CALGARY, AB, July 27, 2023 /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, 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 3rd party plant issues during turn-around season, negatively impacted production by 500 – 700 boe/d 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 on-stream at the end of July.
Yangarra’s Oilfield 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 $2.00 per BOE, drilling and completion costs by $400,000 – $500,000 per well and equipping and pipeline tie costs by 40%.
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 ($0.22 per share – diluted), a decrease of 55% from the same period in 2022
- Oil and gas sales were $38.4 million, a decrease of 44% from the same period in 2022
- Adjusted EBITDA was $24.9 million ($0.25 per share – diluted)
- Net income of $7.8 million ($0.08 per share – diluted, $12.4 million before tax), a decrease of 74% from the same period in 2022
- Average production of 12,103 boe/d (38% liquids) during the quarter, a 15% 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% and funds flow from operations margins were 58%
- G&A costs of $1.23/boe
- Royalties were 9% 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
Financial Summary
|
2023 |
2022 |
Six Months Ended |
||||
|
Q2 |
Q1 |
Q2 |
2023 |
2022 |
||
|
Statements of Income and Comprehensive Income |
||||||
|
Petroleum & natural gas sales |
$ 38,396 |
$ 49,055 |
$ 68,545 |
$ 87,451 |
$ 119,973 |
|
|
Income before tax |
$ 12,457 |
$ 19,459 |
$ 40,889 |
$ 31,916 |
$ 70,477 |
|
|
Net income |
$ 7,833 |
$ 14,909 |
$ 30,631 |
$ 22,742 |
$ 53,351 |
|
|
Net income per share – basic |
$ 0.08 |
$ 0.17 |
$ 0.35 |
$ 0.25 |
$ 0.61 |
|
|
Net income per share – diluted |
$ 0.08 |
$ 0.16 |
$ 0.33 |
$ 0.23 |
$ 0.58 |
|
|
Statements of Cash Flow |
||||||
|
Funds flow from operations |
$ 22,410 |
$ 30,068 |
$ 50,028 |
$ 52,478 |
$ 89,784 |
|
|
Funds flow from operations per share – basic |
$ 0.24 |
$ 0.34 |
$ 0.57 |
$ 0.57 |
$ 1.03 |
|
|
Funds flow from operations per share – diluted |
$ 0.22 |
$ 0.32 |
$ 0.54 |
$ 0.54 |
$ 0.98 |
|
|
Cash flow from operating activities |
$ 22,292 |
$ 33,948 |
$ 49,317 |
$ 56,240 |
$ 81,548 |
|
|
Weighted average number of shares – basic |
94,776 |
88,287 |
87,095 |
91,549 |
86,885 |
|
|
Weighted average number of shares – diluted |
99,917 |
94,110 |
92,087 |
97,061 |
91,488 |
|
|
June 30, 2023 |
December 31, 2022 |
|
|
Statements of Financial Position |
||
|
Property and equipment |
$ 736,129 |
$ 701,045 |
|
Total assets |
$ 799,284 |
$ 768,058 |
|
Working (deficit) capital surplus |
$ 3,125 |
$ (136,920) |
|
Adjusted net debt |
$ 119,958 |
$ 134,364 |
|
Shareholders equity |
$ 511,125 |
$ 473,574 |
Company Netbacks ($/boe)
|
2023 |
2022 |
Six Months Ended |
||||
|
Q2 |
Q1 |
Q2 |
2023 |
2022 |
||
|
Sales price |
$ 34.86 |
$ 43.91 |
$ 71.37 |
$ 39.42 |
$ 64.35 |
|
|
Royalty expense |
(3.10) |
(4.68) |
(5.84) |
(3.90) |
(4.40) |
|
|
Production costs |
(6.54) |
(7.00) |
(5.95) |
(6.77) |
(5.56) |
|
|
Transportation costs |
(1.45) |
(1.35) |
(1.24) |
(1.40) |
(1.24) |
|
|
Field operating netback |
23.77 |
30.88 |
58.34 |
27.35 |
53.15 |
|
|
Realized gain (loss) on commodity contract settlement |
0.46 |
(0.04) |
(2.82) |
0.21 |
(1.45) |
|
|
Operating netback |
24.23 |
30.84 |
55.52 |
27.56 |
51.70 |
|
|
G&A |
(1.23) |
(1.41) |
(1.06) |
(1.32) |
(1.03) |
|
|
Cash finance expenses |
(2.72) |
(2.56) |
(2.46) |
(2.70) |
(2.67) |
|
|
Depletion and depreciation |
(9.06) |
(8.85) |
(9.48) |
(8.96) |
(9.50) |
|
|
Non Cash – finance expenses |
(0.17) |
(0.16) |
(0.25) |
(0.11) |
(0.07) |
|
|
Stock-based compensation |
(0.39) |
(0.41) |
(0.19) |
(0.40) |
(0.18) |
|
|
Unrealized gain (loss) on financial instruments |
0.64 |
(0.02) |
0.49 |
0.31 |
(0.44) |
|
|
Deferred income tax |
(4.20) |
(4.07) |
(10.68) |
(4.14) |
(9.19) |
