CALGARY, May 13, 2014 /CNW/ - Yangarra Resources Ltd. ("Yangarra" or the "Company") (TSXV:YGR) announces its financial and operating results for the three months ended March 31, 2014.
First Quarter Highlights
- Production was 2,796 boe/d (53% oil and NGL's), a 55% increase from the same period in 2013.
- Oil and gas sales including royalty income were $16.0 million with funds flow from operations of $10.5 million ($0.07 per share - basic). This was a 132% and 119% increase from the same period in 2013, respectively.
- Earnings before interest, taxes, depletion & depreciation, amortization and changes in commodity contracts ("EBITDA") was $10.7 million, compared with $5.2 million in the same period of 2013.
- Operating costs, including $1.32 per boe of transportation costs, were $7.82 per boe, a reduction of 13% from the same period in 2013.
- Operating netback of $45.23 per boe, a 32% increase from the $34.34 per boe reported in the first quarter of 2013.
- G&A costs of $1.30 per boe, which is a 49% decrease from the first quarter of 2013.
- Royalties were 6% of oil and gas revenue.
- Total capital expenditures were $22.0 million.
- As at March 31, 2014, the Company had current bank debt, subordinated debt and working capital deficit, excluding fair value of commodity contracts and non-cash flow-through share premium obligations, of $55.8 million compared to $44.6 million at December 31, 2013.
- The annualized first quarter debt to cash flow ratio was 1.3 : 1.
Credit Facility Update
Yangarra has entered into an amended and restated credit facility agreement with Alberta Treasury Branches ("ATB") which increased its total available credit facilities to $90 million from the previous $65 million. The ATB facilities now consist of a $70 million senior line and a $20 million subordinated debt line. Currently, the senior line is drawn down in the amount of $50 million and the subordinated line is undrawn.
Subsequent to the first quarter the Company announced a bought deal financing of $25 million which is expected to close on or about May 15, 2014.
Guidance Update
With the recently announced equity financing and credit facility increase, the Company is increasing its 2014 capital budget to $75 million with 28 gross (22.7 net) horizontal wells planned for the year plus a Duvernay strata-graphic vertical test well.
The revised budget is expected to result in annual production of 3,500 boe/d which would be a 59% increase from 2013. Funds flow from operations are expected to be $50 million which is a 95% increase from 2013. The Company expects year-end 2014 total net debt of $45 million resulting in an estimated debt to annual cash flow ratio of 0.9 to 1.0. The budget assumes an average price of US$95.00/bbl for WTI crude oil (CDN$85.00/bbl Edmonton par) and an average price of $3.50/GJ for AECO natural gas.
Operations Update
The Company has successfully drilled or participated in 8 gross (6.2 net) wells during the first quarter of 2014. The Company experienced 11 days of shut-in production (approximately 1,200 boe/d for the 11 days) due to the TransCanada pipeline rupture near Rocky Mountain House and an additional 150 boe/d average for the quarter due to Keyera curtailments at other facilities. The Company drilled through break-up and expects to drill a total of 8 gross (5.1 net) wells in the second quarter.
Financial Summary
| 2014 | 2013 | ||
| Q1 | Q4 | Q1 | |
| Statements of Comprehensive Income (Loss) | |||
| Petroleum & natural gas sales and royalty income | $ 16,008,396 | $ 11,265,291 | $ 6,887,719 |
| Net income (loss) for the period (before tax) | $ 1,202,068 | $ 1,576,908 | $ (393,286) |
| Net income (loss) for the period | $ 719,450 | $ 750,851 | $ (259,424) |
| Net income (loss) per share - basic and diluted | $ 0.01 | $ 0.01 | $ (0.00) |
| Statements of Cash Flow | |||
| Funds flow from (used in) operating activities | $ 10,459,692 | $ 7,975,588 | $ 4,814,183 |
| Funds flow from (used in) operating activities per share - basic and diluted | $ 0.07 | $ 0.06 | $ 0.04 |
| Cash from (used in) operating activities | $ 6,008,779 | $ 10,757,178 | $ 4,452,879 |
| Statements of Financial Position | |||
| Property and equipment | $ 171,336,343 | $ 152,971,016 | $ 130,356,002 |
| Total assets | $ 195,777,835 | $ 169,798,021 | $ 148,761,517 |
| Working Capital (deficit), excluding MTM on commodity contracts and flow-through premium obligation | $ 55,822,090 | $ 36,794,243 | $ 42,469,266 |
| Non-Current Liabilities | $ 18,246,628 | $ 23,096,615 | $ 12,482,223 |
| Shareholders equity | $ 97,025,179 | $ 95,583,587 | $ 79,430,341 |
| Weighted average number of shares - basic | 147,410,341 | 127,219,336 | 121,711,723 |
| Weighted average number of shares diluted | 150,325,177 | 128,322,269 | 121,711,723 |
Company Netbacks ($/boe)
| 2014 | 2013 | |||
| Q1 | Q4 | Q1 | ||
| Sales Price | $ 62.37 | $ 43.61 | $ 40.03 | |
| Royalty income | 1.25 | 0.70 | 2.27 | |
| Royalty expense | (3.73) | (2.19) | (1.60) | |
