Yangarra Announces 2024 Third Quarter Financial and Operating Results

Oct 30 2024 20:05 BST

CALGARY, AB , Oct. 30, 2024 /CNW/ - Yangarra Resources Ltd. ("Yangarra" or the "Company") (TSX: YGR) announces its financial and operating results for the three and nine months ended September 30, 2024.

Operations Update

Yangarra started up the drilling program in late July after a period of reduced activity in the second quarter and expects a very active fourth quarter for bringing on new wells. Despite the reduced annual activity levels, the Company will maintain relatively flat production for the year, excluding the third quarter, which was impacted by a longer than expected turnaround at a key third-party facility.

With the current planned program, Yangarra is on track for $55 - $60 million of capital spending for 2024, a reduction from the original capital budget of $70 million.

The major turnaround at a third-party facility was expected to curtail 80% of Yangarra's production for up to two weeks but ended up being four weeks. Yangarra mitigated some of this down-time by flowing select wells through another third-party shallow-cut facility. This allowed the Company to maximize oil revenues while keeping higher natural gas weighted wells shut-in as AECO averaged only $0.45/GJ for September. All the shut-in production was brought back online in early October with the base production recovering to over 11,000 boe/d.

Currently, between the wells drilled in the third quarter and new wells planned, the Company expects to bring onstream up to eight wells during the fourth quarter. As a follow-up to the successful first half Belly River program, Yangarra elected to drill two additional Belly River wells. The Company also elected to drill and complete a liquids-rich Glauconite well on existing lands that will be tied into existing infrastructure.

Third Quarter Highlights

Funds flow from operations of $13.7 million ($0.13 per share – fully diluted), a decrease of 53% from the same period in 2023
Oil and gas sales were $26.3 million, a decrease of 42% from the same period in 2023
Adjusted EBITDA was $15.8 million ($0.15 per share - fully diluted)
Net income of $4.0 million ($0.04 per share – fully diluted, $5.1 million before tax), a decrease of 65% from the same period in 2023
Average production of 9,257 boe/d (37% liquids) during the quarter, a 24% decrease from the same period in 2023
Operating costs were $8.59/boe (including $1.61/boe of transportation costs)
Field operating netbacks were $20.27/boe
Operating netbacks, which include the impact of commodity contracts, were $20.62/boe
Operating margins were 67% and funds flow from operations margins were 52%
G&A costs of $1.03/boe
Royalties were 6% of oil and gas revenue
All in cash costs were $14.66/boe
Capital expenditures were $15.7million
Adjusted net debt was $99.0 million
Adjusted net debt to third quarter annualized funds flow from operations was 1.8 : 1
Retained earnings of $334.1 million
Decommissioning liabilities of $16.6 million (discounted)

Financial Summary


	2024		2023	Nine Months Ended
	Q3	Q2	Q3	2024	2023
Statements of Income and Comprehensive Income
Petroleum & natural gas sales	$ 26,260	$ 35,718	$ 45,414	$ 102,403	$ 132,865

Income before tax	$ 5,149	$ 12,514	$ 15,157	$ 29,755	$ 47,073

Net income	$ 3,964	$ 9,350	$ 11,487	$ 22,344	$ 34,229
Net income per share - basic	$ 0.04	$ 0.09	$ 0.12	$ 0.23	$ 0.37
Net income per share - diluted	$ 0.04	$ 0.09	$ 0.11	$ 0.21	$ 0.35

Statements of Cash Flow
Funds flow from operations	$ 13,718	$ 21,411	$ 28,994	$ 59,388	$ 81,472
Funds flow from operations per share - basic	$ 0.14	$ 0.22	$ 0.31	$ 0.61	$ 0.88
Funds flow from operations per share - diluted	$ 0.13	$ 0.20	$ 0.29	$ 0.57	$ 0.83
Cash flow from operating activities	$ 14,306	$ 19,315	$ 25,995	$ 55,744	$ 82,235

Weighted average number of shares - basic	98,734	98,734	94,801	97,882	92,644
Weighted average number of shares - diluted	105,053	105,269	100,043	104,246	98,050


	September 30, 2024	December 31, 2023
Statements of Financial Position
Property and equipment	$ 775,135	$ 759,967
Total assets	$ 848,587	$ 835,217
Working capital surplus (deficit)	$ 15,180	$ (735)
Adjusted net debt	$ 98,981	$ 118,646
Shareholders equity	$ 564,602	$ 536,598

Company Netbacks ($/boe)


