YANGARRA RESOURCES LTD. Suite 1530, 715 - 5 | Avenue S.W. | Calgary, Alberta T2P 2X6 |
Phone: (403) 262-9558 | Fax: (403) 262-8281 | |
Webpage: www.yangarra.ca | Email: info@yangarra.ca |
Yangarra Announces 2021 Year End Financials and Operating Results
March 3, 2022
Yangarra Resources Ltd. ("Yangarra" or the "Company") (TSX:YGR) announces its financials and operating results for the year ended December 31, 2021.
Guidance Update
Although commodity prices have improved dramatically since Yangarra released its 2022 budget, the Company remains committed to a disciplined one-rig 30 well program, with the balance of free-cash flow generated to be used for debt retirement until the Company achieves its debt targets. At prevailing commodity prices, the Company expects to realize these targets by summer 2022, at which point a return of capital strategy will be implemented.
The production guidance of 12,000 boe/d and the $105 million of capital spending in the 2022 budget remains unchanged, however projected cash flow has improved by over 20% to $165 million, resulting in a revised budgeted cash flow per share of $1.90.
The above budget now assumes a WTI price of US$85 with a differential of US$5.00 and US to CDN exchange rate of 1.25, resulting in an Edmonton par price of CDN$100/bbl and CDN$4.00/GJ for AECO natural gas. Yangarra has hedged approximately 20% of 2022 summer gas at CDN$4.50/GJ.
Operations Update
The Company started the development of a 14-well pad at West Ferrier in Q4 2021. As a result of improved drilling times and cost efficiencies, the initial 6 (3.0 net) 1.0-mile wells were drilled at a faster pace than expected and the wells were placed onstream by mid February. The remaining wells on the pad are 100% wells. Four additional wells were drilled on the pad while completion operations were underway on the first six wells. Completions are underway on the next four wells. The final four wells on the pad are scheduled to be drilled in Q2 due to lease logistics.
The drilling rig is currently drilling four 100% wells on an eight well pad in the Cow Lake area, the balance of the pad will be drilled in Q3 due to water access scheduling.
As activity increases in western Canada, the impact on accessing services and raw materials is resulting in a rapid inflationary environment. Yangarra's past strategic build-out of the Company's oil-field services group has helped mitigate these pressures. Yangarra expects to maintain a tight cost structure on drilling and completions operations with some potential inflation on raw material purchases.
ESG Report
Yangarra announced the publication of its inaugural ESG report in February 2022 (www.yangarra.ca). The Company is on-track with all emissions reduction targets and ESG standards remain a core principle of Yangarra's operations.
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2021 Highlights
- Average Production of 8,931 boe/d (46% liquids), a decrease of 10% from 2020
- Oil and gas sales were $140.3 million, an increase of 64% from 2020
- Funds flow from operations of $90.9 million ($1.06 per share - basic) an increase of 104% from 2020
- Adjusted EBITDA (which excludes changes in derivative financial instruments) was $100.9 million ($1.18 per share - basic)
- Net income of $50.0 million ($0.58 per share - basic, $65.2 million before tax), resulting in a net income margin of 36%
- Return on capital employed of 11.4% (Earnings before interest and taxes divided by (Total assets minus current liabilities))
- Operating costs were $6.70/boe (including $1.10/boe of transportation costs)
- Operating netbacks, which include the impact of commodity contracts, were $32.27 per boe
- Operating margins were 75% and funds flow margins were 67%
- G&A costs of $0.90/boe
- Royalties were 6% of oil and gas revenue
- Capital expenditures (including $0.4 million of land) were $88 million
- Net debt (which excludes the current derivative financial instruments) was $196.8 million
- Retained earnings of $159 million
- Decommissioning liabilities of $13.8 million (discounted)
Fourth Quarter Highlights
- Average production of 10,060 boe/d (44% liquids) during the quarter, a 10% increase from the same period in 2020
- Oil and gas sales were $47.4 million, an increase of 106% from the same period in 2020
