Quarterly / Earnings Reports | Environmental, Health & Safety | Fourth Quarter (4Q) Update | Financial Results | Capital Markets | Capital Expenditure | Capital Expenditure - 2020 | 2020 Guidance

Yangarra IDs 2020 Capital Budget; Reports Q4 2019 Results

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Yangarra Resources Ltd. reported its financial and operating results for the year ended December 31, 2019.

The company also detailed its 2020 capital plan.

2020 Capital Budget & Guidance

First quarter capital spending and production will be lower than originally forecast due to Yangarra’s response to lower commodity pricing. 

2019 Highlights

• Average Production of 12,572 boe/d (47% liquids) an increase of 33% from 2018
• Oil and gas sales were $145 million with funds flow from operations of $92 million ($1.08 per share – basic)
• Adjusted EBITDA (which excludes changes in derivative financial instruments) was $95 million ($1.12 per share – basic), with adjusted EBITDA margins of 66%
• Net income of $43 million ($0.51 per share – basic) or $48 million before tax, resulting in a net income margin of 30%
• Return on capital employed (“ROCE”) of 10%
• Return on equity (“ROE”) of 14%
• Operating costs were $6.85/boe (including $1.08/boe of transportation costs)
• Operating netbacks, which include the impact of commodity contracts, were $22.43 per boe
• Operating margins were 71% and funds flow margins were 64%
• G&A costs of $0.65/boe
• Royalties were 7% of oil and gas revenue
• Capital expenditures (including $6 million of land) were $120 million
• Net debt (which excludes the current derivative financial instruments) was $188 million
• Net Debt to funds flow from operations was 2.0 : 1
• Retained earnings of $104 million
• Corporate LMR is 11.92 with decommissioning liabilities of $15 million (discounted)
• Proved Developed Producing (“PDP”) reserves increased by 9%, F&D costs were $18.10/boe, the PDP recycle ratio was 1.2x and additions replaced 146% of 2019 production
• Total Proved reserves increased by 13%, F&D costs were $10.74/boe, the Total Proved recycle ratio was 2.1x and additions replaced 320% of 2019 production
• Proved plus Probable (“P+P”) reserves increased by 15%, F&D costs were $6.86/boe, the P+P recycle ratio was 3.3x and additions replaced 522% of 2019 production.

Fourth Quarter Highlights

• Average production of 12,568 boe/d (45% liquids) during the quarter, a decrease of 1% from the third quarter of 2019 and a 2% increase from the same period in 2018
• Oil and gas sales were $36 million, an increase of 19% from the same period in 2018
• Funds flow from operations of $21 million ($0.25 per share – basic), an increase of 22% from the same period in 2018
• Adjusted EBITDA (which excludes changes in derivative financial instruments) was $21 million ($0.25 per share – basic)
• Net income of $7 million ($0.09 per share – basic, $9 million before tax), a decrease of 47% from the same period in 2018 and represents the 12th consecutive quarter of net income
• Operating costs were $7.30/boe (including $1.11/boe of transportation costs)
• Field operating netbacks were $21.34/boe
• Operating netbacks, which include the impact of commodity contracts, were $21.59/boe
• Operating margins were 69% and funds flow from operations margins were 58%
• G&A costs of $1.17/boe
• Royalties were 8% of oil and gas revenue
• Capital expenditures (including $0.5 million on land) were $21 million
• Net Debt to fourth quarter annualized funds flow from operations was 2.2 : 1

Operations Update

Yangarra has drilled six wells and completed five wells in the first quarter of 2020 leaving four wells drilled and uncompleted at the end of the quarter. Yangarra elected to reduce first quarter activity as per the Company’s strategy of reducing capital spending when commodity pricing falls below internal thresholds for rates of return.

Yangarra’s drilling in the first quarter was focused on Chedderville, as that area currently generates the best rates of return and scale in the Company’s portfolio. In addition, the Company has unused processing capacity along with several years of future drilling locations.

The Company continues to refine drilling and completion techniques to optimize best practices and returns as affirmed by the improvements in the latest well results.

ESG Update

Yangarra has partnered with CleaResult within the Energy Efficiency Alberta program to find opportunities to increase energy efficiency while reducing greenhouse gas emissions. Carbon dioxide equivalent emissions were estimated to be 98,629 tonnes in 2019 and a plan has been formulated to significantly reduce the methane portion of these emissions over the next 3 years.