CALGARY, Aug. 11, 2015 /CNW/
- Yangarra Resources
Ltd. ("Yangarra" or the
"Company") (TSX:YGR) announces its financial
and operating results for the three and six months ended
June 30, 2015.
Second Quarter Highlights
- Adjusted EBITDA (which excludes changes in derivative financial
instruments) was $4.1 million
($0.06 per share - basic).
- Oil and gas sales, after royalties, were $5.8 million with funds flow from operations of
$3.6 million ($0.06 per share - basic). This represents a
57% and a 56% decrease, respectively, from the same period in 2014
due to reductions in commodity pricing and shut in production.
- Production was negatively impacted by rolling TCPL sales line
shut downs with daily production averaging 2,155 boe/d for the
quarter, a 17% decrease from the same period in 2014 and a 18%
decrease from the first quarter of 2015. The Company
estimates 650 boe/d was impacted by the shut downs during the
quarter, consisting mainly of oil and representing approximately
$2.5 million of lost revenue.
- Net loss of $3.2 million
($0.05 per share - basic) or
$2.4 million before tax ($0.04 per share - basic). The net loss was
impacted by a $1.4 million one-time
charge for the increase in the Alberta provincial corporate tax rate.
- Operating costs were $9.93/boe
(including $1.71/boe of
transportation costs).
- Operating netbacks, which include the impact of commodity
contracts, were $24.04 per boe, a 37%
decrease from 2014. Field net backs, which do not include the
impact of commodity contracts were $19.84, a decrease of 58% from 2014.
- G&A costs of $2.27/boe.
- Royalties were 4% of oil and gas revenue excluding commodity
contracts and 3% of oil and gas revenue including commodity
contracts.
- Total capital expenditures were $8.3
million. The Company drilled 3 gross (2.35 net) wells in the
second quarter to earn 4 sections and acquired a 5.5% interest in a
third party gas processing plant.
- Net debt (which excludes the current derivative financial
instruments) was $45.5 million down
from $59.8 at 2014 year end.
Operations Update
Yangarra drilled three farm-in wells during the
second quarter (one 1-mile lateral and two 1.5-mile laterals) and
expects to complete and tie-in the first 1.5 mile well in August
with the two remaining wells scheduled to be completed once
pipeline right of ways are acquired. Upon completion of these wells
Yangarra has satisfied the earn-in terms of the farm-in, additional
wells on the farm-in property will be drilled at Yangarra's sole
discretion.
With low commodity pricing and the uncertainty
created by the outcome of the recent Alberta provincial election, Cardium land
prices have dropped significantly. Yangarra has added approximately
2 years of drilling inventory in 2015.
Drilling and completion costs continue to improve
with all wells completed with cemented liner and sliding sleeve
technology. The Company also acquired a 5.5% interest in a third
party gas processing plant with 50.0 mmcf/d of capacity during the
quarter which alleviates shut-in production in north Willesden
Green.
Second quarter production averaged 2,155 boe/d
(18% decline from Q1) with approximately 650 boe/d shut in over the
quarter primarily at the 2-4 Willesden Green gas processing
facility. Production from the 2-4 facility is predominantly oil
with relatively low rates of gas; however, with the gas shut in the
oil is curtailed as well.
The reduced rig count over the past 6 months has
helped create spare firm transportation and processing capacity.
Arrangements have been made to divert the currently shut-in 650
boe/d to an alternate plant outside the James River gas
infrastructure system. The production is expected to be online by
mid-August with the costs to tie-in to the new plant low, as the
pipeline access to the alternate plant crosses the 2-4 facility
sales line. The alternate plant is a shallow cut facility which is
currently advantageous to deep cut facilities as produced propane
is left in the gas stream which will generate positive cash flow
for the propane.
Subsequent to quarter end, Yangarra spud its
first Duvernay strata-graphic
vertical test well on the 54 section North block.
