636,393 | $ | 6,950,338 | |||||
| Statements of Financial Position | |||||||||||||||
| Property and equipment | $ | 130,846,089 | $ | 130,356,002 | $ | 121,329,749 | $ | 130,846,089 | $ | 121,329,749 | |||||
| Total assets | $ | 144,353,167 | $ | 148,761,517 | $ | 142,907,001 | $ | 144,353,167 | $ | 142,907,001 | |||||
| Working Capital Deficit | $ | 39,989,839 | $ | 42,469,266 | $ | 33,456,912 | $ | 39,989,839 | $ | 33,456,912 | |||||
| Non-Current Liabilities | $ | 13,197,200 | $ | 12,482,223 | $ | 15,451,799 | $ | 13,197,200 | $ | 15,451,799 | |||||
| Shareholders equity | $ | 81,826,383 | $ | 79,430,341 | $ | 81,125,416 | $ | 81,826,383 | $ | 81,125,416 | |||||
| Weighted average number of shares - basic | 121,711,723 | 121,711,723 | 121,711,152 | 121,711,723 | 119,602,943 | ||||||||||
| Weighted average number of shares diluted | 121,722,178 | 121,711,723 | 121,711,152 | 121,711,723 | 119,602,943 | ||||||||||
Operations Summary
Net petroleum and natural gas production, pricing and revenue are summarized below:
| 2013 | 2012 | Six Months Ended | |||||||||||
| Q2 | Q1 | Q2 | 2013 | 2012 | |||||||||
| Daily production volumes | |||||||||||||
| Natural gas (mcf/d) | 5,915 | 5,090 | 6,115 | 5,505 | 6,066 | ||||||||
| Oil (bbl/d) | 492 | 502 | 269 | 497 | 354 | ||||||||
| NGL's (bbl/d) | 339 | 291 | 397 | 315 | 372 | ||||||||
| Royalty income | |||||||||||||
| Natural gas (mcf/d) | 832 | 709 | 1,432 | 766 | 1,456 | ||||||||
| Oil (bbl/d) | 1 | 2 | 3 | 2 | 8 | ||||||||
| NGL's (bbl/d) | 49 | 48 | 94 | 48 | 93 | ||||||||
| Combined (boe/d 6:1) | 2,005 | 1,809 | 2,022 | 1,906 | 2,080 | ||||||||
| Product pricing (includes royalty income & realized gains/losses on commodity contracts) | |||||||||||||
| Oil ($/bbl) | $ | 102.73 | $ | 86.80 | $ | 81.97 | $ | 94.16 | $ | 87.56 | |||
| NGL ($/bbl) | 61.36 | 52.62 | 55.22 | 56.95 | 59.81 | ||||||||
| Gas ($/mcf) | 3.67 | 3.41 | 2.05 | 3.53 | 2.07 | ||||||||
| Combined ($/boe) | $ | 48.95 | $ | 44.95 | $ | 32.13 | $ | 47.06 | $ | 36.07 | |||
| Revenue | |||||||||||||
| Petroleum & natural gas sales - Gross | $ | 7,747,389 | $ | 6,518,381 | $ | 5,265,664 | $ | 14,265,770 | $ | 12,173,076 | |||
| Royalty income | 366,609 | 369,338 | 645,002 | 735,947 | 1,484,179 | ||||||||
| Commodity contract settlement | 805,711 | 430,418 | 223,840 | 1,236,128 | (201,941) | ||||||||
| Total sales | 8,919,709 | 7,318,137 | 6,134,506 | 16,237,845 | 13,455,314 | ||||||||
| Royalty expense | (276,865) | (261,092) | (283,131) | (537,957) | (729,948) | ||||||||
| Petroleum & natural gas sales - Net | $ | 8,642,844 | $ | 7,057,045 | $ | 5,851,375 | $ | 15,699,888 | $ | 12,725,366 | |||
| Change in fair value of contracts | $ | (114,736) | $ | (2,185,484) | $ | 7,989,633 | $ | (2,300,219) | $ | 6,170,425 | |||
| Total Revenue - Net | $ | 8,528,108 | $ | 4,871,561 | $ | 13,841,008 | $ | 13,399,669 | $ | 18,895,791 | |||
Operating Netbacks (boe/d)
The Company's operating, cash flow and net income netbacks are summarized below:
| 2013 | 2012 | Six Months Ended | ||||||||||
| Q2 | Q1 | Q2 | 2013 | 2012 | ||||||||
