Peyto Exploration & Development Corp. press release
Yangarra Announces Year End 2013 Financial, Operating Results and Reserves
TSX - Toronto Stock Exchange · Natural Gas · Natural Gas Liquids · Oil · Canada
##
CALGARY, March 25, 2014/CNW/ - Yangarra ResourcesLtd.("Yangarra" or the "Company") (TSX-V:YGR) releases its 2013 financials and reserves.
2013 Financial and Operating Highlights
During the year ended December 31, 2013the Company completed the following significant milestones:
Average daily production was 2,206 boe/d, a 15% increase from 2012.
Funds flow from operations were $26 million($0.21per share - basic), a 76% increase from 2012.
Earnings before interest, taxes, depletion & depreciation, amortization and changes in commodity contracts ("EBITDA") was $27 million.
Operating costs, including $1.26/boe of transportation costs, were $7.56/boe.
Operating netback of $36.18per boe, a 42% increase from the $25.48per boe reported in 2012.
G&A costs of $2.06/boe, which represents an 18% decrease from 2012.
Royalties at 5% of oil and gas revenue.
$1.2 millionof realized hedging gains.
Fourth quarter 2013 production was 2,764 boe/d with funds flow from operations of $8 million($0.06per share - basic).
Total capital expenditures were $47 millionversus $19.8 millionin 2012. With the equity raise late in 2013 the Company accelerated the fourth quarter capital expenditures to $26 million.
As at December 31, 2013, the Company had a current bank debt, subordinated debt and working capital deficit, excluding mark to market on commodity contracts and flow-through share obligations, of $44.6 millioncompared to $36.3 millionat December 31, 2012.
Reserve Report Highlights:
Increased proved plus probable reserves by 39% to 17.5 million barrels of oil equivalent and proved reserves by 32% to 9.4 million barrels of oil equivalent.
Proved plus probable reserves, net present value discounted at 10% ("NPV 10") at December 31, 2013was $251.1 million, an increase of 50% compared to December 312012.
Replaced 2013 production by 283% on a proved basis and 614% on a proved plus probable basis.
Achieved finding and development costs including changes in future capital, of $14.07/boe ($8.18excluding changes in future capital) on proved plus probable reserves and $17.58/boe on proved ($15.25excluding changes in future capital).
Generated a finding and development recycle ratio of 2.57 times on proved plus probable reserves including changes in future capital (4.42 times excluding changes in future capital) based on the Company's 2013 operating netback of $36.18per barrel of oil equivalent.
Reserve life index of 16.0 years on a total proved plus probable basis based on the Company's December, 2013 production rate of 3,000 boe/d.
Future development costs (proved plus probable) of $125 millionwhich is 2.5 times the 2014 capital budget.
Net Asset Value of $206 millionas at December 31, 2013, which is $1.40per common share.
Operations Update
During the first quarter of 2014 the Company drilled 6 gross (5.9 net) wells in the Cardium formation. A total of 4 gross (3.9 net) wells were put on production during the quarter with the final 2 (2.0 net) expected to be on stream at quarter end. The Company experienced 11 days of shut-in production (approximately 1,200 boe/d) due to the TransCanada pipeline rupture near Rocky Mountain Houseand an additional 150 boe/d average for the quarter of Keyera curtailments at other facilities. The Company expects first quarter production to be approximately 2,800 boe/d and full year guidance remains at 3,200 boe/d. The Company will continue to drill through break-up as conditions permit, with 6 gross (5.2 net) wells planned for the second quarter.
President's Message to Shareholders
Yangarra is currently drilling its 71sthorizontal well in Central Alberta. The experience gained by drilling this many wells with the team we have put in place over the past four years has been key to reducing costs to a point where we are top decile in drilling and completions, operating costs and G&A costs. We are currently concentrating on "oilier" targets in the Cardium and Glauconite horizons where we have significant inventory. We also have a large undrilled inventory in "gassier" Cardium, Glauconite and Rock Creekzones that we will drill as natural gas prices continue to improve. These "gassier" targets are extremely "liquids rich", however, the "oilier" targets still command higher internal rates of return (IRR). Half cycle IRR's in 2013 were 65%, re-cycle ratios were 2.57 (P+P including changes in future capital) in 2013 and annual production growth is forecast to be 45% in 2014.