Financial Summary
|
|
|
|
|
|
|
|
|
2015
|
|
2014
|
|
Six Months Ended
|
|
|
Q2
|
|
Q2
|
|
|
2015
|
|
2014
|
Statements of Comprehensive
Income
|
|
|
|
|
|
|
|
|
|
Petroleum & natural gas sales
|
$
|
6,010,973
|
$
|
13,876,299
|
|
$
|
13,164,147
|
$
|
29,571,278
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) (before tax)
|
$
|
(2,390,401)
|
$
|
3,821,726
|
|
$
|
(1,023,089)
|
$
|
5,023,794
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
$
|
(3,202,592)
|
$
|
2,851,233
|
|
$
|
(2,257,475)
|
$
|
3,570,683
|
Net income (loss) per share - basic
|
$
|
(0.05)
|
$
|
0.05
|
|
$
|
(0.04)
|
$
|
0.07
|
Net income (loss) per share -
diluted
|
$
|
(0.05)
|
$
|
0.05
|
|
$
|
(0.04)
|
$
|
0.07
|
|
|
|
|
|
|
|
|
|
|
Statements of Cash Flow
|
|
|
|
|
|
|
|
|
|
Funds flow from operations
|
$
|
3,627,985
|
$
|
8,180,361
|
|
$
|
13,019,339
|
$
|
18,640,053
|
Funds flow from operations per share -
basic
|
$
|
0.06
|
$
|
0.15
|
|
$
|
0.22
|
$
|
0.36
|
Funds flow from operations per share -
diluted
|
$
|
0.06
|
$
|
0.15
|
|
$
|
0.22
|
$
|
0.36
|
Cash from operating activities
|
$
|
4,464,139
|
$
|
6,386,075
|
|
$
|
10,495,061
|
$
|
12,394,854
|
|
|
|
|
|
|
|
|
|
|
Statements of Financial
Position
|
|
|
|
|
|
|
|
|
|
Property and equipment
|
$
|
230,153,013
|
$
|
187,940,259
|
|
$
|
230,153,013
|
$
|
187,940,259
|
Total assets
|
$
|
253,348,412
|
$
|
212,513,340
|
|
$
|
253,348,412
|
$
|
212,513,340
|
Working capital deficit
|
$
|
44,608,443
|
$
|
48,493,987
|
|
$
|
44,608,443
|
$
|
48,493,987
|
Adjusted working capital deficit (which
excludes
current derivative financial
instruments)
|
$
|
45,531,303
|
$
|
41,022,416
|
|
$
|
45,531,303
|
$
|
41,022,416
|
Non-Current Liabilities
|
$
|
30,118,786
|
$
|
19,289,460
|
|
$
|
30,118,786
|
$
|
19,289,460
|
Shareholders equity
|
$
|
162,892,249
|
$
|
126,644,146
|
|
$
|
162,892,249
|
$
|
126,644,146
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares -
basic
|
|
62,118,881
|
|
53,558,093
|
|
|
59,949,395
|
|
51,359,650
|
Weighted average number of shares -
diluted
|
|
62,118,881
|
|
55,898,462
|
|
|
59,949,395
|
|
51,359,650
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company Netbacks ($/boe)
|
|
|
|
|
|
|
2015
|
2014
|
|
Six Months Ended
|
|
Q2
|
Q2
|
|
2015
|
2014
|
|
|
|
|
|
|
Sales price
|
$
30.65
|
$
58.53
|
|
$
30.34
|
$
60.51
|
|
Royalty income
|
0.26
|
0.97
|
|
0.26
|
1.11
|
|
Royalty expense
|
(1.15)
|
(3.66)
|
|
(1.44)
|
(3.69)
|
|
Production costs
|
(8.22)
|
(6.92)
|
|
(7.19)
|
(6.70)
|
|
Transportation costs
|
(1.71)
|
(1.88)
|
|
(1.48)
|
(1.59)
|
Field operating netback
|
19.84
|
47.04
|
|
20.50
|
49.63
|
|
Commodity contract settlement
(1)
|
4.20
|
(8.81)
|
|
14.48
|
(7.80)
|
Operating netback
|
24.04
|
38.23
|
|
34.98
|
41.83
|
|
G&A and other (excludes non-cash
items)
|
(2.27)
|
(1.36)
|
|
(2.21)
|
(1.33)
|
|
Finance expenses
|
(2.83)
|
(2.78)
|
|
(3.42)
|
(3.06)
|
Funds flow netback
|
18.94
|
34.10
|
|
29.35
|
37.44
|
|
|
|
|
|
|
|
Depletion and depreciation
|
(13.63)
|
(16.41)
|
|
(13.78)
|
(16.47)
|
|
Accretion
|
(0.20)
|
(0.17)
|
|
(0.19)
|
(0.17)
|
|
Stock-based compensation
|
(0.67)
|
(0.46)
|
|
(0.57)
|
(1.06)
|
|
Unrealized gain (loss) on financial
instruments
|
(16.63)
|
(0.94)
|
|
(17.17)
|
(9.46)
|
|
Deferred income tax
|
(4.14)
|
(4.09)
|
|
(2.84)
|
(2.97)
|
Net Income (loss) netback
|
$
(16.33)
|
$
12.03
|
|
$
(5.20)
|
$
7.31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes $4 million relating to the monetization
of certain commodity contracts in January 2015.