| Sales Price | $ | 46.94 | $ | 42.68 | $ | 29.84 | $ | 44.93 | $ | 31.62 | ||
| Royalty income | 2.01 | 2.27 | 3.51 | 2.13 | 3.92 | |||||||
| Royalty expense | (1.52) | (1.60) | (1.55) | (1.56) | (1.93) | |||||||
| Production costs | (5.84) | (8.04) | (7.14) | (6.88) | (5.99) | |||||||
| Transportation costs | (1.29) | (0.96) | (0.85) | (1.13) | (0.80) | |||||||
| Operating netback | $ | 40.30 | $ | 34.34 | $ | 23.81 | $ | 37.49 | $ | 26.82 | ||
| G&A and other (excludes non-cash items) | (1.96) | (2.54) | (3.04) | (2.23) | (2.46) | |||||||
| Finance expenses | (2.13) | (2.24) | (1.78) | (2.34) | (1.54) | |||||||
| Cash flow netback | 36.21 | 29.57 | 18.99 | 32.92 | 22.82 | |||||||
| Depletion and depreciation | (18.38) | (18.23) | (26.53) | (18.31) | (23.61) | |||||||
| Accretion | (0.13) | (0.33) | (0.14) | (0.22) | (0.13) | |||||||
| Stock-based compensation | (1.15) | - | (0.68) | (0.61) | (0.94) | |||||||
| Unrealized gain (loss) on financial instruments | (0.63) | (13.42) | 43.43 | (6.67) | 16.30 | |||||||
| Deferred income tax | (4.61) | 0.82 | (17.10) | (2.05) | (10.44) | |||||||
| Net Income (loss) netback | $ | 11.30 | $ | (1.59) | $ | 17.97 | $ | 5.06 | $ | 4.00 | ||
Working Capital Summary
The following table summarizes the change in working capital during the six months ended June 30, 2013 and year ended December 31, 2012:
| 2013 | 2012 | |||||
| Working capital (deficit) - beginning of period | $ | (36,301,842) | $ | (34,028,162) | ||
| Funds flow from operating activities | 11,294,871 | 14,588,405 | ||||
| Purchase/Transfer of property and equipment | (15,434,292) | (24,448,531) | ||||
| Sale of property and equipment | - | 4,650,000 | ||||
| Issuance of shares | - | 2,552,333 | ||||
| Bank Debt | (17,748) | 384,113 | ||||
| Commodity Contract | 469,172 | - | ||||
| Working capital (deficit) - end of period | $ | (39,989,839) | $ | (36,301,842) | ||
| Credit facility limit | $ | 45,000,000 | $ | 42,000,000 | ||
Capital Spending
Capital spending is summarized as follows:
| 2013 | 2012 | Six Months Ended | |||||||||||||
| Q2 | Q1 | Q2 | 2013 | 2012 | |||||||||||
| Land and lease rentals | $ | (226,665) | $ | 1,060,280 | $ | (15,366) | $ | 833,615 | $ | 132,123 | |||||
| Drilling and completion | $ | 1,190,051 | 8,036,865 | 2,383,800 | 9,226,916 | 9,005,698 | |||||||||
| Geological and geophysical | $ | 135,526 | 33,678 | 327,646 | 169,204 | 481,826 | |||||||||
| Equipment | $ | 2,724,863 | 1,879,815 | 309,944 | 4,604,677 | 961,897 | |||||||||
| Other Asset Additions | $ | (115,174) | 251,954 | - | 136,780 | - | |||||||||
| $ | 3,708,601 | $ | 11,262,592 | $ | 3,006,024 | $ | 14,971,192 | $ | 10,581,544 | ||||||
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.
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.
SOURCE: Yangarra Resources Ltd.
For further information, please contact Jim Evaskevich, President & CEO.
Suite 1530, 715 - 5 Avenue S.W.
Calgary, Alberta T2P 2X6
Phone: (403) 262-9558 Fax: (403) 262-8281
Webpage: www.yangarra.ca Email: [email protected]
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