A recent farm-in was negotiated in which the Company added significant acreage to its Cardium inventory. Yangarra has been active at crown land sales and has been successful closing deals with industry to add additional future drilling locations. The Company has added two future drilling locations for every location drilled in each of the past four years and we have visibility to do the same going forward.
Yangarra is focused on adding shareholder value and to properly gauge this we have calculated full-cycle rates of return, presented below which we believe is more indicative of value creation. All capital costs for each year are included in this calculation including land, infrastructure, geological work, etc. The chart shows the impact of focusing on returns rather than focusing on growth.
According to Yangarra's 2013 year end engineering report the Company is valued at $1.40per share (2P (pre-tax) at PV 10, net of debt). The financing late last year provided the necessary liquidity to achieve the outstanding reserve additions generated by the Company in the fourth quarter of 2013. There is significant additional intrinsic value not booked in the reserve report in our 53,000 acres (including farm-in acreage) of undeveloped Cardium and Glauconite land and for our 39,040 acre net Duvernayland position.
TD Bank recently opined that liquids rich Duvernaylands may be worth $2,000 - $4,000per acre in Pembina/Willesden Green which positions our shareholders with great option value in this rapidly developing play. Yangarra has recently retained the services of two experienced shale professionals to develop the asset with plans in progress to drill a vertical strata-graphic test well.
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. They have delivered seamless, reliable operations and demonstrated their ability to quickly interpret, react and adapt to the technical results of our development drilling efforts. I also wish to take this opportunity to thank my fellow directors for their support and leadership.
Financial Summary
| | | | | | | | | | | | | | | | | | | | | | | | 2013 | | | 2012 | | | Year ended | | | | | | | | | | | | | | Q4 | | | Q3 | | | Q4 | | | 2013 | | | 2012 | | | 2011 | | Statements of Comprehensive Income (Loss) | | | | | | | | | | | | | | | | | | | | Petroleum & natural gas sales | | $ | 11,087,956 | | $ | 9,372,931 | | $ | 4,842,343 | | $ | 34,726,657 | | $ | 21,327,157 | | $ | 20,742,259 | | Net income (loss) for the period (before tax) | | $ | 1,576,908 | | $ | 39,646 | | $ | (2,409,766) | | $ | 4,146,706 | | $ | 21,174 | | $ | 4,872,697 | | | | | | | | | | | | | | | | | | | | | | Net income (loss) for the period | | $ | 750,851 | | $ | 11,330 | | $ | 340,623 | | $ | 2,585,699 | | $ | (217,712) | | $ | 1,385,698 | | Net income (loss) per share - basic and diluted | | $ | 0.01 | | $ | 0.00 | | $ | 0.00 | | $ | 0.02 | | $ | (0.00) | | $ | 0.01 | | | | | | | | | | | | | | | | | | | | | | Statements of Cash Flow | | | | | | | | | | | | | | | | | | | | Funds flow from (used in) operating activities | | $ | 7,975,588 | | $ | 6,378,207 | | $ | 3,168,328 | | $ | 25,648,666 | | $ | 14,588,405 | | $ | 16,341,180 | | Funds