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Yangarra Resources Ltd (3)
Symbol YGR
Shares Issued 85,363,059
Close 2019-08-08 C$ 1.62
Market Cap C$ 138,288,156
Recent Sedar Documents

Yangarra Resources earns $18.21-million in Q2 2019

2019-08-08 16:26 ET - News Release

Mr. James Evaskevich reports

YANGARRA ANNOUNCES SECOND QUARTER 2019 FINANCIAL AND OPERATING RESULTS

Yangarra Resources Ltd. has released its financial and operating results for the three and six months ended June 30, 2019.

Second quarter highlights:

  • Average production amounted to 13,032 barrels of oil equivalent per day (47 per cent liquids) during the quarter, an increase of 9 per cent from the first quarter of 2019 and a 72-per-cent increase from the same period in 2018.
  • Oil and gas sales were $36.5-million, an increase of 22 per cent from the same period in 2018.
  • Funds flow from operations amounted to $24.4-million (29 cents per share -- basic), an increase of 44 per cent from the same period in 2018.
  • Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization), which excludes changes in derivative financial instruments, was $25.2-million (30 cents per share -- basic).
  • Net income amounted to $18.2-million (21 cents per share (basic), $13.4-million before tax), an increase of 1,007 per cent from the same period in 2018. This was the 10th consecutive quarter of net income.
  • Operating costs were $6.29 per barrel of oil equivalent (including 79 cents per barrel of oil equivalent of transportation costs).
  • Field netbacks were $22.11 per barrel of oil equivalent.
  • Operating netbacks, which include the impact of commodity contracts, were $22.33 per barrel of oil equivalent.
  • Operating margins amounted to 73 per cent and cash flow margins amounted to 66 per cent.
  • G&A (general and administrative) costs amounted to 50 cents per barrel of oil equivalent.
  • Royalties were 8 per cent of oil and gas revenue.
  • Total capital expenditures (including E&E) were $13.8-million.
  • Adjusted net debt (which excludes current derivative financial instruments) was $178-million, a reduction of $10-million from the first quarter of 2019.
  • Adjusted net debt to annualized second quarter funds flow from operations was 1.8:1.
  • Retained earnings amounted to $90.3-million as at June 30, 2019.
  • Corporate LMR is 13.99 with decommissioning liabilities of $14.1-million (discounted).

Operations update

The company drilled four wells and completed three wells during the quarter, which leaves four wells drilled, but not completed, at the end of the second quarter. Due to the wet spring, drilling and completion operations were delayed until late July. Yangarra expects to drill five to six wells and complete four to five wells during the third quarter. Guidance for the year remains unchanged.

Environment, social and governance (ESG) strategy

Yangarra focuses on creating long-term shareholder value through financial discipline, while minimizing Yangarra's environmental footprint, and by operating in a safe manner with a diverse culture. While Canadian oil and gas ESG standards have not been formalized or adopted, Yangarra is moving forward on ESG initiatives with the following:

  • Methane baseline study is complete and on track for a 55-per-cent reduction.
  • Recently implemented revised completion procedures, which will reduce flaring by 90 per cent and reduce completion costs by 10 per cent.
  • Implement a strategy of recycling 90 per cent of all water generated from completions and production operations via reuse in new fracture stimulations.
  • Yangarra has drilled over 300 wells since inception; 120 of these have produced to their economic limit and were abandoned, resulting in a low standing well count and minimal asset retirement obligations.
  • Recently adopted a formal diversity policy to acknowledge important diversity considerations, such as gender, age and ethnicity, with a view to ensuring that the company benefits from a broader range of perspectives and relevant experiences.

Share buybacks

Yangarra continues to make capital allocation decisions using a full-cycle return model, which includes the decision on whether to buy back the company's shares. Using the second quarter production of 13,032 barrels of oil equivalent per day and the current enterprise value (market capitalization plus net debt), the company's shares have traded as low as $23,500 on a per-flowing-barrel-of-oil-equivalent basis. The company's cash flow and debt levels would allow for buybacks; however, based on full-cycle capital efficiencies comparisons, the company has made the decision to allocate capital to land purchases, new drilling and debt reduction, versus share buybacks, at this time.

                                         STATEMENT OF COMPREHENSIVE INCOME                                         
                                                                                                     
                                    Q2 2019    Q1 2019    Q2 2018    Six months ended 2019    Six months ended 2018    
                                                                        
Petroleum and natural gas sales     $36,473    $39,907    $29,922                  $76,380                  $59,672 
Net income (before tax)              13,433     16,386      2,605                   29,819                   10,651 
Net income                           18,219     11,514      1,646                   29,733                    7,305  
Net income per share -- basic          0.21       0.13       0.02                     0.35                     0.09   
Net income per share -- diluted        0.21       0.13       0.02                     0.34                     0.08   

Quarter-end disclosure

The company's financial statements, notes to the financial statements and management's discussion and analysis for the year ended Dec. 31, 2018, and three and six months ended June 30, 2019, have been filed on SEDAR and are available at the company's website.

We seek Safe Harbor.

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