Mr. Jim Evaskevich reports

YANGARRA ANNOUNCES SECOND QUARTER 2017 FINANCIAL AND OPERATING RESULTS

Yangarra Resources Ltd. has released its financial and operating results for the three and six months ended June 30, 2017.

Second quarter highlights:

• Production averaged 5,705 barrels of oil equivalent per day (54 per cent liquids), doubling output from the second quarter of 2016;
• Production-per-share growth of 97 per cent from the second quarter of 2016 and 27 per cent from the first quarter of 2017;
• Funds flow from operations of $12-million (15 cents per share -- basic), an increase of 332 per cent compared with the second quarter of 2016;
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) (which excludes changes in derivative financial instruments) was $13-million (16 cents per share -- basic);
• Oil and gas sales were $19.5-million;
• Net income of $5.6-million (seven cents per share -- basic), or $7.9-million net income before tax;
• Operating costs were $8.98 per barrel of oil equivalent (including 73 cents per barrel of oil equivalent of transportation costs);
• Operating netbacks, including the impact of commodity contracts, were $26.68 per barrel of oil equivalent;
• Funds flow netbacks were $23.81 per barrel of oil equivalent;
• Operating and funds flow margins were 71 per cent and 63 per cent, respectively;
• General and administrative costs of 92 cents per barrel of oil equivalent;
• Royalties were 8 per cent of oil and gas revenue;
• Total capital expenditures were $7.9-million;
• Net debt (excluding current derivative financial instruments) was $72.7-million;
• Net debt to annualized second quarter funds flow from operations was 1.5:1;
• Increased the credit facility to $100-million;
• Corporate liability management ratio is 6.7, with decommissioning liabilities of $8.7-million.

Operations update

The company's 2017 second half drilling program is under way; two two-mile wells have been drilled and the rig is moving to the third well. The first well was completed with 128 stages and 2,300 tonnes of sand; initial flow test results indicate the well is better than type curve. The second well is programed for 136 stages and 3,000 tonnes of sand, with the completion scheduled to begin on Aug. 9, 2017.

The company continues to reduce stage interval distance as well as increase sand volumes per stage to determine the optimal stage count and sand tonnage to maximize rates of return in the bioturbated section of the Cardium.

Operating costs increased during the second quarter due to a significant number of bottom-hole pump changes during the quarter.

To date 2017, the company has added 110 Cardium locations and continues to successfully consolidate working interests on existing acreage.

The company had 1,200 barrels per day hedged in July and has 1,000 barrels per day hedged for the balance of the year at an average price of $73.30 per barrel.

     
                                           FINANCIAL SUMMARY  
                  
                                                               2017           2017           2016       
                                                                 Q2             Q1             Q2        
Statements of comprehensive income
Petroleum and natural gas sales                          $19,527,395    $15,549,388     $5,729,668
Net income (before tax)                                   $7,893,731     $7,341,733   $(2,667,159)
Net income                                                $5,611,218     $5,216,545     $(899,623)
Net income per share -- basic                                  $0.07          $0.07        $(0.01)
Net income per share -- diluted                                $0.07          $0.06        $(0.01)
Statements of cash flow
Funds flow from operations                               $12,047,670    $10,343,203     $2,791,331
Funds flow from operations per share -- basic                  $0.15          $0.13          $0.04
Funds flow from operations per share -- diluted                $0.14          $0.12          $0.04
Cash from operating activities                            $9,241,194     $8,610,412     $2,325,650

 
                                                           Six months ended June 30
                                                                2017           2016 

Petroleum and natural gas sales                          $35,076,783    $12,075,871
Net income (before tax)                                  $15,235,464     $8,963,944
Net income                                               $10,827,763    $10,978,731
Net income per share -- basic                                  $0.13          $0.16
Net income per share -- diluted                                $0.13          $0.16
Statements of cash flow
Funds flow from operations                               $22,390,874     $6,150,460
Funds flow from operations per share -- basic                  $0.28          $0.09
Funds flow from operations per share -- diluted                $0.27          $0.09
Cash from operating activities                           $17,851,606     $4,416,449

The company's financial statements, notes to the financial statements and management discussion and analysis have been filed on SEDAR and are available on the company's website.

We seek Safe Harbor.