flow from (used in) operating activities per share - basic and diluted | | $ | 0.06 | | $ | 0.05 | | $ | 0.03 | | $ | 0.21 | | $ | 0.12 | | $ | 0.15 | | Cash from (used in) operating activities | | $ | 10,757,178 | | $ | 3,683,552 | | $ | 4,163,347 | | $ | 27,077,123 | | $ | 17,016,431 | | $ | 6,664,849 | | | | | | | | | | | | | | | | | | | | | | Statements of Financial Position | | | | | | | | | | | | | | | | | | | | Property and equipment | | $ | 152,971,016 | | $ | 135,892,343 | | $ | 121,842,378 | | $ | 152,971,016 | | $ | 121,842,378 | | $ | 119,374,219 | | Total assets | | $ | 169,798,021 | | $ | 154,773,403 | | $ | 138,894,114 | | $ | 169,798,021 | | $ | 138,894,114 | | $ | 141,291,043 | | Working Capital (deficit), excluding MTM on commodity contracts | | $ | 36,794,243 | | $ | 42,594,542 | | $ | (36,301,842) | | $ | 36,794,243 | | $ | (36,301,842) | | $ | (34,028,162) | | Subordinated Debt | | $ | 7,786,632 | | $ | - | | $ | - | | $ | 7,786,632 | | $ | - | | $ | - | | Non-Current Liabilities | | $ | 7,523,351 | | $ | 13,971,180 | | $ | 12,274,710 | | $ | 7,523,351 | | $ | (12,274,710) | | $ | (9,752,766) | | Shareholders equity | | $ | 95,583,587 | | $ | 82,022,213 | | $ | 79,689,765 | | $ | 95,583,587 | | $ | (79,689,765) | | $ | (76,627,244) | | | | | | | | | | | | | | | | | | | | | | Weighted average number of shares - basic | | | 127,219,336 | | | 121,718,245 | | | 121,711,723 | | | 123,101,587 | | | 120,663,095 | | | 105,960,324 | | Weighted average number of shares diluted | | | 128,322,269 | | | 121,987,009 | | | 121,711,723 | | | 123,101,587 | | | 120,663,095 | | | 113,781,122 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Operations Summary
| | | | | | | | | | | | | | | | | | | | | | | 2013 | | | 2012 | | | Year Ended | | | | | | | | | | | | | Q4 | | | Q3 | | | Q4 | | | 2013 | | | 2012 | | | | | | | | | | | | | | | | | | | | | | | Daily production volumes | | | | | | | | | | | | | | | | | | | | Natural gas (mcf/d) | | | 8,303 | | | 6,983 | | | 4,607 | | | 6,583 | | | 5,586 | | | | Oil (bbl/d) | | | 683 | | | 547 | | | 418 | | | 556 | | | 350 | | | | NGL's (bbl/d) | | | 605 | | | 450 | | | 304 | | | 422 | | | 341 | | | | Royalty income | | | | | | | | | | | | | | | | | | | | Natural gas (mcf/d) | | | 405 | | | 299 | | | 956 | | | 557 | | | 1,273 | | | | Oil (bbl/d) | | | 1 | | | 1 | | | (7) | | | 1 | | | 3 | | | | NGL's (bbl/d) | | | 24 | | | 26 | | | 57 | | | 37 | | | 77 | | | Combined (boe/d 6:1) | | | 2,764 | | | 2,238 | | | 1,700 | | | 2,206 | | | 1,914 | | | | | | | | | | | | | | | | | | | | | | Revenue | | | | | | | | | | | | | | | | | | | Petroleum & natural gas sales - Gross | | $ | 11,087,956 | | $ | 9,372,931 | | $ | 4,842,343 | | $ | 34,726,657 | | $ | 21,327,157 | | | | Royalty income | | | 177,335 | | | 195,468 | | | 216,693 | | | 1,108,750 | | | 2,024,819 | | | | Commodity contract settlement | | | 271,387 | | | (326,435) | | | 535,585 | | | 1,181,080 | | | 907,863 | | | | Total sales | | | 11,536,678 | | | 9,241,964 | | | 5,594,621 | | | 37,016,487 | | | 24,259,839 | | | | | | | | | | | | | | | | | | | | | | | Royalty expense | | | (557,278) | | | (701,597) | | | (3,370) | | | (1,796,832) | | | (1,057,597) | | | | Petroleum & natural gas sales - Net | | $ | 10,979,400 | | $ | 8,540,367 | | $ | 5,591,251 | | $ | 35,219,655 | | $ | 23,202,242 | | | | Change in fair value of contracts | | $ | (2,217,286) | | $ | (2,411,102) | | $ | (209,267) | | $ | (6,928,607) | | $ | 3,889,986 | | | | Total Revenue - Net of royalties | | $ | 8,762,114 | | $ | 6,129,265 | | $ | 5,381,984 | | $ | 28,291,048 | | $ | 27,092,228 | | | | | | | | | | | | | | | | | | | | | |