- Funds flow from operations of $32.4 million ($0.38 per share - basic), an increase of 161% from the same period in 2020
- Adjusted EBITDA (which excludes changes in derivative financial instruments) was $35.0 million ($0.42 per share - basic)
- Net income of $19.6 million ($0.23 per share - basic, $25.5 million before tax), an increase of 344% from the same period in 2020
- Operating costs were $7.41/boe (including $1.09/boe of transportation costs)
- Field operating netbacks were $40.26/boe
- Operating netbacks, which include the impact of commodity contracts, were $39.32/boe
- Operating margins were 77% and funds flow from operations margins were 68%
- G&A costs of $1.09/boe
- Royalties were 7% of oil and gas revenue
- All in cash costs were $16.48/boe
- Capital expenditures were $26.4 million
- Net Debt to fourth quarter annualized funds flow from operations was 1.5 : 1
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Financial Summary
2021 | 2020 | |||||
Q4 | Q3 | Q4 | ||||
Statements of Income and Comprehensive Income | ||||||
Petroleum & natural gas sales | $ | 47,405 | $ | 35,880 | $ | 23,064 |
Income before tax | $ | 25,547 | $ | 17,657 | $ | 5,754 |
Net income | $ | 19,644 | $ | 13,500 | $ | 4,276 |
Net income per share - basic | $ | 0.23 | $ | 0.16 | $ | 0.05 |
Net income per share - diluted | $ | 0.22 | $ | 0.15 | $ | 0.05 |
Statements of Cash Flow | ||||||
Funds flow from operations | $ | 32,425 | $ | 24,126 | $ | 12,460 |
Funds flow from operations per share - basic | $ | 0.38 | $ | 0.28 | $ | 0.15 |
Funds flow from operations per share - diluted | $ | 0.36 | $ | 0.27 | $ | 0.15 |
Cash from operating activities | $ | 36,835 | $ | 22,078 | $ | 19,192 |
Statements of Financial Position | ||||||
Property and equipment | $ | 627,948 | $ | 606,945 | $ | 563,290 |
Total assets | $ | 683,469 | $ | 656,849 | $ | 609,989 |
Working capital (deficit) surplus | $ | (3,729) | $ | (5,946) | $ | 10 |
Adjusted net debt | $ | 196,794 | $ | 201,811 | $ | 197,379 |
Shareholders equity | $ | 364,959 | $ | 344,397 | $ | 312,260 |
Weighted average number of shares - basic | 86,449 | 86,051 | 85,380 | |||
Weighted average number of shares - diluted | 90,636 | 89,802 | 85,588 | |||
Year Ended | |||
2021 | 2020 | ||
$ | 140,289 | $ | 85,699 |
$ | 65,213 | $ | 7,389 |
$ | 50,014 | $ | 4,847 |
$ | 0.58 | $ | 0.06 |
$ | 0.56 | $ | 0.06 |
$ | 90,921 | $ | 44,619 |
$ | 1.06 | $ | 0.52 |
$ | 1.02 | $ | 0.52 |
$ | 91,266 | $ | 44,271 |
$ | 627,948 | $ | 563,290 |
$ | 683,469 | $ | 609,989 |
$ | (3,729) | $ | 10 |
$ | 196,794 | $ | 197,379 |
$ | 364,959 | $ | 312,260 |
85,892 | 85,380 | ||
89,376 | 85,783 | ||
Company Netbacks ($/boe)
2021 | 2020 | |||||
Q4 | Q3 | Q4 | ||||
Sales price | $ | 51.22 | $ | 44.78 | $ | 27.34 |
Royalty expense | (3.55) | (3.17) | (1.52) | |||
Production costs | (6.32) | (5.71) | (5.02) | |||
Transportation costs | (1.09) | (0.98) | (1.03) | |||
Field operating netback | 40.26 | 34.92 | 19.77 | |||
Realized gain (loss) on commodity contract settlement | (0.94) | (0.33) | (0.38) | |||
Operating netback | 39.32 | 34.58 | 19.39 | |||
G&A | (1.09) | (0.95) | (0.89) | |||
Cash Finance expenses | (3.53) | (3.96) | (3.73) | |||
Depletion and depreciation | (9.42) | (7.62) | (8.04) | |||
Non Cash - Finance expenses | 1.67 | 0.60 | (0.06) | |||
Abandonment Expenses | - | - | (0.21) | |||
Stock-based compensation | (0.40) | (0.49) | (0.61) | |||
Unrealized gain (loss) on financial instruments | 1.04 | (0.12) | 0.96 | |||
Deferred income tax | (6.38) | (5.19) | (1.75) | |||
Net Income netback | $ | 21.21 | $ | 16.85 | $ | 5.06 |
Year Ended | |||
2021 | 2020 | ||
$ | 43.04 | $ | 23.68 |
(2.68) | (1.16) | ||
(5.60) | (5.26) | ||
(1.10) | (1.06) | ||
33.66 | 16.20 | ||
(1.39) | (0.18) | ||
32.27 | 16.02 | ||
(0.90) | (0.65) | ||
(2.52) | (4.21) | ||
(8.34) | (8.36) | ||
(0.05) | (0.05) | ||
- | (0.05) | ||
(0.41) | (0.74) | ||
(0.04) | 0.09 | ||
(4.66) | (0.70) | ||
$ | 15.35 | $ | 1.35 |
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Business Environment
2021 | 2020 | |||||
Q4 | Q3 | Q4 | ||||
Realized Pricing (Including realized commodity contracts) | ||||||
Light Crude Oil ($/bbl) | $ | 89.49 | $ | 84.78 | $ | 55.13 |
NGL ($/bbl) | $ | 51.54 | $ | 51.13 | $ | 24.32 |
Natural Gas ($/mcf) | $ | 4.67 | $ | 3.71 | $ | 2.64 |
