Yangarra Announces Strong 2024 Results Despite Operational Challenges

Yangarra Resources Ltd. (TSX: YGR) has released its financial and operating results for the year ended December 31, 2024, showcasing resilience in the face of operational challenges. The company's strategic shift towards a flat production profile has led to a reduction in future development capital expenditure (capex) and a decrease in proved developed producing (PDP) and total proved (1P) reserves compared to 2023. However, Yangarra's strong performance in key metrics indicates that the company is well-positioned for future growth.

Key Highlights:

* Average production of 10,500 boe/d (41% liquids), a decrease of 12% from 2023
* Oil and gas sales of $133.4 million, a decrease of 20% from 2023
* Funds flow from operations of $75.6 million ($0.73 per share – fully diluted), a decrease of 24% from 2023
* Adjusted EBITDA of $82.9 million ($0.80 per share – fully diluted)
* Net income of $26.2 million ($0.25 per share – fully diluted), resulting in an income margin of 20%
* Return on capital employed of 5.4%
* Operating costs of $8.40/boe (including $2.09/boe of transportation costs)
* Operating netback of $23.84/boe
* Operating margin of 69% and funds flow from operations margin of 56%
* G&A costs of $1.37/boe
* Royalties at 6% of oil and gas revenue
* Capital expenditures of $59.6 million
* Adjusted net debt of $103.1 million, a decrease of $15.5 million from 2023
* Retained earnings of $338.0 million
* Decommissioning liabilities of $16.7 million (discounted)

Impact of Strategic Shift:

Yangarra's strategic shift towards a flat production profile has led to a reduction in future development capex for both 1P and 2P reserves. The company has reduced future development capex by $91 million for 1P and $137 million for 2P, resulting in fewer wells being drilled in the future. This reduction in capital expenditure has led to a decrease in reserves, with PDP reserves down 4% and 1P reserves down 13% compared to 2023. However, the company's recycle ratios and net asset value per fully diluted common share (NAV per FD Share) have improved, indicating that the reduction in future development capex has enhanced the economic viability of Yangarra's reserves.

Future Outlook:

Yangarra's Board of Directors has approved a capital budget of $55 - $60 million for 2025, which will hold production at 11,250 – 11,750 boe/d. At USD $68.00/bbl for WTI oil and CDN$2.00/GJ for AECO natural gas, this budget will generate $85 - $90 million of cash flow ($30 million of free cash flow). Yangarra's strong performance in key metrics, despite operational challenges, suggests that the company is well-positioned for future growth and will continue to deliver value to shareholders.