Yangarra Announces Third Quarter 2015 Financial and Operating Results
November 9, 2015
Yangarra Resources Ltd. (“Yangarra” or the “Company”) (TSX:YGR) announces its financial and operating results for the three and nine months ended September 30, 2015.
Third Quarter Highlights
- Adjusted EBITDA (which excludes changes in derivative financial instruments) was $4.4 million ($0.07 per share – basic).
- Oil and gas sales, after royalties, were $5.3 million with funds flow from operations of $4.2 million ($0.06 per share – basic). This represents a 64% and a 55% decrease, respectively, from the same period in 2014 due to reductions in commodity pricing and shut in production.
- Production was negatively impacted by rolling TransCanada Pipelines Ltd. (“TCPL”) sales line shut downs with daily production averaging 2,158 boe/d for the quarter, a 29% decrease from the same period in 2014 and a 1% increase from the second quarter of 2015.
- Net loss of $2.4 million ($0.03 per share – basic) or $1.8 million before tax ($0.02 per share – basic) including a $5.4 million impairment of exploration & evaluation assets in the North Duvernay block.
- Operating costs were $8.78/boe (including $1.38/boe of transportation costs).
- Operating netbacks, which include the impact of commodity contracts, were $24.79 per boe, a 33% decrease from 2014. Field net backs, which do not include the impact of commodity contracts were $17.97, a decrease of 58% from 2014.
- G&A costs of $1.30/boe.
- Royalties were 2% of oil and gas revenue excluding commodity contracts and 2% of oil and gas revenue including commodity contracts.
- Total capital expenditures were $11.7 million.
- Net debt (which excludes the current derivative financial instruments) was $53.5 million down from $59.8 million at 2014 year end.
Cardium Development Update
Yangarra continues to focus on adding value and maximizing full cycle returns, targeting the majority of the 2015 drilling program to new Cardium lands or farm-in lands that were not in last year’s reserve report. Internal reserve estimates calculated using current pricing indicate this strategy has more than offset the effect of price erosion from the year end 2014 reserve report which provides support for Yangarra’s banking facilities.
With the substantially reduced drilling and completion environment Yangarra estimates that it saved approximately $8 million on the $22 million drilling and completion spending to date in 2015 a 35% reduction from 2014. These savings were experienced despite the fact that the company moved away from drilling two wells on a pad which had improved drilling and completion costs in previous years. With one well drilled on each pad Yangarra can return to drill two to four additional wells on these pads when commodity prices have improved and additional rigs are employed.
TCPL maintenance continues to negatively affect production however a substantial portion of shut-in production has recently come back on-stream. Base production is estimated to be 2,500 boe/d with four recently drilled Cardium HZ wells behind pipe (two 1 mile wells in Ferrier, one 1.5 mile and one 1 mile in North Willesden Green).
The cemented liner/sliding sleeve approach to completions continues to evolve with the most recent completion utilizing 37 fracks over a 1 mile HZ well. Pressure data indicates that communication between the fracks is not occurring even when the spacing is reduced to 30 meters. Initial flow back results suggest that tighter frack spacing’s provide incremental production. Yangarra expects that future wells will have up to 45 stages per mile.
Yangarra continues to accumulate Cardium acreage as well as consolidate ownership in existing acreage. The Company estimates that it currently has 462 gross (270 net) future Cardium drilling locations in inventory.
The Company estimates that it has reduced operating and G&A costs by an annualized $1 million per year as a result of various cost saving measures. These savings have been realized without layoffs or salary reductions.
Yangarra`s corporate strategy for 2016 in the current commodity environment is to target and maintain 2,500 – 2,750 boe/d while spending within cash-flow at US$45/bbl WTI. Yangarra has 35% – 40% of its oil production hedged for 2016 in a costless collar with a $73.45 CDN/bbl floor and an $85.00 CDN/bbl ceiling.
Read More: http://yangarra.ca/documents/YangarraPressReleaseThirdQuarterResults.pdf