Yangarra Announces Third Quarter 2012 Financial Results and Provides Operations Update

CALGARY, Nov. 19, 2012 /CNW/ - Yangarra Resources Ltd. ("Yangarra" or the "Company") (TSXV:YGR) announces its financial results for the three and nine months ended September 30, 2012 and provides an operations update.

Highlights of the quarter ended September 30, 2012 are as follows:

• Production averaged 1,800 boe/d during the third quarter which is a 44% increase from the third quarter of 2011.
  
  
• Oil and NGL production was 37% of total production in the third quarter compared with 42% in the third quarter of 2011.
  
  
• Oil and gas sales including royalty income and realized hedging was $5.8 million with cash flow from operations of $2.8 million ($0.02 per share basic).
  
  
• Operating costs for the third quarter, including $0.80/boe of transportation costs, were $6.81/boe which represents a 9% decrease from the comparable period in 2011.
  
  
• G&A was $2.93/boe and royalties were 6% of oil and gas revenue.
  
  
• Capital expenditures of $4.7 million were for the drilling, completion and work-over operations conducted during the third quarter.
  
  
• As at September 30, 2012, the Company had a working capital deficit of $35 million (excluding mark to market on commodity contracts) compared to $34 million at December 31, 2011.

Operations Update

Yangarra delayed the resumption of its 2012 drilling program until September due to the extremely wet conditions in Central Alberta that prevailed after spring breakup.

The Company also changed the drilling program to mono-bore drilling from the previous intermediate casing method. The mono-bore wells provide significant cost savings as a result of much faster drilling times and substantially lower casing costs.

Cardium

In September, a Cardium horizontal well was drilled in the Willesden Green area and the well was fractured using a slick water system with 500 tonnes of sand placed in 20 stages over a 1,230 meter horizontal leg. The fracture program was monitored using micro-seismic to assist Yangarra in determining optimal well spacing in the reservoir.  The well is currently in clean up and flow testing with a flow rate over the first 15 days of 260 boe/d (IP 15) 85% liquids. The well will be shut in for a two week mandatory pressure buildup at the completion of the flow test.

Second White Specs ("SWS")

Following the Cardium well, the Company drilled a SWS well from the same well pad and the well was fractured with 500 tonnes of sand placed in 14 stages. This well is the second horizontal SWS well drilled by Yangarra in the Willesden Green area. This fracture program was also observed with micro-seismic.  The well was flowed through testers for 48 hours to recover flow-back water together with approximately 190 boe/d of oil and gas (60% liquids).  The well is now shut-in for an estimated 30-45 days to "rest" allowing the water to be absorbed by the under saturated shales at which point the well will be placed on production.

Glauconite (oil)

In mid October, the Company drilled a Glauconite oil horizontal well in Westerose and this well was recently fractured using a foam based surfactant fluid with 500 tonnes placed in 16 stages. The well is currently flowing back through testers.

Production Update

Landowner objections continue to delay installation of incremental compression in the Ferrier area and as a result 700 boe/d remains behind pipe waiting to be brought on-stream.  In addition, the three wells recently drilled are expected to be on-stream by year end.

Current production is approximately 2,000 boe/d and fourth quarter production is expected to be 2,000 - 2,200 boe/d. Yangarra expects to average approximately 2,000 boe/d for 2012 which is a 65% increase from 2011 on an annualized per share basis.

Operations Summary

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

			Three Months ended September 30						Nine Months ended September 30,
			2012		2011				2012		2011
Daily production volumes
	Natural gas (mcf/d)			5,617		4,161				5,915		3,582
	Oil (bbl/d)			273		384				327		303
	NGL's (bbl/d)			317		132				354		107
	Royalty income
		Natural gas (mcf/d)		1,228		172				1,380		86
		Oil (bbl/d)		2		2				6		5
		NGL's (bbl/d)		67		13				84		6
	Combined (boe/d 6:1)			1,800		1,253				1,986		1,032
Product pricing (includes royalty income & realized hedging)
	Oil ($/bbl)		$	84.35	$	89.25			$	84.45	$	92.34
	NGL  ($/bbl)			42.24		54.00				52.95		61.64
	Gas ($/mcf)			2.52		3.93				2.37		3.90
	Combined ($/boe)		$	31.47	$	55.09			$	34.30	$	51.74
Revenue
Petroleum & natural gas sales - Gross			$	4,885,957	$	5,378,932			$	16,857,092	$	13,186,832
Royalty income				323,947		137,243				1,808,126		277,521
Realized hedging				574,219		834,284				372,278		1,107,912
Total sales				5,784,122		6,350,459				19,037,496		14,572,265
Royalty expense				(324,279)		(209,529)				(1,054,227)		(409,444)
Petroleum & natural gas sales - Net			$	5,459,843	$	6,140,930			$	17,983,269	$	14,162,821

