Mr. James Evaskevich reports

YANGARRA ANNOUNCES 2023 SECOND QUARTER FINANCIAL AND OPERATING RESULTS

Yangarra Resources Ltd. has released its financial and operating results for the three and six months ended June 30, 2023.

Operations update

Yangarra drilled six wells and completed five wells during the quarter. The drilling rig was shut down for five weeks due to wet conditions during breakup. The company also elected to delay the completion of a five-well pad by four weeks. This delay decreased water pumping costs by $1.2-million for the pad as a closer water source was available after breakup and water heating was no longer necessary.

During the quarter, wildfire outages were followed by wet weather conditions. This, together with third party plant issues during turnaround season, negatively impacted production by 500 to 700 boe/d (barrels of oil equivalent/day) on average. The majority of production has now been restored and the company remains on pace to meet 2023 production guidance. The company has a six-well pad coming onstream at the end of July.

Yangarra's oil field services (OFS) group continues to increase its footprint with the addition of a 50-ton crane. With the numerous increases in services provided by Yangarra over the past year, the company has been able to multitask staff in a very efficient manner. According to company estimates, the OFS group has reduced operating costs by $1.50 to $2 per boe, drilling and completion costs by $400,000 to $500,000 per well, and equipping and pipeline tie costs by 40 per cent.

Yangarra retained the services of two consulting firms to review frack efficacy as it relates to well path, frack intensity, viscosity and frack rate. This has resulted in substantial changes to the drill and completion operations. A variety of these changes have been implemented on a total of seven wells to date and while it is early in the process Yangarra is very encouraged by the results.

Second quarter highlights:

• Funds flow from operations of $22.4-million (22 cents per share -- diluted), a decrease of 55 per cent from the same period in 2022;
• Oil and gas sales were $38.4-million, a decrease of 44 per cent from the same period in 2022;
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $24.9-million (25 cents per share -- diluted);
• Net income of $7.8-million (eight cents per share -- diluted, $12.4-million before tax), a decrease of 74 per cent from the same period in 2022;
• Average production of 12,103 boe/d (38 per cent liquids) during the quarter, a 15-per-cent increase from the same period in 2022;
• Operating costs were $7.99/boe (including $1.45/boe of transportation costs);
• Field operating netbacks were $23.77/boe;
• Operating netbacks, which include the impact of commodity contracts, were $24.24/boe;
• Operating margins were 70 per cent and funds flow from operations margins were 58 per cent;
• General and administrative costs of $1.23/boe;
• Royalties were 9 per cent of oil and gas sales;
• All-in cash costs were $14.58/boe;
• Capital expenditures were $20.2-million;
• Adjusted net debt was $119.9-million;
• Adjusted net debt to second quarter annualized funds flow from operations was 1.34:1;
• $1.6-million of adjusted net debt was repaid during the second quarter;
• Retained earnings of $288-million;
• Decommissioning liabilities of $15.2-million (discounted);
• Completed the borrowing base review and the company's syndicated senior credit facility was set at $145-million.

Quarter-end disclosure

The company's June 30, 2023, unaudited condensed interim consolidated financial statements and management's discussion and analysis will be filed on SEDAR and are available on the company's website.

We seek Safe Harbor.