Yangarra Announces 2021 First Quarter Financial and Operating Results


CALGARY, AB, April 28, 2021 /CNW/ – Yangarra Resources Ltd. (“Yangarra” or the “Company“) (TSX: YGR) announces its financial and operating results for the three months ended March 31, 2021.

During the first quarter, Yangarra continued its disciplined approach to controlling costs on operations and capital spending by successfully drilling seven wells and completing eight wells below previous guidance on cost estimates. The emphasis on a profitable growth strategy resulted in delays to bringing these wells on stream as the Company purposefully maximized use of company owned services to minimize costs. As of April, all the wells completed in the first quarter are on production. Yangarra’s focus on cost reduction has established a cost base that will allow for significant improvements on profitability into the future. The Company expects these profits will maximize free cash flow which will initially reduce debt and ultimately translate into returns to shareholders.

Yangarra continues to make strides on its ESG initiatives as the Company executes on various methane reduction methodologies. Early results suggest the emissions reductions will be higher than initially estimated and as mandated by regulation, all at a cost lower than expected. The Company is mobilizing for a 2021 abandonment program, partially funded by the Government of Alberta’s Site Rehabilitation Program, that will result in the abandonment of the majority of Yangarra’s suspended wells. As well, new additions to the leadership structure has resulted in increased diversity at both the board and management level.

Annual General Meeting of Shareholders
The Company’s Annual General Meeting of Shareholders is scheduled for 10:00 AM on Thursday April 29, 2021.

As a precaution due to the COVID-19 pandemic, there will not be a corporate presentation at the conclusion of the meeting and the following Zoom conference information will be utilized to allow registered shareholders to listen to the formal portion of the meeting:

Zoom Link:

https://us02web.zoom.us/j/82111432509?pwd=YTQvRGdkd0RHZ1hvTGIwSzZuQms2dz09

Zoom Meeting ID: 821 1143 2509

Zoom Passcode: 752122

Participants will also be able to join with audio only, using the following number

1-587-328-1099

First Quarter Highlights

  • Average production of 8,736 boe/d (47% liquids) during the quarter, a 28% decrease from the same period in 2020
  • Oil and gas sales were $28.4 million, an increase of 4% from the same period in 2020
  • Funds flow from operations of $17.0 million ($0.20 per share – basic), a increase of 11% from the same period in 2020 
  • Adjusted EBITDA was $19.6 million ($0.22 per share – basic)
  • Net income of $9.1 million ($0.11 per share – basic, $11.9 million before tax), a increase of 222% from the same period in 2020
  • Operating costs were $5.84/boe (including $1.10/boe of transportation costs)
  • Field operating netbacks were $28.29/boe
  • Operating netbacks, which include the impact of commodity contracts, were $25.95/boe
  • Operating margins were 72% and funds flow from operations margins were 60% 
  • G&A costs of $0.67/boe
  • Royalties were 6% of oil and gas revenue
  • All in cash costs were $12.25/boe
  • Capital expenditures were $18.6 million
  • Net debt (which excludes the current derivative financial instruments) was $199.4 million
  • Net Debt to first quarter annualized funds flow from operations was 2.9 : 1
  • Retained earnings of $117.8 million
  • Corporate LMR is 6.9 with decommissioning liabilities of $12.3 million (discounted)

Operations Summary

The Company drilled 7 wells and completed 8 wells during the quarter, with a majority of the wells brought onstream in late March, resulting in higher exit production for the quarter.  Drilling operations have commenced on a five-well pad which is targeted to be brought on production before the end of the second quarter. Production during the quarter was negatively impacted by inclement weather and completions activity on adjacent pads. As part of the Company’s disciplined approach to costs, Yangarra continues to avoid expensive third-party takeaway options when mid-streamers shut down for maintenance.     

Disciplined Approach to Cost structure

Yangarra continues to streamline and improve its field operations which periodically results in short-term delay bringing-on new wells.  However, by utilizing its own field personnel and equipment, Yangarra’s costs are materially lower than third-party service providers. The cost to equip and tie-in wells has been reduced significantly as Company crews are handling all surface installations and pipeline construction. Surface equipment is rotated through the field to new pads efficiently, as wells
on older pads decline. Multi-disciplined field personnel and the addition of a full line of construction and commercial trucking equipment to augment the fluid trucking division allows Yangarra to allocate its field personnel to multiple tasks which creates efficient services with less staff.

ESG Initiatives

The project to reduce vented methane via pneumatic device retrofits or removal is nearing completion and the project to reduce methane venting via incineration has commenced. The Company has begun hook up of pad sites to the electric grid and, converting pump jacks to electric motors which significantly reduces carbon emissions while increasing profit as natural gas sold instead of being burned for fuel is net cash flow positive. Yangarra is also installing vapour recovery units to conserve solution gas on new pad sites.

Another abandonment program is set to commence targeting 15-20 standing wells, further reducing the $12.3 million decommissioning liability.

Financial Summary






2021

2020


Q1

Q4

Q1

Statements of Income and Comprehensive Income




Petroleum & natural gas sales

$

28,475

$

23,064

$

27,435





Income before tax

$

11,919

$

5,754

$

3,877





Net income

$

9,117

$

4,276

$

2,835

Net income per share – basic

$

0.11

$

0.05

$

0.03

Net income per share – diluted

$

0.10

$

0.05

$

0.03





Statements of Cash Flow




Funds flow from operations

$

17,091

$

12,460

$

15,293

Funds flow from operations per share – basic

$

0.20

$

0.15

$

0.18

Funds flow from operations per share – diluted

$

0.20

$

0.15

$

0.18

Cash from operating activities

$

12,986

$

19,192

$

15,725





Statements of Financial Position




Property and equipment

$

575,296

$

563,290

$

558,956

Total assets

$

625,776

$

609,989

$

608,468

Working capital (deficit) surplus

$

(1,656)

$

6

$

(9,278)

Adjusted net debt

$

199,428

$

197,379

$

198,253

Shareholders equity

$

321,784

$

312,260

$

307,265





Weighted average number of shares – basic

85,416

85,380

85,380

Weighted average number of shares – diluted

87,159

85,588

85,524









Company Netbacks ($/boe)






2021

2020


Q1

Q4

Q1





Sales price

$

36.22

$

27.34

$

24.87

   Royalty expense

(2.08)

(1.52)

(1.49)

   Production costs

(4.74)

(5.02)

(5.67)

   Transportation costs

(1.10)

(1.03)

(1.00)

Field operating netback

28.30

19.77

16.71

  Realized gain (loss) on commodity contract settlement

(2.35)

(0.38)

0.05

Operating netback

25.96

19.39

16.76

   G&A

(0.67)

(0.89)

(0.72)

   Cash Finance expenses

(3.79)

(3.73)

(2.17)

   Depletion and depreciation

(8.04)

(8.04)

(8.36)

   Non Cash – Finance expenses

3.42

(0.06)

(2.11)

   Stock-based compensation

(0.28)

(0.61)

(0.51)

   Unrealized gain (loss) on financial instruments

(1.42)

0.96

0.57

   Deferred income tax

(3.56)

(1.75)

(0.94)

Net Income netback

$

11.61

$

5.06

$

2.51





Business Environment






2021

2020


Q1

Q4

Q1

Realized Pricing (Including realized commodity contracts)




   Oil ($/bbl)

$

60.80

$

55.13

$

52.19

  …



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