Pricing Summary
| | | | | | | | | | | | | | | | | | | | | | | | | | | | 2013 | | | | 2012 | | | | Year Ended | | | | | | | | | | | | | | | Q4 | | | | Q3 | | | | Q4 | | | | 2013 | | | | 2012 | | | Realized Pricing (Including commodity contracts) | | | | | | | | | | | | | | | | | | | | | | | | Oil ($/bbl) | | $ | | 85.56 | | $ | | 96.51 | | $ | | 83.76 | | $ | | 92.08 | | $ | | 84.09 | | | NGL ($/bbl) | | $ | | 52.08 | | $ | | 53.33 | | $ | | 25.09 | | $ | | 54.32 | | $ | | 46.78 | | | Gas ($/mcf) | | $ | | 3.92 | | $ | | 3.05 | | $ | | 3.02 | | $ | | 3.53 | | $ | | 2.49 | | | | | | | | | | | | | | | | | | | | | | | | | Realized Pricing (Excluding commodity contracts) | | | | | | | | | | | | | | | | | | | | | | | | Oil ($/bbl) | | $ | | 84.98 | | $ | | 102.99 | | $ | | 77.78 | | $ | | 90.93 | | $ | | 83.07 | | | NGL ($/bbl) | | $ | | 51.45 | | $ | | 60.77 | | $ | | 18.27 | | $ | | 52.91 | | $ | | 45.92 | | | Gas ($/mcf) | | $ | | 3.67 | | $ | | 2.57 | | $ | | 2.94 | | $ | | 3.25 | | $ | | 2.23 | | | | | | | | | | | | | | | | | | | | | | | | | Oil Price Benchmarks | | | | | | | | | | | | | | | | | | | | | | | | West Texas Intermediate ("WTI") (US$/bbl) | | $ | | 97.46 | | $ | | 105.81 | | $ | | 88.22 | | $ | | 97.97 | | $ | | 94.21 | | | Edmonton (C$/bbl) | | $ | | 86.58 | | $ | | 103.65 | | $ | | 83.99 | | $ | | 93.11 | | $ | | 87.02 | | | | | | | | | | | | | | | | | | | | | | | | | Natural Gas Price Benchmarks | | | | | | | | | | | | | | | | | | | | | | | | AECO gas (Cdn$/GJ) | | $ | | 3.15 | | $ | | 2.82 | | $ | | 3.06 | | $ | | 3.65 | | $ | | 2.79 | | | | | | | | | | | | | | | | | | | | | | | | | Foreign Exchange | | | | | | | | | | | | | | | | | | | | | | | | U.S./Canadian Dollar Exchange | | $ | | 0.953 | | $ | | 0.963 | | $ | | 1.009 | | $ | | 0.971 | | $ | | 1.000 | | | | | | | | | | | | | | | | | | | | | | | |
Netback Summary
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2013 | | | | | 2012 | | | | | Year Ended | | | | | | | | | | | | | | | | | Q4 | | | | | Q3 | | | | | Q4 | | | | | 2013 | | | | | 2012 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Sales Price | | $ | | 44.67 | | | $ | | 43.94 | | | $ | | 34.39 | | | $ | | 44.59 | | | $ | | 31.74 | | | | Royalty income | | | | 0.70 | | | | | 0.95 | | | | | 1.39 | | | | | 1.38 | | | | | 2.89 | | | Royalty expense | | | | (2.19) | | | | | (3.41) | | | | | (0.02) | | | | | (2.23) | | | | | (1.51) | | | Production costs | | | | (6.20) | | | | | (5.45) | | | | | (9.65) | | | | | (6.30) | | | | | (6.81) | | | Transportation costs | | | | (1.27) | | | | | (1.47) | | | | | (0.95) | | | | | (1.26) | | | | | (0.84) | | Operating netback | | $ | | 35.70 | | | $ | | 34.56 | | | $ | | 25.16 | | | $ | | 36.18 | | | $ | | 25.48 