|
|
Net income netback |
$ 7.11 |
$ 13.35 |
$ 31.89 |
$ 10.25 |
$ 28.63 |
|
Business Environment
|
2023 |
2022 |
Six Months Ended |
||||
|
Q2 |
Q1 |
Q2 |
2023 |
2022 |
||
|
Realized Pricing (Including realized commodity contracts) |
||||||
|
Light Crude Oil ($/bbl) |
$ 94.74 |
$ 100.12 |
$ 130.38 |
$ 95.73 |
$ 119.49 |
|
|
NGL ($/bbl) |
$ 42.20 |
$ 49.85 |
$ 70.70 |
$ 46.23 |
$ 69.99 |
|
|
Natural Gas ($/mcf) |
$ 2.33 |
$ 3.46 |
$ 7.50 |
$ 2.99 |
$ 6.18 |
|
|
Realized Pricing (Excluding commodity contracts) |
||||||
|
Light Crude Oil ($/bbl) |
$ 94.74 |
$ 100.12 |
$ 137.95 |
$ 95.73 |
$ 123.03 |
|
|
NGL ($/bbl) |
$ 39.35 |
$ 49.92 |
$ 70.46 |
$ 44.92 |
$ 69.84 |
|
|
Natural Gas ($/mcf) |
$ 2.36 |
$ 3.45 |
$ 7.86 |
$ 3.00 |
$ 6.37 |
|
|
Oil Price Benchmarks |
||||||
|
West Texas Intermediate (“WTI”) (US$/bbl) |
$ 73.76 |
$ 77.45 |
$ 108.40 |
$ 74.92 |
$ 101.43 |
|
|
Edmonton Par ($/bbl) |
$ 95.04 |
$ 100.88 |
$ 136.20 |
$ 97.41 |
$ 126.76 |
|
|
Edmonton Par to WTI differential (US$/bbl) |
$ (3.00) |
$ (2.82) |
$ (1.70) |
$ (2.63) |
$ (1.73) |
|
|
Natural Gas Price Benchmarks |
||||||
|
AECO gas ($/mcf) |
$ 2.32 |
$ 3.32 |
$ 6.68 |
$ 2.82 |
$ 5.58 |
|
|
Foreign Exchange |
||||||
|
Canadian Dollar/U.S. Exchange |
0.74 |
0.74 |
0.78 |
0.74 |
0.79 |
|
Operations Summary
Net petroleum and natural gas production, pricing and revenue are summarized below:
|
2023 |
2022 |
Six Months Ended |
||||
|
Q2 |
Q1 |
Q2 |
2023 |
2022 |
||
|
Daily production volumes |
||||||
|
Natural Gas (mcf/d) |
44,799 |
43,180 |
36,874 |
43,994 |
35,289 |
|
|
Light Crude Oil (bbl/d) |
2,417 |
2,709 |
2,271 |
2,558 |
2,432 |
|
|
NGL’s (bbl/d) |
2,220 |
2,506 |
2,138 |
2,366 |
1,987 |
|
|
Combined (BOE/d 6:1) |
12,103 |
12,412 |
10,554 |
12,257 |
10,301 |
|
|
Revenue |
||||||
|
Petroleum & natural gas sales |
$ 38,396 |
$ 49,055 |
$ 68,545 |
$ 87,451 |
$ 119,973 |
|
|
Realized gain (loss) on commodity contract settlement |
510 |
(40) |
(2,712) |
470 |
(2,701) |
|
|
Total sales |
38,906 |
49,015 |
65,833 |
87,921 |
117,272 |
|
|
Royalty expense |
(3,414) |
(5,228) |
(5,605) |
(8,642) |
(8,210) |
|
|
Total Revenue – Net of royalties |
$ 35,492 |
$ 43,787 |
$ 60,228 |
$ 79,279 |
$ 109,062 |
|
Net Debt Summary
The following table summarizes the $14.4 million reduction change in adjusted net debt during the six months ended June 30, 2023, and the $62.4 million reduction during the year ended December 31, 2022.
|
Six months ended |
Year ended |
|
|
June 30, 2023 |
December 31, 2022 |
|
|
Adjusted net debt – beginning of period |
$ (134,364) |
$ (196,794) |
|
Funds flow from operations |
$ 52,478 |
177,194 |
|
Additions to property and equipment |
$ (52,679) |
(109,354) |
|
Decommissioning costs incurred |
$ – |
(291) |
|
Additions to E&E Assets |
$ (264) |
(3,888) |
|
Issuance of shares |
$ 15,993 |
1,077 |
|
Lease obligation repayment |
$ (744) |
(2,331) |
|
Other |
$ (378) |
23 |
|
Adjusted net debt – end of period |
$ (119,958) |
$ (134,364) |
|
Credit facility limit |
$ 145,000 |
$ 180,000 |
Capital Spending
Capital spending is summarized as follows:
|
2023 |
2022 |
Six Months Ended |
||||
|
Cash additions |
Q2 |
Q1 |
Q2 |
2023 |
2022 |
|
|
Land, acquisitions and lease rentals |
$ 250 |
$ 128 |
$ 40 |
$ 378 |
$ 201 |
|
|
Drilling and completion |
14,457 |
25,805 |
23,806 |
40,259 |
42,146 |
|
|
Geological and geophysical |
(183) |
423 |
191 |
240 |
313 |
|
|
Equipment |
5,009 |
5,893 |
2,808 |
10,903 |
5,259 |
|
|
Other asset additions |
656 |
241 |
116 |
899 |
307 |
|
|
$ 20,189 |
$ 32,490 |
$ 26,961 |
$ 52,679 |
$ 48,226 |
||
|
Exploration & evaluation assets |
$ – |
$ 264 |
$ 308 |
$ 264 |
$ 382 |
|
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 (www.sedar.com) and are available on the Company’s website (www.yangarra.ca).
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