Yangarra Reports Q1 2019 Results

Yangarra Resources Ltd. reported its Q1 2019 results.

First Quarter Highlights

• Average production of 11,956 boe/d (52% liquids) during the quarter, a decrease of 2% from the fourth quarter of 2018 and a 59% increase from the same period in 2018.

• Oil and gas sales were $39.9 million, an increase of 34% from the same period in 2018.

• Funds flow from operations of $27.7 million ($0.32 per share – basic), an increase of 49% from the same period in 2018.

• Adjusted EBITDA (which excludes changes in derivative financial instruments) was $28.1 million ($0.33 per share - basic).

• Net income of $11.5 million ($0.13 per share – basic, $16.4 million before tax), an increase of 103% from the same period in 2018.

• Operating costs were $6.83/boe (including $0.96/boe of transportation costs).

• Field netbacks were $27.46/boe.

• Operating netbacks, which include the impact of commodity contracts, were $27.62/boe.

• Operating margins were 74% and cash flow margins were 68%.

• G&A costs of $0.32/boe.

• Royalties were 8% of oil and gas revenue.

• Total capital expenditures (including E&E) were $59.0 million.

• Net debt (which excludes current derivative financial instruments) was $188 million.

• Net Debt to annualized first quarter funds flow from operations was 1.70 : 1.

• Corporate LMR is 12.6 with decommissioning liabilities of $13.3 million (discounted).

Operations Update

Production during the quarter was reduced by approximately 1,000 boe/d (75% liquids) with two wells shut in due to third party line failure and four wells on two pads shut in for a month to accommodate completions of four new wells on those pads. All production was restored during the month of April.

Yangarra installed a new compression facility in South Ferrier capable of processing an additional 25 mmcf/d with total corporate nameplate capacity of more than 100 mmcf/d. Yangarra has accumulated a sizeable land base at the Cow Lake/Cheddarville areas and expects a significant portion of its drilling budget, over the next few quarters, to be devoted to these areas now that Company owned compression capacity is available.

Lower industry activity created an environment of decreasing drilling, completion and equipping costs which together with improving commodity pricing resulted in improving full cycle returns. As a result of these conditions, Yangarra accelerated the capital program, with 9 wells drilled and 10 wells completed in Q1.

Capital expenditures in Q2 are expected to be $13-17 million depending on when drilling operations can resume due to spring breakup. Free cash flow generated in Q2 will be directed to debt reduction. Production in Q2 will be reduced with a two week turn-around in Willesden Green in May with quarterly production projected to be 13,000-14,000 boe/d.

As part of the Custom Energy Solutions program of Energy Efficiency Alberta, Yangarra has partnered with the Alberta Energy Regulator (“AER”) to measure methane emissions company wide in Central Alberta and has initiated a program to significantly reduce those emissions.

Financial Summary

Company Netbacks ($/boe)

Operations Summary

Net petroleum and natural gas production, pricing and revenue are summarized below:

Working Capital Summary

The following table summarizes the change in working capital during the three months ended March 31, 2019 and the year ended December 31, 2018: