CALGARY, AB, March 7, 2024 /CNW/ – Yangarra Resources Ltd. (“Yangarra” or the “Company”) (TSX:YGR) announces its financial and operating results and reserves for the year ended December 31, 2023.
2023 Operations Review
Yangarra continued to refine the Company’s drilling approach resulting in a dramatic reduction in drilling times and drilling costs.
The new core area of Chambers with Cardium, Belly River and Manville potential was delineated with five Cardium wells and one Belly River well with positive results.
The Company added 2.2 new drilling locations for every well drilled.
Several “Smart Dart” and Plug & Perf wells were tested during the year with the Company returning to cemented, coil activated sleeves completions while monitoring the results on the “Smart Dart” and Plug & Perf wells.
Yangarra constrained the fourth quarter capital program due to ongoing depressed natural gas prices, resulting in capital spending of $16 million in Q4.
2024 Outlook
Yangarra’s primary goal in 2024 is to hit a debt target of $80 million and then focus on shareholder returns.
The Company has set a capital budget of $70 million for 2024.
Yangarra will continue to constrain the capital program into 2024 because of depressed natural gas prices with spending of $20 – $25 million in the first half, dependent on the timing of spring breakup.
The second half spending has been set at $45 – $50 million, however this is dependent on an improvement in commodity pricing.
Included in the budget is a well stimulation and optimization program targeting 20-25% of legacy wells. This stimulation strategy was initiated in 2021 and now has evolved to where the Company can apply the strategy to the entire field annually.
The 2024 capital budget is designed to hold production flat for 2024, while maximizing debt repayment.
A recent Computer Modelling Group (CMG) study indicated waterflood potential in the Halo Cardium and as a result Yangarra plans to initiate a waterflood pilot in Q2 2024 in the Chedderville area. Water for the pilot will be sourced from flow back and produced water, which would have otherwise needed to be disposed of, giving the project an added benefit of approximately $800,000 per year in avoided water disposal fees.
2023 Highlights
Average production of 11,936 boe/d (39% liquids), an increase of 8% from 2022
Oil and gas sales of $166.5 million, a decrease of 31% from 2022
Funds flow from operations of $99.0 million ($1.06 per share – fully diluted) a decrease of 44% from 2022
Adjusted EBITDA of $109 million ($1.11 per share – fully diluted)
Net income of $46.7 million ($0.47 per share – fully diluted), resulting in an income margin of 28%
Return on capital employed of 9.5%
Operating costs of $8.24/boe (including $1.54 /boe of transportation costs)
Operating netback of $26.72/boe
Operating margin of 70% and funds flow from operations margin of 59%
G&A costs of $1.32/boe
Royalties at 9% of oil and gas revenue
Capital expenditures of $94.3 million
Adjusted net debt of $118.6 million, a decrease of $15.7 million from 2022
Retained earnings of $311.7 million
Decommissioning liabilities of $16.0 million (discounted)
Less than $1.0 million is required to abandon all non-producing wells
Expenditures on abandonments and reclamations of $0.5 million for calendar 2023
Fourth Quarter Highlights
Funds flow from operations of $17.6 million ($0.19 per share – fully diluted), a decrease of 58% from the same period in 2022
Oil and gas sales of $33.7 million, a decrease of 44% from the same period in 2022
Adjusted EBITDA of $20.1 million ($0.20 per share – fully diluted), a decrease of 40% from the same period in 2022
Net income of $12.4 million ($0.14 per share – fully diluted), a decrease of 50% from the same period in 2022
Average production of 11,133 boe/d (38% liquids), a 5% decrease from the same period in 2022
Operating costs of $8.39/boe (including $1.70/boe of transportation costs)
Operating netback of $21.54/boe
Operating margin of 66% and funds flow from operations margin of 52%
G&A costs of $1.55/boe
Royalties at 8% of oil and gas revenue
All in cash costs of $15.77/boe
Capital expenditures of $16.0 million
Adjusted net debt to fourth quarter annualized funds flow from operations of 1.69 : 1
Reserve Report Highlights
Summary
All reserves information contained in this press release are based on the Company’s 2023 NI 51-101 oil and gas reserve report as prepared by Deloitte LLP (The “2023 Reserve Report”).
