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Yangarra Announces First Quarter 2011 Financial and Operating Results

^{Published on 2011-05-25 13:35:44 - Market Wire}
 

 - Oil and gas sales during Q1 2011 were $3.6 million and cash flow from operations was $2.5 million ($0.03 per share), a 27% and 62% increase from the fourth quarter of 2010, respectively - Production increased by 13% from the fourth quarter - 42% of production was generated from oil and NGL's - 82% of our production came from the Willesden Green/Ferrier area - Production and transportation costs dropped in the first quarter of 2011 to $8.26 per boe from $11.60 in Q4, 2010 - Operating costs in the Willesden Green/Ferrier area were $7.53/boe in the first quarter - The Q1 2011 field netback of $37.95 per boe is a 32% increase from the $28.84 per boe reported in the fourth quarter - Capital expenditures of $18.1 million, the focus of the Q1 capital program was the drilling of wells in Central Alberta. - $14.2 million spent on the drilling and completion of 9 gross (4.0 net) wells as well as the completion and tie in of 2.0 (1.7 net) wells from the 2010 drilling program - $1.3 million was spent on land, increasing our future drilling inventory to 123 gross (70.0 net) locations, representing a 171% increase from year-end on a net basis, and this was increased to 134 gross (78.0 net) after the end of the quarter - $2.3 million spent on equipment purchases and infrastructure development during the quarter 

 Willesden Green area -------------------- - Yangarra drilled a total of 4 gross (2.84 net) horizontal (HZ) Glauconite wells. 2.0 wells (2.0 net) were completed during the quarter and were tied into facilities with initial production during the first 30 days (IP 30) of 324 and 527 boe/d, respectively, (35% oil and NGL's). The wells were completed with a water based foam/surfactant fracture stimulation with initial flow rates deliberately restricted to confirm the Company's theory that pressure decline during the initial 90 days of production should be more gradual. Of the two remaining Glauconite wells, one has been fracture stimulated with similar test results to previous wells and the second well will be completed by the end of May. Both of these wells have been connected by pipeline and will be produced into the Keyera plant at Rimbey once the completions are finished. The Keyera plant will significantly increase NGL recoveries from these wells. - In addition, the Company participated in 1 gross (0.50 net) HZ Cardium well which has been fracture stimulated and is currently in the process of being tied into facilities and 1 gross (0.20 net) HZ Viking well which is scheduled to be fracture stimulated by the end of May and will be tied into facilities shortly thereafter. Ferrier area ------------ - Yangarra participated in 1 gross (0.15 net) Glauconite well which is scheduled to be fracture stimulated by the end of May. - In addition, Yangarra participated in 2 gross (0.47 net) HZ Cardium wells one of which was fracture stimulated with a water based foam/surfactant stimulation and the second well fractured using a oil based facture stimulation. Both wells are expected to be tied into facilities and placed on-stream by mid June. Land Purchases/Acquisitions --------------------------- - Yangarra continued to accumulate quality perspective acreage in Central Alberta during Q1 with 11.25 sections purchased during the quarter and an additional 9.25 sections after the end of the quarter for a total of 20.5 sections at recent crown sales. - Yangarra also closed a minor property acquisition on Willesden Green during the quarter. - Total drilling inventory now consists of 134 gross (78.0 net) locations, representing a 202% increase from year end 2010. Hedging program --------------- - A total of 400 bbl/d of oil hedged for the remainder of 2011 - 200 bbl/d at an average swap price of $93.92/bbl CAD - 200 bbl/d in a costless collar range of $95.00-$113.50/bbl CAD - A total of 600 bbl/d of oil hedged for 2012 - 100 bbl/d swap priced at $99.00/bbl CAD - 100 bbl/d swap priced at $102.00/bbl CAD - 200 bbl in a costless collars with a range of $95.00-$109.57/bbl CAD - 200 bbl/d in a costless collar priced at $100.00-$113.00/bbl CAD Current Production ------------------ - 1,100 boe/d with approximately 900 boe/d of flush behind pipe volumes all of which are expected to be on production by mid June. Future Development ------------------ - The post breakup drilling program has commenced with the spud of the Yangarra operated Rock Creek HZ well in Willesden Green on May 18, 2011. - During the remainder of 2011 Yangarra will continue to advance its $50 million capital budget focused in Central Alberta. The remainder of the drilling program includes 22 gross (10 net) wells with a portion of capital allocated to land and equipment. 