	2024		2023	Nine Months Ended
	Q3	Q2	Q3	2024	2023

Sales price	$ 30.83	$ 34.53	$ 40.76	$ 35.27	$ 39.87
Royalty expense	(1.97)	(1.90)	(2.77)	(2.16)	(3.52)
Production costs	(6.98)	(6.65)	(6.53)	(6.60)	(6.69)
Transportation costs	(1.61)	(1.89)	(1.68)	(1.75)	(1.50)
Field operating netback	20.27	24.09	29.78	24.76	28.16
Realized gain (loss) on commodity contract settlement	0.35	(0.31)	0.07	(0.24)	0.16
Operating netback	20.62	23.78	29.85	24.52	28.32
G&A	(1.03)	(1.22)	(1.10)	(1.39)	(1.25)
Cash finance expenses	(3.41)	(1.86)	(2.77)	(2.74)	(2.77)
Depletion and depreciation	(9.03)	(8.58)	(9.14)	(9.05)	(9.02)
Non Cash - finance expenses	(0.09)	(0.47)	(0.27)	(0.35)	(0.11)
Abandonment Expenses	(0.11)	-	-	(0.03)	-
Stock-based compensation	(0.99)	(0.82)	(0.37)	(0.88)	(0.39)
Unrealized gain (loss) on financial instruments	0.08	1.26	(2.59)	0.16	(0.66)
Deferred income tax	(1.39)	(3.06)	(3.29)	(2.55)	(3.85)
Net income netback	$ 4.65	$ 9.03	$ 10.32	$ 7.69	$ 10.27

Business Environment


	2024		2023	Nine Months Ended
	Q3	Q2	Q3	2024	2023
Realized Pricing (Including realized commodity contracts)
Light Crude Oil ($/bbl)	$ 100.04	$ 101.65	$ 105.54	$ 98.20	$ 98.65
NGL ($/bbl)	$ 49.92	$ 41.82	$ 56.47	$ 46.41	$ 49.87
Natural Gas ($/mcf)	$ 0.91	$ 1.23	$ 2.80	$ 1.56	$ 2.92

Realized Pricing (Excluding commodity contracts)
Light Crude Oil ($/bbl)	$ 101.61	$ 103.46	$ 107.06	$ 99.94	$ 99.11
NGL ($/bbl)	$ 49.92	$ 41.82	$ 54.60	$ 46.41	$ 48.36
Natural Gas ($/mcf)	$ 0.74	$ 1.21	$ 2.81	$ 1.52	$ 2.93

Oil Price Benchmarks
West Texas Intermediate ("WTI") (US$/bbl)	$ 76.24	$ 81.71	$ 82.30	$ 78.50	$ 77.38
Edmonton Par ($/bbl)	$ 101.44	$ 101.44	$ 107.26	$ 97.11	$ 100.69
Edmonton Par to WTI differential (US$/bbl)	$ (1.85)	$ (7.58)	$ (2.32)	$ (7.12)	$ (2.53)

Natural Gas Price Benchmarks
AECO gas ($/mcf)	$ 0.65	$ 1.12	$ 2.44	$ 1.38	$ 2.69

Foreign Exchange
Canadian Dollar/U.S. Exchange	0.73	0.73	0.75	0.74	0.74

Operations Summary

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



	2024		2023	Nine Months Ended
	Q3	Q2	Q3	2024	2023

Daily production volumes
Natural Gas (mcf/d)	34,872	40,226	44,451	37,837	44,148
Light Crude Oil (bbl/d)	1,702	2,394	2,138	2,184	2,416
NGL's (bbl/d)	1,743	2,267	2,563	2,107	2,433
Combined (BOE/d 6:1)	9,257	11,366	12,109	10,597	12,207

Revenue
Petroleum & natural gas sales	$ 26,260	$ 35,718	$ 45,414	$ 102,403	$ 132,865
Realized gain (loss) on commodity contract settlement	297	(319)	78	(688)	548
Total sales	26,557	35,399	45,492	101,715	133,413
Royalty expense	(1,679)	(1,964)	(3,087)	(6,275)	(11,729)
Total Revenue - Net of royalties	$ 24,878	$ 33,435	$ 42,405	$ 95,440	$ 121,684

Adjusted Net Debt Summary

The following table summarizes the change in adjusted net debt during the nine months ended September 30, 2024 and year December 31, 2023:


	Nine months ended	Year ended
	September 30, 2024	December 31, 2023
Adjusted net debt - beginning of period	$ (118,646)	$ (134,364)

Funds flow from operations	$ 59,388	99,024
Additions to property and equipment	$ (39,736)	(93,950)
Decommissioning costs incurred	$ (526)	(488)
Additions to E&E Assets	$ -	(353)
Issuance of shares	$ 2,093	15,988
Lease obligation repayment	$ (851)	(1,525)
Other	$ (703)	(2,978)
Adjusted net debt - end of period	$ (98,981)	$ (118,646)

Credit facility limit	$ 130,000	$ 135,000

Capital Spending

Capital spending is summarized as follows:


