Yangarra Announces 2021 Third Quarter Financial and Operating Results

Source: www.gulfoilandgas.com 11/3/2021, Location: North America

Yangarra Resources Ltd. announces its financial and operating results for the three and nine months ended September 30, 2021.

Third Quarter Highlights
Average production of 8,710 BOE/D (46% liquids) during the quarter, a 4% increase from the same period in 2020
Sales were $35.9 million, an increase of 90% from the same period in 2020
Funds flow from operations of $24.1 million ($0.28 per share basic), an increase of 140% from the same period in 2020
Adjusted EBITDA was $26.6 million ($0.28 per share basic)
Net income of $13.5 million ($0.16 per share basic, $17.7 million before tax)
Operating costs were $6.69/BOE (including $0.98/BOE of transportation costs)
Field operating netbacks were $34.92/BOE
Operating netbacks, which include the impact of commodity contracts, were $34.58/BOE
Operating margins were 77% and funds flow from operations margins were 66%
G&A costs were $0.95/BOE
Royalties were 7% of revenue
All in cash costs were $14.69/BOE
Capital expenditures were $23.5 million
Adjusted net debt was $201.8 million
Adjusted net debt to third quarter annualized funds flow from operations was 2.1: 1
Retained earnings of $139.1 million
Corporate LMR is 6.4 with decommissioning liabilities of $12.7 million (discounted)

Strategic Update
Yangarra remains committed to being a low-cost producer in Central Alberta with a focus on return on capital employed by generating positive net income. The Company strategically built out the oilfield services group ("OFS") while equipment was favourably priced and quality operations staff were available. The internally owned OFS group includes 50 staff, lease and pipeline construction, fluid hauling, rig-move, pressure trucks, vac/combo trucks, crew trucks and trailers, wireline, proprietary water completion access, three mechanics and a fully equipped service facility. The OFS group will insulate against inflationary pressures as oilfield activity ramps up and will mitigate wait times for scarce services.

Also, because of improving drilling rig efficiencies, the Company will only require one fully utilized rig to drill 30 gross wells a year. With prevailing commodity prices, Yangarra expects to generate material free cash flow in 2022 and once the Company reaches a 1.0x debt to cash flow, it expects to return a portion of the free cash flow to shareholders via a dividend policy.

Operations Summary
Yangarra drilled seven wells and completed seven wells during the third quarter and has continued to execute on the full-year capital program with well costs averaging at or below previous guidance. Q3 2021 production volumes were negatively impacted by below type-curve initial flush performance at the Company's Chedderville and O'Cheise pad sites. The wells took longer than anticipated to clean up during flowback, however, the initial underperformance is offset by the wells leveling out at a lower decline rate relative to type curve.

In addition, several high-volume wells were shut in during the quarter due to access issues caused by the drilling rig being on location and workovers on recent wells were delayed while Yangarra staff prioritized ongoing completions.

Four additional wells were recently completed at West Ferrier as a follow-up to two confidential wells that were brought on in the summer. These wells did not have the same low initial flush issues during cleanup and as a result, Yangarra remains confident with the corporate type-curve.

The Company has implemented initiatives on a sample of existing wells to flatten declines, improve production profiles and maximize recoveries. Initial results have been very positive and Yangarra expects these initiatives can be applied through-out the inventory of producing wells at a low-cost with short paybacks.

During the fourth quarter of 2021, the Company will drill and complete a four well pad in the Chedderville area and then begin drilling a fourteen well pad in West Ferrier, with completions scheduled for early 2022.


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