Yangarra Announces Third Quarter 2014 Financial and Operating Results
CALGARY, Nov. 12, 2014 /CNW/ - Yangarra Resources Ltd. ("Yangarra" or the "Company") (TSX:YGR) announces its financial and operating results for the three and nine months ended September 30, 2014.
Third Quarter Highlights
- Production for the quarter was 3,039 boe/d (48% oil and NGL's), a 36% increase from the same period in 2013 and a 17% increase from the previous quarter.
- Oil and gas sales, after royalties, were $13.6 million with funds flow from operations of $9.3 million ($0.16 per share - basic). Both are a 46% increase from the same period in 2013.
- Net Income of $8.0 million ($10.6 million before future income taxes).
- Earnings before interest, taxes, depletion, depreciation and impairment ("EBITDA") was $15.7 million ($0.27 per share - basic), compared with $4.3 million in the same period of 2013. This represents a 265% increase primarily due to positive non-cash changes in the fair value of commodity contracts.
- Operating costs were $6.45 per boe and transportation costs were $1.52 per boe, an increase of 18% and 3%, respectively, from the same period in 2013. Operating costs have been reduced by 7% when compared to the second quarter of 2014.
- Field net backs (operating netback excluding commodity contracts) were $42.33, an increase of 17% from the same period in 2013. Operating netback were $37.20 per boe, an 8% increase from $34.56 per boe reported in the same period of 2013.
- G&A costs were $2.23 per boe, which is a 27% increase from the third quarter of 2013 due to the fees required to graduate to the Toronto Stock Exchange.
- Royalties were 7% of oil and gas revenue (6% when the commodity contracts are excluded).
- Total capital expenditures were $19.6 million. The Company drilled 5 gross (4.2 net) wells.
- Net debt, excluding the current portion of the fair value of commodity contracts, was $51.2 million.
- The annualized third quarter debt to cash flow ratio was 1.4 : 1.
- The Company had utilized 57% of its total debt facility as at September 30, 2014.
- Yangarra has 60% of its 2015 liquids production hedged at an average price of $93.32 CDN/bbl.
Operations and Guidance Update
The Company drilled 5 gross (4.2 net) wells and completed and brought on-stream 8 gross (4.6 net) wells during the third quarter. Production during the quarter continued to be negatively affected by third party restrictions as well as the below type curve results from a two well Glauc oil pad. No mechanical issues were experienced in the Glauc oil wells, however, the frac fluids appear to be impeding inflow with production slowly improving over time.
In Q4, third party restrictions have mostly been alleviated as of November 1st, and Yangarra plans to bring on-stream 4 gross (2.4 net) wells drilled and completed in the previous quarter. Subsequent to quarter end, Yangarra plans to drill, complete and bring on-stream 6 gross (3.6 net) wells.
A Duvernay well was spud in Willesden Green October 2, 2014 and is drilling according to program with an estimated cost of $6.0 million. Yangarra will provide an update upon on the well and Duvernay strategy once the well is drilled and rig released.
The Company has revised the fourth quarter pricing to an average price of US$80.00/bbl for WTI crude oil (CDN$79.20/bbl Edmonton par) and an average price of $3.50/GJ for AECO natural gas. With the reduced pricing and third party constraints the Company now expects fourth quarter cash flow of $12 million and full year cash flow of $40 million (a 56% increase from 2013).
Fourth quarter production is expected to be 3,500 boe/d and full year production is expected to average 3,000 boe/d (a 36% increase from 2013).
The Company has $14 million remaining to spend on its $75 million 2014 capital budget in the fourth quarter and expects year-end 2014 debt of $53 million resulting in a net debt to annualized fourth quarter cash flow ratio of 1.1 to 1.0.