	2024		2023	Nine Months Ended
Cash additions	Q3	Q2	Q3	2024	2023

Land, acquisitions and lease rentals	$ 65	$ 80	$ 114	$ 214	$ 492
Drilling and completion	13,196	5,394	21,550	32,738	61,809
Geological and geophysical	-	-	-	323	240
Equipment	2,361	2,457	3,123	5,557	14,026
Other asset additions	45	127	547	904	1,446
	$ 15,667	$ 8,058	$ 25,334	$ 39,736	$ 78,013



Exploration & evaluation assets	$ -	$ -	$ -	$ -	$ 264

Quarter End Disclosure

The Company's September 30, 2024 unaudited condensed interim consolidated financial statements and management's discussion and analysis will be filed on SEDAR+ (www.sedarplus.ca) and are available on the Company's website (www.yangarra.ca).

Oil and Gas Advisories

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. Figures that are presented on a boe basis herein are calculated as the total aggregate amount for the period divided by boe production volumes for the period. 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.

This press release contains metrics commonly used in the oil and natural gas industry which have been prepared by management, such as "operating netback" and "operating margins". These terms do not have a standardized meaning and may not be comparable to similar measures presented by other companies and, therefore, should not be used to make such comparisons. For additional information regarding netbacks and operating margins, see "Non-IFRS Financial Measures".

Management uses these oil and gas metrics for its own performance measurements and to provide shareholders with measures to compare Yangarra's operations over time. Readers are cautioned that the information provided by these metrics, or that can be derived from metrics presented in this press release, should not be relied upon for investment or other purposes.

Non-IFRS Financial Measures

This press release contains various specified financial measures that do not have standardized meanings as prescribed by International Financial Reporting Standards ("IFRS"). These reported amounts and their underlying calculations are not necessarily comparable or calculated in an identical manner to a similarly titled measure of other companies where similar terminology is used. Readers are cautioned that such financial measures should not be construed as alternatives to or more meaningful than the most directly comparable IFRS measures as indicators of the Company's performance. These measures have been described and presented in this press release in order to provide shareholders and potential investors with additional information regarding the Company's liquidity and its ability to generate funds to finance its operations and should not be considered in isolation.

Funds flow from operations

Funds flow from operations ("FFO") should not be considered an alternative to, or more meaningful than, cash provided by operating, investing and financing activities or net income as determined in accordance with IFRS, as an indicator of Yangarra's performance or liquidity. Management uses FFO to analyze operating performance and leverage and considers FFO to be a key measure as it demonstrates the Company's ability to generate cash flow necessary to fund future capital investments and to repay debt, if applicable. FFO is calculated using cash flow from operating activities before changes in non-cash working capital and decommissioning costs incurred.

The following table reconciles FFO to cash flow from operating activities, which is the most directly comparable measure calculated in accordance with IFRS:


	2024		2023	Nine Months Ended
	Q3	Q2	Q3	2024	2023
Cash flow from operating activities	$ 14,306	$ 19,315	$ 25,995	$ 55,744	$ 82,235
Decommissioning costs incurred	526	-	-	526	-
Changes in non-cash working capital	(1,114)	2,096	2,999	3,118	(763)
Funds flow from operations	$ 13,718	$ 21,411	$ 28,994	$ 59,388	$ 81,472

Yangarra presents FFO per share whereby per share amounts are calculated using weighted average shares outstanding consistent with the calculation of net income per share.

Adjusted EBITDA

Yangarra defines Adjusted EBITDA as earnings before interest, taxes, depletion and depreciation, which represents EBITDA, excluding changes in the fair value of commodity contracts. Management believes that Adjusted EBITDA is a useful measure, which provides an indication of the results generated by the Yangarra's primary business activities prior to consideration of how those activities are financed, amortized or taxed. The most directly comparable IFRS financial measure to Adjusted EBITDA is net income (loss). The following table provides a reconciliation of Adjusted EBITDA to net income (loss).


	2024		2023	Nine Months Ended
	Q3	Q2	Q3	2024	2023

Net income for the Period	$ 3,964	$ 9,350	$ 11,487	$ 22,344	$ 34,229
Finance	2,980	2,404	3,386	8,964	9,605
Deferred tax expense	1,185	3,164	3,670	7,411	12,844
Depletion and depreciation	7,690	8,878	10,182	26,269	30,053
Change in fair value of commodity contracts	(67)	(1,301)	2,889	(455)	2,204
Adjusted EBITDA	$ 15,752	$ 22,495	$ 31,614	$ 64,533	$ 88,935

Adjusted Net Debt

Yangarra defines Adjusted net debt as the sum of our existing credit facilities, trade and other payables, and trade receivables and prepaids. Yangarra uses Adjusted net debt to assess efficiency, liquidity and the general financial strength of the Company. The most directly comparable IFRS financial measure to Adjusted net debt is Bank Debt. The following table provides a calculation of adjusted net debt.