 ------------------------------------------------------------------------- 2011 2010 Q1 Q4 Q1 ------------------------------------------------------------------------- Daily production volumes Natural gas (mcf/d) 2,978 2,564 2,018 Oil (bbl/d) 258 260 9 NGL's (bbl/d) 86 54 13 Royalty income (boe/d) 23 19 - ------------------------------------------------------------------------- Combined (boe/d 6:1) 863 761 358 Product pricing Oil ($/bbl) $ 86.66 $ 80.54 $ 78.39 NGL ($/bbl) $ 62.53 $ 62.30 $ 61.36 Gas ($/mcf) $ 3.87 $ 3.93 $ 4.82 ------------------------------------------------------------------------- Combined ($/boe) $ 46.70 $ 40.94 $ 31.30 Revenue Petroleum & natural gas sales - Gross $ 3,628,974 $ 2,864,802 $ 1,009,188 Royalty income $ 104,430 $ 93,882 - Royalty expense $ (143,368) $ (128,984) $ 40,588 ------------------------------------------------------------------------- Petroleum & natural gas sales - Net $ 3,590,036 $ 2,829,700 $ 1,049,776 ------------------------------------------------------------------------- ------------------------------------------------------------------------- ------------------------------------------------------------------------- 2011 2010 Q1 Q4 Q1 ------------------------------------------------------------------------- Production by area (boe/d) Willesden Green/Ferrier 681 546 54 Willesden Green/Ferrier - royalty income 23 19 - Medicine Hat 70 87 94 Jaslan 80 98 206 Other 10 11 4 ------------------------------------------------------------------------- Total 863 761 358 ------------------------------------------------------------------------- Netback Summary ------------------------------------------------------------------------- 2011 2010 Q1 Q4 Q1 ------------------------------------------------------------------------- Revenues $ 46.70 $ 40.94 $ 31.30 Royalty income 1.34 1.34 - Royalty expense (1.85) (1.84) (1.26) Production costs (7.36) (10.56) (8.47) Transportation costs (0.90) (1.04) (1.52) ------------------------------------------------------------------------- Netback per boe $ 37.95 $ 28.83 $ 20.05 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Financial Summary ------------------------------------------------------------------------- 2011 2010 Q1 Q4 Q1 ------------------------------------------------------------------------- Statement of Operations and Deficit Net (loss) income for the period $(2,230,631) $ (183,574) $ (147,119) Net (loss) income per share - basic $ (0.03) $ 0.00 $ 0.00 Net (loss) income per share - fully diluted $ (0.02) $ 0.00 $ 0.00 Weighted average number of shares - basic 85,987,807 73,869,598 39,876,895 Weighted average number of shares - fully diluted 93,649,398 80,497,022 39,876,895 Statement of Cash Flows Funds flow from operations $ 2,535,251 $ 1,567,756 $ 410,168 Funds flow from operations per share - basic $ 0.03 $ 0.02 $ 0.01 Funds flow from operations per share - fully diluted $ 0.03 $ 0.02 $ 0.01 ------------------------------------------------------------------------- ------------------------------------------------------------------------- ------------------------------------------------------------------------- 2011 2010 Q1 Q4 Q1 ------------------------------------------------------------------------- Balance Sheet Property and equipment $80,990,090 $63,263,452 $40,987,140 Total assets $87,597,721 $68,373,813 $42,817,351 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Capital Expenditures ------------------------------------------------------------------------- 2011 2010 Q1 Q4 Q1 ------------------------------------------------------------------------- Land and lease rentals $ 1,339,435 $ 3,827,343 $ 1,411,343 Drilling and completion 14,286,734 10,593,594 1,997,955 Geological and geophysical 170,632 190,640 125,432 Equipment 2,327,862 2,148,426 265,116 ------------------------------------------------------------------------- $18,124,663 $16,760,003 $ 3,799,846 ------------------------------------------------------------------------- -------------------------------------------------------------------------