| Production costs | (6.49) | (6.20) | (8.04) | |
| Transportation costs | (1.32) | (1.27) | (0.96) | |
| Field operating netback | 52.07 | 34.63 | 31.70 | |
| Commodity contract settlement | (6.85) | 1.07 | 2.64 | |
| Operating netback | 45.23 | 35.70 | 34.34 | |
| G&A and other (excludes non-cash items) | (1.30) | (2.07) | (2.54) | |
| Finance expenses | (3.33) | (2.59) | (2.24) | |
| Cash flow netback | 40.60 | 31.04 | 29.57 | |
| Depletion and depreciation | (16.53) | (15.96) | (18.23) | |
| Accretion | (0.16) | (0.16) | (0.33) | |
| Stock-based compensation | (1.63) | - | - | |
| Unrealized gain (loss) on financial instruments | (17.50) | (8.72) | (13.42) | |
| Deferred income tax | (1.92) | (3.25) | 0.82 | |
| Net Income (loss) netback | $ 2.86 | $ 2.95 | $ (1.59) | |
Operations Summary
Net petroleum and natural gas production, pricing and revenue are summarized below:
| 2014 | 2013 | |||||
| Q1 | Q4 | Q1 | ||||
| Daily production volumes | ||||||
| Natural gas (mcf/d) | 7,572 | 8,303 | 5,090 | |||
| Oil (bbl/d) | 1,036 | 683 | 502 | |||
| NGL's (bbl/d) | 413 | 605 | 291 | |||
| Royalty income | ||||||
| Natural gas (mcf/d) | 359 | 405 | 709 | |||
| Oil (bbl/d) | 0 | 1 | 2 | |||
| NGL's (bbl/d) | 25 | 24 | 48 | |||
| Combined (boe/d 6:1) | 2,796 | 2,764 | 1,809 | |||
| Revenue | ||||||
| Petroleum & natural gas sales - Gross | $ 15,694,979 | $ 11,087,956 | $ 6,518,381 | |||
| Royalty income | 313,417 | 177,335 | 369,338 | |||
| Commodity contract settlement | (1,723,339) | 271,387 | 430,418 | |||
| Total sales | 14,285,057 | 11,536,678 | 7,318,137 | |||
| Royalty expense | (937,556) | (557,278) | (261,092) | |||
| Petroleum & natural gas sales - Net | 13,347,501 | 10,979,400 | 7,057,045 | |||
| Change in fair value of contracts | (4,403,102) | (2,217,286) | (2,185,484) | |||
| Total Revenue - Net of royalties | $ 8,944,399 | $ 8,762,114 | $ 4,871,561 | |||
Working Capital Summary
The following table summarizes the change in working capital during the three months ended March 31, 2014 and year ended December 31, 2013:
| 2014 | 2013 | |
| Working capital (deficit) - beginning of period (1) | $ (36,794,243) | $ (36,301,842) |
| Funds flow from operating activities | 10,459,692 | 25,648,666 |
| Additions to of property and equipment & E&E Assets | (21,989,208) | (47,485,106) |
| Issuance of shares | 297,500 | 13,593,273 |
| Issuance of Subordinated Debt | 3,513 | 7,786,632 |
| Other Debt | (9,199) | (35,866) |
| Working capital (deficit) - end of period (1) | $ (48,031,945) | $ (36,794,243) |
| Subordinated Debt Outstanding | $ (7,790,145) | $ (7,786,632) |
| Total Debt | $ (55,822,090) | $ (44,580,875) |
| Credit facility limit | $ 45,000,000 | $ 45,000,000 |
| Subordinated debt facility limit | $ 20,000,000 | $ 20,000,000 |
| (1) | Excludes fair value of commodity contracts and non-cash flow through premium obligations |
Capital Spending
Capital spending is summarized as follows:
| 2014 | 2013 | ||
| Cash Additions | Q1 | Q4 | Q1 |
| Land, acquistions and lease rentals | $ 972,133 | $ (261,263) | $ 1,060,280 |
| Drilling and completion | 18,373,738 | 18,958,090 | 8,036,865 |
| Geological and geophysical | 320,228 | 170,565 | 33,678 |
| Equipment | 2,324,948 | 1,490,863 | 1,879,815 |
| Other Asset Additions | (1,839) | 100,771 | 251,954 |
| $ 21,989,208 | $ 20,459,026 | $ 11,262,592 | |
Annual General Meeting of Shareholders
The Company's Annual General and Special Meeting of Shareholders is scheduled for 10:00 AM on Tuesday May 27, 2014 in the Tillyard Management Conference Centre, Main Floor, 715 5th Avenue SW, Calgary, AB.
Disclosure Items
The Company's financial statements, notes to the financial statements and management's discussion and analysis have been filed on SEDAR (www.sedar.com) and are available on the Company's website (www.yangarra.ca).
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. Operating netbacks are calculated as revenue from all products less operating costs.
Forward looking information
Certain information regarding Yangarra set forth in this news release, including management's assessment of future plans, operations and operational results may constitute forward-looking statements under applicable securities law and necessarily involve risks associated with oil and gas exploration, production, marketing and transportation such as loss of market, volatility of prices, currency fluctuations, imprecision of reserves estimates, environmental risks, competition from other producers and ability to access sufficient capital from internal and external sources. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements.
All reference to $ (funds) are in Canadian dollars.
Neither the TSX Venture Exchange nor its Regulation Service Provider (as that term is defined in the Policies of the TSX Venture Exchange) accepts responsibility for the adequacy and accuracy of this release.
SOURCE Yangarra Resources Ltd.
James Evaskevich, President & CEO, at (403) 262-9558
Copyright CNW Group 2014