Financial Summary
| 2014 | 2013 | Nine Months Ended | ||||||||||||||
| Q3 | Q2 | Q3 | 2014 | 2013 | ||||||||||||
| Statements of Comprehensive Income (Loss) | ||||||||||||||||
| Petroleum & natural gas sales and royalty income | $ | 14,796,645 | $ | 14,106,137 | $ | 9,372,931 | $ | 44,117,319 | $ | 23,638,701 | ||||||
| Net income (loss) for the period (before tax) | $ | 10,586,337 | $ | 3,821,726 | $ | 39,646 | $ | 15,610,131 | $ | 2,569,798 | ||||||
| Net income (loss) for the period | $ | 7,967,369 | $ | 2,851,233 | $ | 11,330 | $ | 11,538,052 | $ | 1,834,848 | ||||||
| Net income (loss) per share - basic and diluted | $ | 0.14 | $ | 0.05 | $ | 0.00 | $ | 0.22 | $ | 0.05 | ||||||
| Statements of Cash Flow | ||||||||||||||||
| Funds flow from (used in) operating activities | $ | 9,346,927 | $ | 8,180,361 | $ | 6,378,207 | $ | 27,986,980 | $ | 17,673,078 | ||||||
| Funds flow from (used in) operating activities per share - basic and diluted | $ | 0.16 | $ | 0.15 | $ | 0.16 | $ | 0.52 | $ | 0.44 | ||||||
| Cash from (used in) operating activities | $ | 8,910,365 | $ | 6,386,075 | $ | 3,683,552 | $ | 21,305,219 | $ | 16,319,945 | ||||||
| Statements of Financial Position | ||||||||||||||||
| Property and equipment | $ | 203,295,153 | $ | 187,940,259 | $ | 135,892,343 | $ | 203,295,153 | $ | 135,892,343 | ||||||
| Total assets | $ | 224,710,379 | $ | 212,513,340 | $ | 154,773,403 | $ | 224,710,379 | $ | 154,773,403 | ||||||
| Working Capital (deficit), excluding MTM on commodity contracts | $ | 50,596,689 | $ | 41,022,416 | $ | 42,594,542 | $ | 50,596,689 | $ | 42,594,542 | ||||||
| Non-Current Liabilities | $ | 21,164,535 | $ | 19,289,460 | $ | 13,971,180 | $ | 21,164,535 | $ | 13,971,180 | ||||||
| Shareholders equity | $ | 134,826,579 | $ | 126,644,146 | $ | 82,022,213 | $ | 134,826,579 | $ | 82,022,213 | ||||||
| Weighted average number of shares - basic | 57,746,877 | 53,558,093 | 40,572,748 | 53,512,122 | 40,571,307 | |||||||||||
| Weighted average number of shares diluted | 60,014,866 | 55,898,462 | 40,662,336 | 53,512,122 | 40,571,307 | |||||||||||
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Company Netbacks ($/boe)
| 2014 | 2013 | Nine Months Ended | |||||
| Q3 | Q2 | Q3 | 2014 | 2013 | |||
| Sales Price | $ 52.80 | $ 58.53 | $ 45.53 | $ 57.42 | $ 42.91 | ||
| Royalty income | 0.90 | 0.97 | 0.95 | 1.03 | 1.69 | ||
| Royalty expense | (3.40) | (3.66) | (3.41) | (3.59) | (2.25) | ||
| Production costs | (6.45) | (6.92) | (5.45) | (6.61) | (6.35) | ||
| Transportation costs | (1.52) | (1.88) | (1.47) | (1.57) | (1.26) | ||
| Field operating netback | 42.33 | 47.04 | 36.15 | 46.69 | 34.74 | ||
| Commodity contract settlement | (5.13) | (8.81) | (1.59) | (6.54) | 1.65 | ||
| Operating netback | 37.20 | 38.23 | 34.56 | 40.14 | 36.39 | ||
| G&A and other (excludes non-cash items) | (2.23) | (1.36) | (1.76) | (1.66) | (2.05) | ||
| Finance expenses | (1.42) | (2.78) | (2.32) | (2.47) | (2.19) | ||
| Cash flow netback | 33.54 | 34.10 | 30.49 | 36.02 | 32.15 | ||
| Depletion and depreciation | (16.72) | (16.41) | (18.05) | (16.56) | (18.21) | ||
| Accretion | (0.16) | (0.17) | (0.15) | (0.16) | (0.20) | ||
| Stock-based compensation | (0.39) | (0.46) | (0.38) | (0.82) | (0.53) | ||
| Unrealized gain (loss) on financial instruments | 21.59 | (0.94) | (11.71) | 1.84 | (8.55) | ||
| Deferred income tax | (9.37) | (4.09) | (0.14) | (5.30) | (1.33) | ||
| Net Income netback | $ 28.49 | $ 12.03 | $ 0.06 | $ 15.02 | $ 3.33 | ||
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Operations Summary
Net petroleum and natural gas production, pricing and revenue are summarized below:
