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Yangarra Year Ends

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By Bobwins

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.  

By rodball

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 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."

James Evaskevich

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
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.

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