Press release from CNW Group
Yangarra Announces Third Quarter 2012 Financial Results and Provides Operations Update
Monday, November 19, 2012
Yangarra Announces Third Quarter 2012 Financial Results and Provides Operations Update07:00 EST Monday, November 19, 2012CALGARY, Nov. 19, 2012 /CNW/ - Yangarra ResourcesLtd. ("Yangarra" or the "Company") (TSXV:YGR) announces its financial results for the three and nine months ended September 30, 2012 and provides an operations update.Highlights of the quarter ended September 30, 2012 are as follows:Production averaged 1,800 boe/d during the third quarter which is a 44% increase from the third quarter of 2011.Oil and NGL production was 37% of total production in the third quarter compared with 42% in the third quarter of 2011.Oil and gas sales including royalty income and realized hedging was $5.8 million with cash flow from operations of $2.8 million ($0.02 per share basic).Operating costs for the third quarter, including $0.80/boe of transportation costs, were $6.81/boe which represents a 9% decrease from the comparable period in 2011.G&A was $2.93/boe and royalties were 6% of oil and gas revenue.Capital expenditures of $4.7 million were for the drilling, completion and work-over operations conducted during the third quarter.As at September 30, 2012, the Company had a working capital deficit of $35 million (excluding mark to market on commodity contracts) compared to $34 million at December 31, 2011.Operations UpdateYangarra delayed the resumption of its 2012 drilling program until September due to the extremely wet conditions in Central Alberta that prevailed after spring breakup.The Company also changed the drilling program to mono-bore drilling from the previous intermediate casing method. The mono-bore wells provide significant cost savings as a result of much faster drilling times and substantially lower casing costs.Cardium In September, a Cardium horizontal well was drilled in the Willesden Green area and the well was fractured using a slick water system with 500 tonnes of sand placed in 20 stages over a 1,230 meter horizontal leg. The fracture program was monitored using micro-seismic to assist Yangarra in determining optimal well spacing in the reservoir. The well is currently in clean up and flow testing with a flow rate over the first 15 days of 260 boe/d (IP 15) 85% liquids. The well will be shut in for a two week mandatory pressure buildup at the completion of the flow test.Second White Specs ("SWS") Following the Cardium well, the Company drilled a SWS well from the same well pad and the well was fractured with 500 tonnes of sand placed in 14 stages. This well is the second horizontal SWS well drilled by Yangarra in the Willesden Green area. This fracture program was also observed with micro-seismic. The well was flowed through testers for 48 hours to recover flow-back water together with approximately 190 boe/d of oil and gas (60% liquids). The well is now shut-in for an estimated 30-45 days to "rest" allowing the water to be absorbed by the under saturated shales at which point the well will be placed on production.Glauconite (oil)In mid October, the Company drilled a Glauconite oil horizontal well in Westerose and this well was recently fractured using a foam based surfactant fluid with 500 tonnes placed in 16 stages. The well is currently flowing back through testers.Production UpdateLandowner objections continue to delay installation of incremental compression in the Ferrier area and as a result 700 boe/d remains behind pipe waiting to be brought on-stream. In addition, the three wells recently drilled are expected to be on-stream by year end.Current production is approximately 2,000 boe/d and fourth quarter production is expected to be 2,000 - 2,200 boe/d. Yangarra expects to average approximately 2,000 boe/d for 2012 which is a 65% increase from 2011 on an annualized per share basis.Operations SummaryNet petroleum and natural gas production, pricing and revenue are summarized below: Three Months endedSeptember 30 Nine Months endedSeptember 30, 20122011 20122011 Daily production volumes Natural gas (mcf/d) 5,617 4,161 5,915 3,582 Oil (bbl/d) 273 384 327 303 NGL's (bbl/d) 317 132 354 107 Royalty income Natural gas (mcf/d) 1,228 172 1,380 86 Oil (bbl/d) 2 2 6 5 NGL's (bbl/d) 67 13 84 6 Combined (boe/d 6:1) 1,800 