CALGARY, April 1, 2020 /CNW/ - Yangarra Resources
Ltd. ("Yangarra" or the "Company") (TSX:YGR) provides an
operations update.
As a result of the COVID-19 pandemic, Yangarra has implemented a
number of actions to reduce the risk of spread amongst our valuable
employee team. The Company's Calgary office has been reduced to two people
with the remainder of the team working remotely to ensure the
business continues to function and our people stay safe. In the
field, Yangarra has implemented social distancing and maintains
safe work practices, with minimal impact on operations.
Operations Update
Due to the rapid reduction in oil prices, all capital
expenditures were halted in February. Currently Yangarra has four
drilled but uncompleted wells ("DUC's") in the Chedder area that
can be completed and put on stream in a very short period of
time.
Yangarra has applied extensive additional cost cutting measures
to ongoing production operations and other areas throughout the
Company. As a result, the Company expects all in cash-costs
(operating, transportation, G&A, interest and royalties) to be
less than $10 per boe which allows
the Company to generate a positive cash flow margin even in the
current commodity price environment.
Yangarra has approximately 100,000 bbls of existing available
oil storage which will be utilized in the event differentials widen
or deliveries to pipeline are halted or curtailed. Current
production is approximately 12,000 boe/d.
Guidance
Formal guidance from the Company is suspended given the
volatility of the market. Capital expenditures were approximately
$25 million in the first quarter and
spending will re-commence once commodity prices improve. Yangarra
remains committed to a cash flow neutral budget and maximizing
full-cycle rates of return and will modulate capital expenditures
accordingly.
Normal-Course Issuer Bid ("NCIB")
No share purchases have been made under the Company NCIB program
and in the interests of preserving balance sheet strength, the
Company does not expect to make any purchases in the near term.
Annual General and Special Meeting
The Company's Annual General Meeting of Shareholders is
scheduled for 10:00 AM on Thursday April 30,
2020.
As a precaution due to the COVID-19 pandemic, the Company will
ensure social distancing will be in effect at the annual meeting
and Yangarra does not plan to have a formal presentation at the
conclusion of the meeting. Please ensure your vote is
represented at the meeting by submitting your Proxy as per the
instructions in the in the Notice of Meeting of Shareholders.
A conference call number will be provided for shareholders to
listen to the formal portion of the meeting. We strongly
encourage all shareholders to register their votes by proxy and
participate in the meeting via the conference call.
Forward looking information
This press release contains forward-looking statements.
More particularly, this press release contains statements
concerning planned exploration and development activities, the
anticipated profitability of the Company if commodity prices were
to further decline from the current levels, the planned corporate
strategy during the current commodity environment, the Company's
ability to utilize its available oil storage, the Company's
guidance in the current environment, expectations regarding G&A
and cash flow margins and the Company's expectations regarding the
use of its NCIB.
The forward-looking statements in this press release are
based on certain key expectations and assumptions made by Yangarra,
including expectations and assumptions concerning the impact of
COVID-19 on Company operations, the length and severity of the
commodity price downturn expectations regarding G&A spend, the
performance of existing wells, the performance of new wells, the
successful application of technology, prevailing weather
conditions, commodity prices, royalty regimes and exchange rates
and the availability of capital, labour and services.
Although Yangarra believes that the expectations and
assumptions on which the forward-looking statements are based are
reasonable, undue reliance should not be placed on the
forward-looking statements because Yangarra can give no assurance
that they will prove to be correct. Since forward-looking
statements address future events and conditions, by their very
nature they involve inherent risks and uncertainties. Actual
results could differ materially from those currently anticipated
due to a number of factors and risks. These include, but are
not limited to, risks associated with the oil and gas industry in
general (e.g., operational risks in development, exploration and
production; delays or changes in plans with respect to exploration
or development projects or capital expenditures; the uncertainty of
reserves estimates; the uncertainty of estimates and projections
relating to production, costs and expenses; and health, safety and
environmental risks), uncertainty as to the availability of labour
and services, extreme commodity price and exchange rate
fluctuations, unexpected adverse weather conditions, the impact of
COVID-19 on Company operations, general business, economic,
competitive, political and social uncertainties, capital market
conditions and market prices for securities and changes to existing
laws and regulations. Certain of these risks are set out in
more detail in Yangarra's current Annual Information Form, which is
available on Yangarra's SEDAR profile at www.sedar.com.
Forward-looking statements are based on estimates and
opinions of management of Yangarra at the time the statements are
presented. Yangarra may, as considered necessary in the
circumstances, update or revise such forward-looking statements,
whether as a result of new information, future events or otherwise,
but Yangarra undertakes no obligation to update or revise any
forward-looking statements, except as required by applicable
securities laws.
Any references in this press release to initial and/or final
raw test or production rates and/or "flush" production rates are
useful in confirming the presence of hydrocarbons, however, such
rates are not necessarily determinative of the rates at which such
wells will commence production and decline thereafter.
Additionally, such rates may also include recovered "load oil"
fluids used in well completion stimulation. While encouraging,
readers are cautioned not to place reliance on such rates in
calculating the aggregate production for the Corporation. The
initial production rate may be estimated based on other third-party
estimates or limited data available at this time. In all cases in
this press release, initial production or test are not necessarily
indicative of long-term performance of the relevant well or fields
or of ultimate recovery of hydrocarbons.
Barrels of Oil Equivalent
The term barrels of oil equivalent ("BOE") may be misleading,
particularly if used in isolation. Per boe amounts have been
calculated using a conversion ratio of six thousand cubic feet (6
mcf) of natural gas to one barrel (1 Bbl) of crude oil. The
boe conversion ratio of 6 mcf to 1 Bbl is based on an energy
equivalency conversion method primarily applicable at the burner
tip and does not represent a value equivalency at the
wellhead. Given that the value ratio based on the current
price of crude oil as compared to natural gas is significantly
different from the energy equivalency of 6:1, utilizing a
conversion on a 6:1 basis may be misleading as an indication of
value.
All reference to $ (funds) are in Canadian dollars.
SOURCE Yangarra Resources Ltd.