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | G&A and other (excludes non-cash items) | | | | (2.07) | | | | | (1.76) | | | | | (2.25) | | | | | (2.06) | | | | | (2.52) | | | Finance expenses | | | | (2.59) | | | | | (2.32) | | | | | (2.65) | | | | | (2.32) | | | | | (2.13) | | Cash flow netback | | | | 31.04 | | | | | 30.49 | | | | | 20.26 | | | | | 31.80 | | | | | 20.82 | | | | Depletion and depreciation | | | | (15.96) | | | | | (18.05) | | | | | (18.52) | | | | | (17.50) | | | | | (20.67) | | | Impairment | | | | - | | | | | - | | | | | (19.82) | | | | | - | | | | | (5.76) | | | Gain on sale of property and equipment | | | | - | | | | | - | | | | | 4.15 | | | | | - | | | | | 0.93 | | | Accretion | | | | (0.16) | | | | | (0.15) | | | | | (0.14) | | | | | (0.18) | | | | | (0.13) | | | Stock-based compensation | | | | - | | | | | (0.38) | | | | | - | | | | | (0.36) | | | | | (0.71) | | | Unrealized gain (loss) on financial instruments | | | | (8.72) | | | | | (11.71) | | | | | (1.34) | | | | | (8.60) | | | | | 5.55 | | | Deferred income tax | | | | (3.25) | | | | | (0.14) | | | | | 17.59 | | | | | (1.94) | | | | | (0.34) | | Net Income (loss) netback | | $ | | 2.95 | | | $ | | 0.06 | | | $ | | 2.18 | | | $ | | 3.21 | | | $ | | (0.31) | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Capital Summary
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2013 | | | | | 2012 | | | | | Year Ended | | | | | | | | | | | | Cash Additions | | | | Q4 | | | | | Q3 | | | | | Q4 | | | | | 2013 | | | | | 2012 | | | | | | | | | | | | | | | | | | | | | | | | | | | | Land, acquisitions and lease rentals | | $ | | (261,263) | | | $ | | 307,274 | | | $ | | 240,777 | | | $ | | 184,606 | | | $ | | 734,910 | | Drilling and completion | | | | 18,958,090 | | | | | 6,725,516 | | | | | 6,679,886 | | | | | 35,705,499 | | | | | 19,727,708 | | Geological and geophysical | | | | 170,565 | | | | | 417,101 | | | | | 337,060 | | | | | 756,870 | | | | | 1,002,064 | | Equipment | | | | 1,490,863 | | | | | 1,036,654 | | | | | 1,758,120 | | | | | 7,595,294 | | | | | 2,812,328 | | Other Asset Additions | | | | 100,771 | | | | | 80,681 | | | | | | | | | | 318,233 | | | | | 171,521 | | | | $ | | 20,459,026 | | | $ | | 8,567,226 | | | $ | | 9,015,843 | | | $ | | 44,560,502 | | | $ | | 24,448,531 | | | | | | | | | | | | | | | | | | | | | | | | | | | | Disposition of Property and Equipment | | $ | | - | | | $ | | - | | | $ | | (4,650,000) | | | $ | | - | | | $ | | (4,650,000) | | Net Capital Additions | | $ | | 20,459,026 | | | $ | | 8,567,226 | | | $ | | 4,365,843 | | | $ | | 44,560,502 | | | $ | | 19,798,531 | | | | | | | | | | | | | | | | | | | | | | | | | | | | Exploration & evaluation assets additions | | $ | | 2,461,506 | | | $ | | - | | | $ | | - | | $ | | | 2,461,506 | | | $ | | - |
Oil and Gas Reserves
The following tables summarize certain information contained in the independent reserves report prepared by AJM Deloitte as of December 31, 2013. The report was prepared in accordance with definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook ("COGE Handbook") and National Instrument 51-101, Standards of Disclosure for Oil and Gas Activities ("NI 51-101").