1,253 1,986 1,032 Product pricing (includes royalty income & realized hedging) Oil ($/bbl)$84.35$89.25 $84.45$92.34 NGL ($/bbl) 42.24 54.00 52.95 61.64 Gas ($/mcf) 2.52 3.93 2.37 3.90 Combined ($/boe)$31.47$55.09 $34.30$51.74 Revenue Petroleum & natural gas sales - Gross$4,885,957$5,378,932 $16,857,092$13,186,832Royalty income 323,947 137,243 1,808,126 277,521Realized hedging 574,219 834,284 372,278 1,107,912Total sales 5,784,122 6,350,459 19,037,496 14,572,265Royalty expense (324,279) (209,529) (1,054,227) (409,444)Petroleum & natural gas sales - Net$5,459,843$6,140,930 $17,983,269$14,162,821 Financial Summary Summary Financial Information is summarized below: Three Months endedSeptember 30 Nine Months endedSeptember 30, 20122011 20122011Statements of Comprehensive Income (Loss) Net income (loss) for the period (before tax)$(3,037,649)$5,424,074 $2,430,940$8,015,045 Net income (loss) for the period$(2,073,174)$4,106,091 $(558,335)$3,541,281Net income (loss) per share - basic$(0.02)$0.04 $(0.00)$0.03Net income (loss) per share - fully diluted$(0.02)$0.03 $(0.00)$0.03 Statements of Cash Flow Funds flow from (used in) operating activities$2,780,520$4,967,853 $11,420,077$10,654,769Funds flow from (used in) operating activities per share - basic$0.02$0.04 $0.09$0.10Funds flow from (used in) operating activities per share - fully diluted$0.02$0.04 $0.09$0.10 Statements of Financial Position Property and equipment$122,723,826$104,908,393 $121,329,749$104,908,393Total assets$138,820,924$118,260,567 $142,907,001$18,260,567Working Capital (deficit), excluding MTM on commodity contracts and flow-through share obligation$(35,450,284)$(19,545,339) $(35,450,284)$(19,545,339)Shareholders equity$79,349,142$78,375,411 $79,349,142$78,375,411 Weighted average number of shares - basic 121,711,723 116,307,057 120,311,001 102,463,621Weighted average number of shares - fully diluted 121,711,723 124,209,770 120,343,320 110,610,771 Operating Netbacks (boe/d)The Company's operating, cash flow and net income netbacks are summarized below: Three Months endedSeptember 30 Nine Months endedSeptember 30, 20122011 20122011 Sales Price$29.51$53.54 $30.98$50.75 Royalty income 1.96 1.55 3.32 0.99 Royalty expense (1.96) (1.82) (1.94) (1.45) Production costs (6.01) (6.44) (6.00) (7.16) Transportation costs (0.80) (1.01) (0.80) (0.98)Operating netback 22.70 45.82 25.57 42.15 G&A and other (excludes non-cash items) (2.93) (2.13) (2.60) (3.50) Finance expenses (2.97) (0.60) (1.98) (0.81)Cash flow netback 16.79 43.09 20.99 37.84 Depletion and depreciation (21.63) (19.55) (23.00) (17.84) Accretion (0.13) (0.26) (0.13) (0.30) Stock-based compensation (0.87) (1.29) (0.92) (5.05) Unrealized gain (loss) on financial instruments (12.51) 25.06 7.53 13.82 Deferred income tax 5.83 (11.43) (5.49) (15.88)Net Income (loss) netback$(12.52)$35.61 $(1.03)$12.59Working Capital SummaryThe following table summarizes the change in working capital during the three months and nine months ended September 30, 2012: Three Months EndedSeptember 30, 2012Nine months EndedSeptember 30, 2012 Working capital (deficit) - beginning of period (1)$(33,428,709)$(34,028,162) Cash flow from (used in) operating activities 2,780,520 11,420,077Capital expenditures (4,802,095) (15,394,532)Issuance of shares - 2,552,333 Working capital (deficit) - end of period (1)$(35,450,284)$(35,450,284) Credit facility limit$42,000,000$42,000,000(1)Excludes non-cash change in fair value of commodity contractsCapital Spending Capital spending is summarized as follows: Three Months endedSeptember 30 Nine Months endedSeptember 30, 20122011 20122011 Land and lease rentals$362,010$953,884 $494,133$3,041,601Drilling and completion 4,042,124 14,892,270 13,047,822 34,080,733Geological and geophysical 183,178 359,277 665,004 785,045Equipment 92,311 2,799,884 1,054,208 6,383,254 $4,679,623$19,005,315 $15,261,167$44,290,633 Disclosure ItemsThe 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 informationCertain 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.See Management's Discussion and Analysis for the three and nine months ended September 30, 2012 for a special note regarding Non-IRFS measures.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.For further information: Jim Evaskevich, President & CEO or James Glessing, Chief Financial Officer, at (403) 262-9558.