Yangarra Year Ends
Posted: Sunday Mar 22 12:34:23PM 2015
Yangarra report was outstanding. They made .44eps so p/e ratio of ~3X ttm eps. Price to cashflow around 2.
Yangarra is a low cost operator. They manage expenses extremely well so don't do as well during boom times because they won't grow at any cost. They are conservative and as such, they have a healthy hedging strategy, which obviously was a big part of their big Q4.
Going forward, they will still have to deal with the dramatically lower oil prices on the majority of their production. But their low cost approach will still allow them to shine versus higher growth but higher cost competitors who won't be able to continue drilling because of lower cashflow.
I sold out of Yangarra along with my other oil producers but have followed them for several years. The mgmt has been consistent and conservative and I think will be a good performer over time. Like all energy producers, we will have to see how their hedging works and what the current pricing does to the capex program and production.
Posted: Friday Mar 20 7:19:45AM 2015
Yangarra reported its 2014 year ends last night. Impressive. Stock is currently at $1.50. not sure how nr format will paste, but here goes...
Yangarra Resources earns $24.37-million in 2014
2015-03-19 16:50 ET - News Release
Mr. James Evaskevich reports
YANGARRA ANNOUNCES YEAR END 2014 FINANCIAL AND OPERATING RESULTS
Yangarra Resources Ltd. has released its financials for the year ended Dec. 31, 2014.
2014 financial and operating highlights
- Average daily production was 2,870 barrels of oil equivalent per day, a 30-per-cent increase from 2013;
- Oil and gas sales, after royalties, were $51.4-million with funds flow from operations of $38.3-million (70 cents per share, basic); this represents a 48-per-cent increase and a 49-per-cent increase, respectively, from 2013;
- Net income of $24.4-million (45 cents per share, basic) or $33.4-million before future income taxes (61 cents per share, basic);
- Earnings before interest, taxes, depletion and depreciation, amortization and changes in commodity contracts (EBITDA) were $39.7-million (73 cents per share, basic) or $52.7-million including changes in commodity contracts (97 cents per share, basic);
- Operating costs were $8.47 per barrel of oil equivalent (including $1.58 per barrel of oil equivalent of transportation costs);
- Field netbacks (operating netback excluding commodity contracts) were $41.10, an increase of 18 per cent from 2013; operating netbacks were $40.62 per barrel of oil equivalent, a 12-per-cent increase from 2013;
- General and administrative costs of $2.05 per barrel of oil equivalent;
- Royalties were 6 per cent of oil and gas revenue;
- Total capital expenditures were $79.9-million (including $2.6-million of property acquisition costs under the August, 2013, farm-in and $1-million in exploration and evaluation assets); the company drilled 29 gross (19.4 net) wells in 2014;
- Net debt, excluding the current portion of the fair value of commodity contracts, was $59.8-million ($51.4-million including the current portion of the fair value of commodity contracts);
- Year-end debt-to-2014-cash-flow ratio excluding the current portion of the fair value of commodity contracts was 1.56:1 (1.34:1 including the current portion of the fair value of commodity contracts).
Fourth quarter highlights
- Fourth quarter 2014 production of 3,035 barrels of oil equivalent per day is an increase of 10 per cent compared with the 2,764 barrels of oil equivalent per day in the comparable period in 2013; petroleum and natural gas sales decreased by 5 per cent when compared with the same period in 2013 and funds flow from operations increased by 30 per cent, due to the effect of commodity contracts; production increased by 10 per cent; however, realized pricing (excluding commodity contracts) decreased by 21 per cent due to the drop in oil and liquids pricing;
- Capital expenditures were $19-million in the fourth quarter of 2014 compared with $23-million in the same period in 2013; the company drilled three Cardium wells in the fourth quarter, satisfied its Canadian exploration expense (CEE) commitment (by drilling a Duvernay well in the south block) and participated in four non-operated wells.