|
Operations Summary
Net petroleum and natural gas production, pricing and revenue
are summarized below:
|
|
|
|
|
|
|
2015
|
2014
|
|
Six Months Ended
|
|
Q2
|
Q2
|
|
2015
|
2014
|
|
|
|
|
|
|
Daily production volumes
|
|
|
|
|
|
|
Natural gas (mcf/d)
|
7,992
|
7,306
|
|
8,353
|
7,438
|
|
Oil (bbl/d)
|
554
|
1,003
|
|
668
|
1,019
|
|
NGL's (bbl/d)
|
238
|
309
|
|
300
|
361
|
|
Royalty income
|
|
|
|
|
|
|
|
Natural gas (mcf/d)
|
147
|
302
|
|
171
|
329
|
|
|
Oil (bbl/d)
|
0
|
1
|
|
0
|
1
|
|
|
NGL's (bbl/d)
|
7
|
26
|
|
9
|
25
|
|
Combined (boe/d 6:1)
|
2,155
|
2,606
|
|
2,397
|
2,700
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
Petroleum & natural gas sales -
Gross
|
$ 6,010,973
|
$ 13,876,299
|
|
$ 13,164,147
|
$ 29,571,278
|
Royalty income
|
51,428
|
229,838
|
|
114,278
|
543,255
|
Commodity contract settlement
(1)
|
824,490
|
(2,088,038)
|
|
6,282,231
|
(3,811,377)
|
Total sales
|
6,886,891
|
12,018,099
|
|
19,560,656
|
26,303,156
|
|
|
|
|
|
|
Royalty expense
|
(225,059)
|
(867,916)
|
|
(624,203)
|
(1,805,472)
|
Total Revenue - Net of royalties
|
$ 6,661,832
|
$ 11,150,183
|
|
$ 18,936,453
|
$ 24,497,684
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes $4 million relating to the monetization
of certain commodity contracts in January 2015.
|
Working Capital Summary
The following table summarizes the change in adjusted working
capital (deficit) during the six months ended June 30, 2015 and the year ended December 31, 2014:
|
|
|
|
|
|
|
|
2015
|
|
2014
|
Adjusted Working capital (deficit) - beginning of
period
|
$
|
(59,766,933)
|
$
|
(36,794,243)
|
|
|
|
|
|
Funds flow from operations
|
|
13,019,339
|
|
38,325,988
|
Additions to property and
equipment
|
|
(17,501,166)
|
|
(78,125,708)
|
Additions to E&E Assets
|
|
-
|
|
(1,680,941)
|
Issuance of shares
|
|
18,736,729
|
|
26,408,338
|
Issuance (repayment) of Subordinated
Debt
|
|
-
|
|
(7,786,632)
|
Decommissioning costs
incurred
|
|
-
|
|
(76,361)
|
Other Debt
|
|
(19,272)
|
|
(37,374)
|
Adjusted Working capital (deficit) - end of
period
|
$
|
(45,531,303)
|
$
|
(59,766,933)
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Credit facility limit
|
$
|
80,000,000
|
|
|
|
Current Subordinated debt facility
limit
|
$
|
10,000,000
|
|
|
|
Capital Spending
Capital spending is summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
2014
|
|
Six Months Ended
|
Cash additions
|
|
Q2
|
|
Q2
|
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
Land, acquisitions and lease
rentals
|
$
|
515,989
|
$
|
1,037,155
|
|
$
|
574,491
|
$
|
2,009,288
|
Drilling and completion
|
|
4,045,835
|
|
15,973,721
|
|
|
10,593,367
|
|
34,347,461
|
Geological and geophysical
|
|
435,890
|
|
368,657
|
|
|
802,469
|
|
688,884
|
Equipment
|
|
3,094,615
|
|
2,056,234
|
|
|
5,355,984
|
|
4,381,182
|
Other asset additions
|
|
168,535
|
|
9,462
|
|
|
172,855
|
|
7,622
|
|
$
|
8,260,864
|
$
|
19,445,229
|
|
$
|
17,501,166
|
$
|
41,434,437
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploration & evaluation assets
additions
|
$
|
-
|
$
|
-
|
|
$
|
-
|
$
|
2,461,506
|
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.