Yangarra announces 2020 first quarter financial and operating results

April 29, 20202:00 PM CNW

CALGARY – Yangarra Resources Ltd. (“Yangarra” or the “Company“) (TSX:YGR) announces its financial and operating results for the three months ended March 31, 2020. Annual General and Special Meeting of Shareholders The Company’s Annual General and Special Meeting of Shareholders is scheduled for 10:00 AM on Thursday April 30, 2020. As a precaution due to the COVID-19 pandemic, there will not be a corporate presentation at the conclusion of the meeting and the following conference call number will be utilized to allow registered shareholders to listen to the formal portion of the meeting: Toll free (Canada/North America) dial in is 1-877-385-4099 Participant code is 2618233 The participant will dial in using the dial in number then they will enter the participant code and wait to be connected to conference call First Quarter Highlights

• Average production of 12,122 boe/d (47% liquids) during the quarter a 1% increase from the same period in 2019

• Oil and gas sales were $27.4 million, a decrease of 31% from the same period in 2019

• Funds flow from operations of $15.3 million ($0.18 per share – basic), a decrease of 45% from the same period in 2019

• Adjusted EBITDA (which excludes changes in derivative financial instruments) was $17.1 million ($0.21 per share – basic)

• Net income of $2.8 million ($0.03 per share – basic, $3.9 million before tax), a decrease of 76% from the same period in 2019 and represents the 13th consecutive quarter of net income

• Operating costs were $6.67/boe (including $1.00/boe of transportation costs)

• Field operating netbacks were $16.71/boe

• Operating netbacks, which include the impact of commodity contracts, were $16.76/boe

• Operating margins were 67% and funds flow from operations margins were 56%

• G&A costs of $0.72/boe

• Royalties were 6% of oil and gas revenue

• All in cash costs were $11.06/boe

• Capital expenditures (including $0.4 million on land) were $25.4 million

• Net Debt to first quarter annualized funds flow from operations was 3.24 : 1

• Retained earnings of $107 million

• Corporate LMR is 11.0 with decommissioning liabilities of $16 million (discounted)

• Yangarra drilled six wells and completed five wells in the first quarter of 2020 leaving four wells drilled and uncompleted at the end of the quarter. Yangarra elected to reduce first quarter activity as per the Company’s strategy of reducing capital spending when commodity pricing falls below internal thresholds for rates of return.

Operations Update COVID-19 protocols remain in place and all personnel have remained on salary in both the head office and the field. Yangarra will qualify for 75% wage coverage from the federal government due to the significant reduction in revenue from 2019. The wage subsidy combined with very low G&A and operating costs has allowed the Company to avoid laying off any staff. Yangarra did not nominate any sweet oil sales for May due to very high sweet oil differentials. Field inventory is currently low, and the company expects to utilize this storage until spot oil prices are at a more reasonable level. In addition, 30 low volume wells have been shut in as that production will continue to accumulate downhole for up to four months. Current production is approximately 11,000 boe/d. Financial Summary 20202019Q1Q4Q1Statements of Comprehensive IncomePetroleum & natural gas sales$27,435$35,990$39,907Net income (before tax)$3,877$9,405$16,386Net income$2,835$7,020$11,514Net income per share – basic$0.03$0.08$0.13Net income per share – diluted$0.03$0.08$0.13Statements of Cash FlowFunds flow from operations$15,293$21,005$27,731Funds flow from operations per share – basic$0.18$0.25$0.32Funds flow from operations per share – diluted$0.18$0.25$0.32Cash from operating activities$15,725$25,469$22,963Statements of Financial PositionProperty and equipment$558,956$541,799$511,113Total assets$608,468$592,195$566,081Working capital deficit (surplus)$9,278$(906)$18,699Adjusted Net Debt$198,253$187,712$188,063Shareholders equity$307,265$303,643$268,584Weighted average number of shares – basic85,38085,37085,359Weighted average number of shares – diluted85,52485,70886,772 Company Netbacks ($/boe) 20202019Q1Q4Q1Sales price$24.87$31.13$37.09   Royalty expense(1.49)(2.49)(2.79)   Production costs(5.67)(6.19)(5.87)   Transportation costs(1.00)(1.11)(0.96)Field operating netback16.7121.3427.46  Realized gain (loss) on commodity contract settlement0.050.250.16Operating netback16.7621.5927.62   G&A(0.72)(1.17)(0.32)   Cash Finance expenses(2.17)(1.58)(1.53)   Depletion and depreciation(8.36)(8.33)(8.48)   Non Cash – Finance expenses(2.11)0.02(0.50)Abandonment Expenses–(0.75)–Provision for Credit Losses–(0.57)–   Stock-based compensation(0.51)(0.61)(1.18)   Unrealized gain (loss) on financial instruments0.57(0.44)(0.39)   Deferred income tax(0.94)(2.06)(4.53)Net Income netback$2.51$6.09$10.70 Business Environment 20202019Q1Q4Q1Realized Pricing (Including realized commodity contracts)   Oil ($/bbl)$52.19$67.06$66.00   NGL ($/bbl)$16.64$19.65$38.21   Gas ($/mcf)$2.11$2.48$2.56Realized Pricing (Excluding commodity contracts)   Oil ($/bbl)$52.05$67.06$66.00   NGL ($/bbl)$16.59$18.03$37.18   Gas ($/mcf)$2.11$2.48$2.56Oil Price Benchmarks   West Texas Intermediate (“WTI”) (US$/bbl)$46.17$56.95$54.90   Edmonton Par (C$/bbl)$51.44$68.05$66.48   Edmonton Par to WTI differential (US$/bbl)$(7.85)$(5.40)$(4.91)Natural Gas Price Benchmarks   AECO gas (Cdn$/mcf)$2.03$2.48$1.94Foreign Exchange   U.S./Canadian Dollar Exchange0.750.760.75 Operations Summary Net petroleum and natural gas production, pricing and revenue are summarized below: 20202019Q1Q4Q1Daily production volumes   Natural gas (mcf/d)38,71241,48334,707   Oil (bbl/d)3,5503,7124,343   NGL’s (bbl/d)2,1201,9421,829   Combined (boe/d 6:1)12,12212,56811,956RevenuePetroleum & natural gas sales – Gross$27,435$35,990$39,907Realized gain (loss) on commodity contract settlement53290170Total sales27,48836,28040,077Royalty expense(1,640)(2,879)(3,003)Total Revenue – Net of royalties$25,848$33,401$37,074 Working Capital Summary The following table summarizes the change in working capital during the months ended March 31, 2020 and December 31, 2019: Three months endedYear endedMarch 31, 2020December 31, 2019Adjusted Net Debt – beginning of period$(187,711)$(155,882) Funds flow from operations15,29392,236 Additions to property and equipment(25,008)(115,276) Decommissioning costs incurred–(966) Additions to E&E Assets(426)(5,723) Issuance of shares–41 Other(401)(2,141) Adjusted Net Debt – end of period $(198,253)$(187,711)Credit facility limit$225,000$225,000 Capital Spending Capital spending is summarized as follows: 20202019Cash additionsQ1Q4Q1Land, acquisitions and lease rentals$104$38$38Drilling and completion22,56316,99738,908Geological and geophysical171447237Equipment1,9682,50318,320Other asset additions201193500$25,008$20,178$58,004Exploration & evaluation assets$426$480$1,044 Quarter End Disclosure The Company’s financial statements, notes to the financial statements and management’s discussion and analysis will be filed on SEDAR (www.sedar.com) and are available on the Company’s website (www.yangarra.ca).