Summary of Oil and Gas Reserves
(based on forecast price and costs)
| Reserves Category | | | | Light and Medium Oil (Mbbl) | | | | | | Natural Gas Liquids (Mbbl) | | | | | | Natural Gas (MMcf) | | | | | | W.I. Gross | | Co.Share Gross | | Net | | W.I. Gross | | Co.Share Gross | | Net | | W.I. Gross | | Co.Share Gross | | Net | | Proved Developed Producing | | 988 | | 993 | | 820 | | 711 | | 754 | | 539 | | 12,095 | | 13,209 | | 11,130 | | Proved Developed Non-Producing | | 215 | | 216 | | 194 | | 65 | | 67 | | 53 | | 1,634 | | 1,679 | | 1,511 | | Proved Undeveloped | | 1,276 | | 1,289 | | 1,118 | | 866 | | 923 | | 705 | | 14,806 | | 16,304 | | 14,351 | | Total Proved | | 2,479 | | 2,498 | | 2,132 | | 1,642 | | 1,744 | | 1,297 | | 28,535 | | 31,192 | | 26,992 | | Probable | | 2,392 | | 2,401 | | 2,031 | | 1,308 | | 1,357 | | 1,010 | | 24,227 | | 25,590 | | 22,739 | | Total Proved Plus Probable | | 4,871 | | 4,899 | | 4,163 | | 2,950 | | 3,101 | | 2,307 | | 52,762 | | 56,782 | | 49,731 | | | | | | | | | | | | | | | | | | | | |
| Reserves Category | | | Total BOE as at December 31, 2013 (Mboe) | | | Total BOE as at December 31, 2012 (Mboe) | | | | | | | | | | | | | | | | | W.I. Gross | | | Co.Share Gross | | | Net | | | W.I. Gross | | | Co.Share Gross | | | Net | | Proved Developed Producing | | | 3,715 | | | 3,949 | | | 3,214 | | | 2,076 | | | 2,381 | | | 2,042 | | Proved Developed Non-Producing | | | 552 | | | 563 | | | 499 | | | 433 | | | 443 | | | 386 | | Proved Undeveloped | | | 4,610 | | | 4,929 | | | 4,215 | | | 4,039 | | | 4,338 | | | 3,765 | | Total Proved | | | 8,877 | | | 9,441 | | | 7,928 | | | 6,548 | | | 7,163 | | | 6,193 | | Probable | | | 7,738 | | | 8,023 | | | 6,831 | | | 5,058 | | | 5,356 | | | 4,473 | | Total Proved Plus Probable | | | 16,615 | | | 17,464 | | | 14,759 | | | 11,606 | | | 12,518 | | | 10,667 |
| Notes to table: | | | (1) | Total values may not add due to rounding. | | (2) | BOEs are derived by converting gas to oil equivalent in the ratio of six thousand cubic feet of gas to one barrel of oil (6 Mcf:1 bbl). | | (3) | "Working Interest Gross" reserves are the Company's working interest (operating or non-operating) share before deducting royalty obligations and without including any royalty interests of the Company. | | (4) | "Company Share Gross" reserves are the Company's working interest (operating or non-operating) share and before deducting royalty obligations but including any royalty interests of the Company. | | (5) | "Net" Reserves are the Company's working interest (operating or non-operating) share after deduction of royalty obligations plus any royalty interests of the Company. | | | |