| 2014 | 2013 | Nine Months Ended | |||||||||||||||||||
| Q3 | Q2 | Q3 | 2014 | 2013 | |||||||||||||||||
| Daily production volumes | |||||||||||||||||||||
| Natural gas (mcf/d) | 9,219 | 7,306 | 6,983 | 8,038 | 6,003 | ||||||||||||||||
| Oil (bbl/d) | 1,004 | 1,003 | 547 | 1,014 | 513 | ||||||||||||||||
| NGL's (bbl/d) | 423 | 309 | 450 | 382 | 361 | ||||||||||||||||
| Royalty income | |||||||||||||||||||||
| Natural gas (mcf/d) | 287 | 302 | 299 | 315 | 609 | ||||||||||||||||
| Oil (bbl/d) | 9 | 1 | 1 | 3 | 1 | ||||||||||||||||
| NGL's (bbl/d) | 18 | 26 | 26 | 23 | 41 | ||||||||||||||||
| Combined (boe/d 6:1) | 3,039 | 2,606 | 2,238 | 2,814 | 2,018 | ||||||||||||||||
| Revenue | |||||||||||||||||||||
| Petroleum & natural gas sales - Gross | $ | 14,546,041 | $ | 13,876,299 | $ | 9,372,931 | $ | 44,117,319 | $ | 23,638,701 | |||||||||||
| Royalty income | 250,604 | 229,838 | 195,468 | 793,859 | 931,415 | ||||||||||||||||
| Commodity contract settlement | (1,216,666) | (2,088,038) | (326,435) | (5,028,043) | 909,693 | ||||||||||||||||
| Total sales | 13,579,979 | 12,018,099 | 9,241,964 | 39,883,135 | 25,479,809 | ||||||||||||||||
| Royalty expense | (950,651) | (867,916) | (701,597) | (2,756,123) | (1,239,554) | ||||||||||||||||
| Petroleum & natural gas sales - Net | 12,629,328 | 11,150,183 | 8,540,367 | 37,127,012 | 24,240,255 | ||||||||||||||||
| Change in fair value of contracts | 6,035,816 | (222,122) | (2,411,102) | 1,410,592 | (4,711,321) | ||||||||||||||||
| Total Revenue - Net of royalties | $ | 18,665,144 | $ | 10,928,061 | $ | 6,129,265 | $ | 38,537,604 | $ | 19,528,934 | |||||||||||
Working Capital Summary
The following table summarizes the change in working capital during the nine months ended September 30, 2014 and year ended December 31, 2013:
| 2014 | 2013 | ||||
| Working capital (deficit) - beginning of period (1) | $ | (36,794,243) | $ | (36,301,842) | |
| Funds flow from operating activities | 27,986,980 | 25,648,666 | |||
| Additions to property and equipment & E&E Assets | (61,023,296) | (47,485,106) | |||
| Issuance of shares | 26,408,338 | 13,593,273 | |||
| Issuance of Subordinated Debt | (7,786,632) | 7,786,632 | |||
| Other Debt | (27,886) | (35,866) | |||
| Working capital (deficit) - end of period (1) | $ | (51,236,739) | $ | (36,794,243) | |
| Subordinated Debt Outstanding | $ | - | $ | (7,786,632) | |
| Total Debt | $ | (51,236,739) | $ | (44,580,875) | |
| Credit facility limit | $ | 70,000,000 | $ | 45,000,000 | |
| Subordinated debt facility limit | $ | 20,000,000 | $ | 20,000,000 | |
| (1)Excludes fair value of commodity contracts | |||||
Capital Spending
Capital spending is summarized as follows:
| 2014 | 2013 | Nine Months Ended | |||||||||||||
| Cash Additions | Q3 | Q2 | Q3 | 2014 | 2013 | ||||||||||
| Land, acquisitions and lease rentals | $ | 386,844 | $ | 1,037,155 | $ | 307,274 | $ | 2,396,132 | $ | 1,140,889 | |||||
| Drilling and completion | 14,923,634 | 15,973,721 | 6,725,516 | 49,271,094 | 15,952,432 | ||||||||||
| Geological and geophysical | 458,608 | 368,657 | 417,101 | 1,147,492 | 586,305 | ||||||||||
| Equipment | 3,829,045 | 2,056,234 | 1,036,654 | 8,210,227 | 5,641,331 | ||||||||||
| Other Asset Additions | (9,272) | 9,462 | 80,681 | (1,649) | 217,461 | ||||||||||
| $ | 19,588,859 | $ | 19,445,229 | $ | 8,567,226 | $ | 61,023,296 | $ | 23,538,418 | ||||||
| Exploration & evaluation assets additions | $ | - | $ | - | $ | - | $ | - | $ | - | |||||
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.
SOURCE: Yangarra Resources Ltd.
For further information, please contact James Evaskevich, President & CEO 403-262-9558.
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