Proved Developed Producing (“PDP”) Reserves
38.0 million boe (45% increase from 2022)
Net present value before tax discounted at 10% (“NPV10”) of $504 million (3% decrease from 2022)
Yangarra’s PDP finding and development (“F&D”) cost is $5.85/boe resulting in a recycle ratio of 4.6 times
PDP net asset value per fully diluted common share (“NAV per FD Share”) of $3.79
PDP Reserve Life Index (“RLI”) of 9.4 years
PDP additions replaced 370% of 2023 production
Total Proved reserves (“1P”)
96.8 million boe (12% increase from 2022)
NPV10 of $1.1 billion (21% decrease from 2022)
1P future development costs of $420 million
Yangarra’s 1P F&D cost is $7.49/boe resulting in a recycle ratio of 3.6 times
1P NAV per FD Share of $9.85
RLI of 24 years
1P additions replaced 336% of 2023 production
Proved plus probable reserves (“2P”)
155.7 million boe (7% increase from 2022)
NPV10 of $1.6 billion (21% decrease from 2022)
2P future development costs of $632 million
Yangarra’s 2P F&D cost is $7.74/boe resulting in a recycle ratio of 3.5 times
2P NAV per FD Share of $14.25
RLI of 38 years
2P additions replaced 349% of 2023 production
Financial Summary
2023
2022
Year Ended
Q4
Q3
Q4
2023
2022
Statements of Income and Comprehensive Income
Petroleum & natural gas sales
$ 33,651
$ 45,414
$ 60,292
$ 166,516
$ 243,056
Income before tax
$ 16,106
$ 15,157
$ 31,075
$ 63,179
$ 137,745
Net income
$ 12,435
$ 11,487
$ 25,071
$ 46,664
$ 106,358
Net income per share – basic
$ 0.13
$ 0.12
$ 0.29
$ 0.50
$ 1.22
Net income per share – diluted
$ 0.12
$ 0.11
$ 0.27
$ 0.47
$ 1.16
Statements of Cash Flow
Funds flow from operations
$ 17,552
$ 28,994
$ 41,808
$ 99,024
$ 177,194
Funds flow from operations per share – basic
$ 0.19
$ 0.31
$ 0.48
$ 1.06
$ 2.03
Funds flow from operations per share – diluted
$ 0.18
$ 0.29
$ 0.45
$ 1.01
$ 1.92
Cash flow from operating activities
$ 16,798
$ 25,995
$ 40,675
$ 99,033
$ 169,664
Weighted average number of shares – basic
94,801
94,801
87,956
93,189
87,423
Weighted average number of shares – diluted
99,534
100,043
92,742
98,445
92,054
December 31, 2023
December 31, 2022
Statements of Financial Position
Property and equipment
$
759,967
$
701,045
Total assets
$
835,217
$
768,058
Working capital deficit
$
(735)
$
(136,920)
Adjusted net debt
$
118,646
$
134,364
Shareholders equity
$
536,598
$
473,574
Company Netbacks ($/boe)
2023
2022
Year Ended
Q4
Q3
Q4
2023
2022
Sales price
$
32.85
$
40.76
$
55.95
$
38.22
$
60.42
Royalty expense
(2.47)
(2.77)
(5.22)
(3.27)
(4.77)
Production costs
(6.70)
(6.53)
(6.77)
(6.69)
(6.07)
Transportation costs
(1.70)
(1.68)
(1.22)
(1.54)
(1.21)
Field operating netback
21.99
29.78
42.74
26.71
48.37
Realized gain (loss) on commodity contract settlement
(0.45)
0.07
0.10
0.02
(0.73)
Operating netback
21.54
29.85
42.84
26.73
47.64
G&A
(1.55)
(1.10)
(1.21)
(1.32)
(1.01)
Cash finance expenses
(2.90)
(2.77)
(2.86)
(2.84)
(2.79)
Depletion and depreciation
(9.16)
(9.14)
(9.44)
(9.05)
(9.36)
Non Cash – finance expenses
(0.31)
(0.27)
(0.41)
(0.12)
(0.09)
Gain on settlement of lawsuit
6.79
–
–
1.60
–
Stock-based compensation
(0.39)
(0.37)
(0.11)
(0.39)
(0.16)
Unrealized gain (loss) on financial instruments
1.71
(2.59)
0.03
(0.10)
0.01
Deferred income tax
(3.58)
(3.29)
(5.57)
(3.79)
(7.80)
Net income netback
$
12.14
$
10.32
$
23.26
$
10.72
$
26.44
Business Environment
2023
2022
Year Ended
Q4
Q3
Q4
2023
2022
Realized Pricing (Including realized commodity contracts)
Light Crude Oil ($/bbl)
$
101.92
$
105.54
$
112.53
$
98.42
$
116.26
NGL ($/bbl)
$
32.97
$
56.47
$
51.64
$
45.72
$
61.53
Natural Gas ($/mcf)
$
2.36
$
2.80
$
5.25
$
2.79
$
5.53
Realized Pricing (Excluding commodity contracts)
Light Crude Oil ($/bbl)
$
103.51
$
107.06
$
112.53
$
99.11
$
117.78
NGL ($/bbl)
$
32.96
$
54.60
$
51.70
$
44.58
$
61.45
Natural Gas ($/mcf)
$
2.41
$
2.81
$
5.21
$
2.81
$
5.64
Oil Price Benchmarks
West Texas Intermediate (“WTI”) (US$/bbl)
$
78.48
$
82.30
$
82.79
$
77.65
$
94.41
Edmonton Par ($/bbl)
$