	Sep 30, 2024	Jun 30, 2024	Dec 31, 2023
	Sep 30, 2024	Jun 30, 2024	Dec 31, 2023
Bank Debt	$ 115,655	$ 117,321	$ 121,057
Accounts receivable	(27,495)	(29,548)	(30,092)
Prepaid expenses and inventory	(9,854)	(9,008)	(8,918)
Accounts payable and accrued liabilities	20,675	17,247	36,599
Adjusted net Debt	$ 98,981	$ 96,012	$ 118,646

Adjusted net debt to third quarter annualized FFO

Adjusted net debt to third quarter annualized FFO is a non-GAAP financial ratio calculated as adjusted net debt divided by third quarter annualized FFO.

Netbacks

The Company considers corporate netbacks to be a key measure that demonstrates Yangarra's profitability relative to current commodity prices. Corporate netbacks are comprised of operating, field operating, FFO and net income (loss) netbacks.

Yangarra calculates Field Operating netback as the average sales price of its commodities (including realized gains (losses) on financial instruments) less royalties, operating costs and transportation expenses. Operating netback starts with Field Operating netback and subtracts realized gains (losses) on financial instruments. FFO netback starts with the Operating netback and further deducts general and administrative costs, finance expense and adds finance income. To calculate the net income (loss) netback, Yangarra takes the Operating netback and deducts share-based compensation expense as well as depletion and depreciation charges, accretion expense, unrealized gains (losses) on financial instruments, any impairment or exploration and evaluation expense and deferred income taxes.

FFO margins and operating margins

FFO margins and operating margins are calculated as the ratio of FFO netbacks to sales price and operating netback to sales price, respectively.

Please refer to the management discussion and analysis for the three and nine months ended September 30, 2024, for further discussion on the Non-IFRS financial measures presented in this press release.

Forward Looking Information

This press release contains forward-looking statements and forward-looking information (collectively "forward-looking information") within the meaning of applicable securities laws relating to the Company's plans and other aspects of our anticipated future operations, management focus, strategies, financial, operating and production results and business opportunities. Forward-looking information typically uses words such as "anticipate", "believe", "continue", "sustain", "project", "expect", "forecast", "budget", "goal", "guidance", "plan", "objective", "strategy", "target", "intend" or similar words suggesting future outcomes, statements that actions, events or conditions "may", "would", "could" or "will" be taken or occur in the future, including, but not limited to, statements on potential completion techniques being considered. Statements relating to "reserves" are also deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described exist in the quantities predicted or estimated and that the reserves can be profitably produced in the future.

The forward-looking information is based on certain key expectations and assumptions made by our management, including expectations and assumptions concerning prevailing commodity prices, exchange rates, interest rates, applicable royalty rates and tax laws; future production rates and estimates of operating costs; performance of existing and future wells; reserve volumes; anticipated timing and results of capital expenditures; the success obtained in drilling new wells; the sufficiency of budgeted capital expenditures in carrying out planned activities; benefits to shareholders of our programs and initiatives, the timing, location and extent of future drilling operations; the state of the economy and the exploration and production business; results of operations; performance; business prospects and opportunities; the availability and cost of financing, labour and services; the impact of increasing competition; ability to efficiently integrate assets and employees acquired through acquisitions, ability to market oil and natural gas successfully and our ability to access capital.

Although we believe that the expectations and assumptions on which such forward-looking information is based are reasonable, undue reliance should not be placed on the forward-looking information because Yangarra can give no assurance that they will prove to be correct. Since forward-looking information addresses future events and conditions, by its very nature they involve inherent risks and uncertainties. Our actual results, performance or achievement could differ materially from those expressed in, or implied by, the forward-looking information and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking information will transpire or occur, or if any of them do so, what benefits that we will derive therefrom. Management has included the above summary of assumptions and risks related to forward-looking information provided in this press release in order to provide security holders with a more complete perspective on our future operations and such information may not be appropriate for other purposes.

Readers are cautioned that the foregoing lists of factors are not exhaustive. Additional information on these and other factors that could affect our operations or financial results are included in reports on file with applicable securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com).

These forward-looking statements are made as of the date of this press release and we disclaim any intent or obligation to update publicly any forward-looking information, whether as a result of new information, future events or results or otherwise, other than as required by applicable securities laws.

All reference to $ (funds) are in Canadian dollars.

Neither the TSX nor its Regulation Service Provider (as that term is defined in the Policies of the TSX) accepts responsibility for the adequacy and accuracy of this release.

SOURCE Yangarra Resources Ltd.