Hedging program update
The company has reconfigured its 2015 crude oil swap positions by monetizing 800 barrels per day for proceeds of $7-million ($3-million in 2014 and $4-million in 2015). The company then rehedged 500 barrels per day, a reduction from the 800 barrels per day that were monetized to better match expected 2015 production, with costless collars at a floor of $65 WTI (West Texas Intermediate) per barrel and a ceiling of $73.50 WTI per barrel for the remainder of 2015. The company also added 800 barrels per day of Edmonton par to WTI differential hedges at $6.75 (U.S.) per barrel for 2015. The company's hedge position for 2015 now consists of the 500-barrel-per-day costless collar, a 300-barrel-per-day crude oil swap at an average price of $102.56 WTI per barrel, 800 barrels per day of Edmonton par differential hedged at $6.75 (U.S.) per barrel and 2,000 gigajoules per day of gas at $4.11 AECO per gigajoule.
President's message to shareholders
"During 2014, Yangarra focused on keeping its cost structure competitive by reducing drilling and completion costs and maintaining low operating and general and administrative costs. Royalty costs remain low primarily due to the purchase in 2010 of a gross overriding royalty (GORR) on 11 sections in the heart of our Cardium and Glauconite acreage. These advantages are meaningful given the current commodity pricing environment and provide Yangarra with superior internal rates of return (IRRs) and higher relative cash netbacks.
"Yangarra focused the 2014 capital budget on validating Cardium acreage and continuing its Duvernay acreage. With our 2P [proved plus probable] reserve life index (RLI) increasing to 34 years, Yangarra is positioned to accelerate the drilling program as conditions improve.
"We believe measurement of full-cycle returns are the best indicator of value creation, and we continue to focus on full-cycle rates of return to determine capital allocation. The chart below graphs half-cycle and full-cycle results for Yangarra since we started drilling HZ wells in 2010.
Half-cycle IRR (1) Full-cycle IRR(2) 2010 24% 12% 2011 41% 31% 2012 67% 26% 2013 65% 31% 2014 33% 27% (1) Half-cycle IRR is based on actual drilling and completion costs, production to date, and proved plus probable reserves. (2) Full-cycle IRR allocates all other capital costs to the wells (land, geological and geophysical, and infrastructure).
"The company continues to manage the balance sheet with the strategy of maintaining debt-to-cash-flow levels near 1:1 when commodity prices are high so that debt levels do not become problematic when commodity prices are low.
"In January, the company drilled its first Cardium well using a sleeve system/cemented production liner, replacing the previous open-hole/ball-drop completion approach. Advantages of the sleeve system/cemented liner include lower well costs, higher initial production rates, and a simplified drilling and completion process. With the success of the first well, we recently drilled a second well from the same pad using a closable sleeve/cemented production liner and increased stages from 18 on the previous well to 30 (one-mile lateral) to determine optimum frac intensity. Yangarra believes the closable sleeve will enable the company to more easily refrac these wells at a later date and will monitor results from both wells over breakup to formulate best practice go forward.
"As Yangarra moves through 2015 and gets better visibility on commodity pricing, where service cost reductions settle and the economic impact of closable sleeve/cemented liners, we will adjust 2015 capital spending accordingly.
"I would like to thank the shareholders for their support. I thank my colleagues at Yangarra for their ongoing dedication to the development of the company. I also wish to take this opportunity to thank my fellow directors for their support and leadership."