Realized Pricing (Excluding commodity contracts) | ||||||
Light Crude Oil ($/bbl) | $ | 89.49 | $ | 84.90 | $ | 55.13 |
NGL ($/bbl) | $ | 51.61 | $ | 51.06 | $ | 24.43 |
Natural Gas ($/mcf) | $ | 4.95 | $ | 3.81 | $ | 2.75 |
Oil Price Benchmarks | ||||||
West Texas Intermediate ("WTI") (US$/bbl) | $ | 77.45 | $ | 70.62 | $ | 42.66 |
Edmonton Par ($/bbl) | $ | 91.70 | $ | 81.39 | $ | 50.24 |
Edmonton Par to WTI differential (US$/bbl) | $ | (4.67) | $ | (6.02) | $ | (4.01) |
Natural Gas Price Benchmarks | ||||||
AECO gas ($/mcf) | $ | 4.41 | $ | 3.41 | $ | 2.64 |
Foreign Exchange | ||||||
Canadian Dollar/U.S. Exchange | 0.79 | 0.79 | 0.77 |
Year Ended | |||
2021 | 2020 | ||
$ | 78.24 | $ | 47.64 |
$ | 45.11 | $ | 18.45 |
$ | 3.75 | $ | 2.28 |
$ | 82.01 | $ | 47.59 |
$ | 45.10 | $ | 18.49 |
$ | 3.87 | $ | 2.34 |
$ | 67.65 | $ | 39.40 |
$ | 79.80 | $ | 45.34 |
$ | (3.89) | $ | (5.54) |
$ | 3.49 | $ | 2.23 |
0.80 | 0.75 |
Operations Summary
Net petroleum and natural gas production, pricing and revenue are summarized below:
2021 | 2020 | Year Ended | |||||||||
Q4 | Q3 | Q4 | 2021 | 2020 | |||||||
Daily production volumes | |||||||||||
Natural Gas (mcf/d) | 33,774 | 27,965 | 30,322 | 29,092 | 32,404 | ||||||
Light Crude Oil (bbl/d) | 2,744 | 2,274 | 2,269 | 2,373 | 2,611 | ||||||
NGL's (bbl/d) | 1,687 | 1,776 | 1,846 | 1,709 | 1,876 | ||||||
Combined (BOE/d 6:1) | 10,060 | 8,710 | 9,169 | 8,931 | 9,888 | ||||||
Revenue | |||||||||||
Petroleum & natural gas sales - Gross | $ | 47,405 | $ | 35,880 | $ | 23,064 | $ | 140,289 | $ | 85,699 | |
Realized gain (loss) on commodity contract settlement | (872) | (267) | (323) | (4,529) | (658) | ||||||
Total sales | 46,533 | 35,613 | 22,741 | 135,760 | 85,041 | ||||||
Royalty expense | (3,287) | (2,539) | (1,283) | (8,722) | (4,213) | ||||||
Total Revenue - Net of royalties | $ | 43,246 | $ | 33,074 | $ | 21,458 | $ | 127,038 | $ | 80,828 |
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Working Capital Summary
The following table summarizes the change in working capital during the year ended December 31, 2021 and December 31, 2020:
Three months ended | Year ended | Year ended | ||||
December 31, 2021 | December 31, 2021 | December 31, 2020 | ||||
Adjusted net debt - beginning of period | $ | (201,811) | $ | (197,414) | $ | (187,711) |
Funds flow from operations | 32,425 | 90,921 | 45,524 | |||
Additions to property and equipment | (26,624) | (88,153) | (51,093) | |||
Decommissioning costs incurred | (416) | (881) | (389) | |||
Additions to E&E Assets | (212) | (387) | (426) | |||
Issuance of shares | 510 | 1,132 | - | |||
Other | (666) | (2,012) | (3,319) | |||
Adjusted net debt - end of period | $ | (196,794) | $ | (196,794) | $ | (197,414) |
Credit facility limit | $ | 210,000 | $ | 210,000 | $ | 210,000 |
Capital Spending
Capital spending is summarized as follows:
2021 | 2020 | |||||
Cash additions | Q4 | Q3 | Q4 | |||
Land, acquisitions and lease rentals | $ | (89) | $ | 327 | $ | (75) |
Drilling and completion | 23,994 | 19,847 | 14,030 | |||
Geological and geophysical | 114 | 42 | 134 | |||
Equipment | 2,349 | 3,136 | 753 | |||
Other asset additions | 255 | 122 | 347 | |||
$ | 26,623 | $ | 23,474 | $ | 15,189 | |
Year Ended | |||
2021 | 2020 | ||
$ | 54 | $ | 324 |
77,991 | 44,816 | ||
547 | 640 | ||
8,872 | 4,226 |
6891,087
$ 88,153 $ 51,093
Exploration & evaluation assets | $ | 212 | $ | 41 | $ | - | $ | 387 | $ | 426 |
Annual General Meeting of Shareholders
The Company's Annual General Meeting of Shareholders is scheduled for 10:00 AM on Thursday April 28, 2022 in the Tillyard Management Conference Centre, Main Floor, 715 5th Avenue SW, Calgary, AB.
Year End Disclosure
The Company's December 31, 2021 audited consolidated financial statements, management's discussion and analysis and annual information form will be filed on SEDAR (www.sedar.com) and are available on the Company's website (www.yangarra.ca).
For further information, please contact James Evaskevich, President & CEO 403-262-9558.
Oil and Gas Advisories
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.
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Yangarra Resources Ltd. published this content on 03 March 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 03 March 2022 22:14:57 UTC.