Financial Summary

Summary Financial Information is summarized below:

	Three Months ended September 30						Nine Months ended September 30,
	2012		2011				2012		2011
Statements of Comprehensive Income (Loss)
Net income (loss) for the period (before tax)	$	(3,037,649)	$	5,424,074			$	2,430,940	$	8,015,045
Net income (loss) for the period	$	(2,073,174)	$	4,106,091			$	(558,335)	$	3,541,281
Net income (loss) per share - basic	$	(0.02)	$	0.04			$	(0.00)	$	0.03
Net income (loss) per share - fully diluted	$	(0.02)	$	0.03			$	(0.00)	$	0.03
Statements of Cash Flow
Funds flow from (used in) operating activities	$	2,780,520	$	4,967,853			$	11,420,077	$	10,654,769
Funds flow from (used in) operating activities per share - basic	$	0.02	$	0.04			$	0.09	$	0.10
Funds flow from (used in) operating activities per share - fully diluted	$	0.02	$	0.04			$	0.09	$	0.10
Statements of Financial Position
Property and equipment	$	122,723,826	$	104,908,393			$	121,329,749	$	104,908,393
Total assets	$	138,820,924	$	118,260,567			$	142,907,001	$	18,260,567
Working Capital (deficit), excluding MTM on commodity contracts and flow-through share obligation	$	(35,450,284)	$	(19,545,339)			$	(35,450,284)	$	(19,545,339)
Shareholders equity	$	79,349,142	$	78,375,411			$	79,349,142	$	78,375,411
Weighted average number of shares - basic		121,711,723		116,307,057				120,311,001		102,463,621
Weighted average number of shares - fully diluted		121,711,723		124,209,770				120,343,320		110,610,771

Operating Netbacks (boe/d)

The Company's operating, cash flow and net income netbacks are summarized below:

		Three Months ended September 30						Nine Months ended September 30,
		2012		2011				2012		2011
Sales Price		$	29.51	$	53.54			$	30.98	$	50.75
	Royalty income		1.96		1.55				3.32		0.99
	Royalty expense		(1.96)		(1.82)				(1.94)		(1.45)
	Production costs		(6.01)		(6.44)				(6.00)		(7.16)
	Transportation costs		(0.80)		(1.01)				(0.80)		(0.98)
Operating netback			22.70		45.82				25.57		42.15
	G&A and other (excludes non-cash items)		(2.93)		(2.13)				(2.60)		(3.50)
	Finance expenses		(2.97)		(0.60)				(1.98)		(0.81)
Cash flow netback			16.79		43.09				20.99		37.84
	Depletion and depreciation		(21.63)		(19.55)				(23.00)		(17.84)
	Accretion		(0.13)		(0.26)				(0.13)		(0.30)
	Stock-based compensation		(0.87)		(1.29)				(0.92)		(5.05)
	Unrealized gain (loss) on financial instruments		(12.51)		25.06				7.53		13.82
	Deferred income tax		5.83		(11.43)				(5.49)		(15.88)
Net Income (loss) netback		$	(12.52)	$	35.61			$	(1.03)	$	12.59

Working Capital Summary

The following table summarizes the change in working capital during the three months and nine months ended September 30, 2012:

	Three Months Ended September 30, 2012		Nine months Ended September 30, 2012
Working capital (deficit) - beginning of period ^(1)	$	(33,428,709)	$	(34,028,162)
Cash flow from (used in) operating activities		2,780,520		11,420,077
Capital expenditures		(4,802,095)		(15,394,532)
Issuance of shares		-		2,552,333
Working capital (deficit) - end of period ^(1)	$	(35,450,284)	$	(35,450,284)
Credit facility limit	$	42,000,000	$	42,000,000

(1)	Excludes non-cash change in fair value of commodity contracts

Capital Spending

Capital spending is summarized as follows:

	Three Months ended September 30						Nine Months ended September 30,
	2012		2011				2012		2011
Land and lease rentals	$	362,010	$	953,884			$	494,133	$	3,041,601
Drilling and completion		4,042,124		14,892,270				13,047,822		34,080,733
Geological and geophysical		183,178		359,277				665,004		785,045
Equipment		92,311		2,799,884				1,054,208		6,383,254
	$	4,679,623	$	19,005,315			$	15,261,167	$	44,290,633

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.

See Management's Discussion and Analysis for the three and nine months ended September 30, 2012 for a special note regarding Non-IRFS measures.

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.

Jim Evaskevich, President & CEO or James Glessing, Chief Financial Officer, at [phone].