President and chief executive officer
FINANCIAL SUMMARY Year ended Year ended Q4 2014 Q4 2013 2014 2013 Statements of comprehensive income (loss) Petroleum and natural gas sales and royalty income $10,524,238 $11,087,956 $54,582,213 $34,726,657 Net income (before tax) $17,803,106 $1,576,908 $33,413,237 $4,146,706 Net income (loss) $12,833,554 $750,851 $24,371,606 $2,585,699 Net income (loss) per share -- basic $0.22 $0.02 $0.45 $0.06 Net income (loss) per share -- diluted $0.22 $0.01 $0.44 $0.06
OPERATIONS SUMMARY Year ended Year ended Q4 2014 Q4 2013 2014 2013 Daily production volumes Natural gas (mcf/d) 9,927 8,303 8,514 6,583 Oil (bbl/d) 1,043 683 1,022 556 NGLs (bbl/d) 311 605 364 422 Royalty income Natural gas (mcf/d) 142 405 271 557 Oil (bbl/d) (6) 1 1 1 NGLs (bbl/d) 10 24 20 37 Combined (boe/d 6:1) 3,035 2,764 2,870 2,206 Revenue Petroleum and natural gas sales -- gross $10,464,894 $11,087,956 $54,582,213 $34,726,657 Royalty income 59,344 177,335 853,203 1,108,750 Commodity contract settlement 4,517,674 271,387 (510,369) 1,181,080 Total sales 15,041,912 11,536,678 54,925,047 37,016,487 Royalty expense (749,812) (557,278) (3,505,935) (1,796,832) Petroleum and natural gas sales -- net 14,292,100 10,979,400 51,419,112 35,219,655 Change in fair value of contracts 11,613,943 (2,217,286) 13,024,535 (6,928,607) Total revenue -- net of royalties $25,906,043 $8,762,114 $64,443,647 $28,291,048
PRICING SUMMARY Year ended Year ended Q4 2014 Q4 2013 2014 2013 Realized pricing (including realized commodity contracts) Oil ($/bbl) $77.91 $85.56 $84.40 $92.08 NGL ($/bbl) $52.99 $52.08 $52.93 $54.32 Gas ($/mcf) $3.29 $3.92 $4.06 $3.53 Realized pricing (excluding commodity contracts) Oil ($/bbl) $64.48 $84.98 $88.41 $90.93 NGL ($/bbl) $38.51 $51.45 $56.50 $52.91 Gas ($/mcf) $3.50 $3.67 $4.53 $3.25 Oil price benchmarks West Texas Intermediate (WTI) (US$/bbl) $73.15 $97.46 $93.00 $97.95 Edmonton (C$/bbl) $73.33 $86.58 $86.10 $93.90 Natural gas price benchmarks AECO gas (Cdn$/GJ) $4.01 $3.15 $4.50 $3.15 Foreign exchange U.S.-dollar/Canadian-dollar exchange $0.88 $0.95 $0.91 $0.97
NETBACK SUMMARY Year ended Year ended Q4 2014 Q4 2013 2014 2013 Sales price $34.60 $43.60 $52.10 $43.12 Royalty income 0.21 0.70 0.81 1.38 Royalty expense (2.69) (2.19) (3.35) (2.23) Production costs (7.67) (6.20) (6.89) (6.30) Transportation costs (1.60) (1.27) (1.58) (1.26) Field operating netback 22.86 34.63 41.10 34.71 Commodity contract settlement 19.05 1.07 (0.49) 1.47 Operating netback 41.91 35.70 40.62 36.18 General, administrative and other (excludes non-cash items) (3.13) (2.07) (2.05) (2.06) Finance expenses (2.07) (2.59) (2.36) (2.32) Cash flow netback 36.71 31.04 36.21 31.80 Depletion and depreciation (14.00) (15.96) (15.88) (17.50) Accretion (0.16) (0.16) (0.16) (0.18) Stock-based compensation (0.39) - (0.70) (0.36) Unrealized gain (loss) on financial instruments 41.59 (8.72) 12.43 (8.60) Deferred income tax (17.80) (3.25) (8.63) (1.94) Net income netback $45.96 $2.95 $23.26 $3.21
CAPITAL SUMMARY Year ended Year ended Q4 2014 Q4 2013 2014 2013 Cash additions Land, acquisitions and lease rentals $(505,545) $(261,263) $1,188,777 $184,606 Property acquisitions (farm-in drilling) 2,627,312 - 2,627,312 - Drilling and completion 15,688,428 18,958,090 65,125,540 35,705,499 Geological and geophysical 465,245 170,565 1,612,737 756,870 Equipment (640,350) 1,490,863 7,569,877 7,595,294 Other asset additions 3,113 100,771 1,465 318,233 $17,638,203 $20,459,026 $78,125,708 $44,560,502 Exploration and evaluation assets additions $1,680,941 $2,461,506 $1,680,941 $2,461,506
Annual general meeting of shareholders
The company's annual general meeting of shareholders is scheduled for 10 a.m. on Wednesday, May 27, 2015, in the Tillyard Management Conference Centre, main floor, 715 5th Ave. SW, Calgary, Alta.