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Yangarra Resources Ltd. (YGR.TO)

Toronto - Toronto Real Time Price. Currency in CAD
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1.8200+0.0300 (+1.68%)
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  • F
    FF
    time to buy???
  • A
    Asdy
    Solid company and good results just released. I have been waiting for it. They are making profits and significant cashflows.
  • Y
    Yahoo Finance Insights
    YGR.TO is down 8.94% to 1.12
  • B
    Bilge
    Nice, and they have higher production targets for the rest of the year? If they keep making ~$8M a quarter we good
  • s
    sam
    Zero trades today?
  • L
    Leon Battista
    Summary

    The wells drilled break even at unusually low oil prices.

    The company now has the same value as when it had minimal production a few years back.

    The second-quarter Spring Breakup comparison could be unusually weak after an unusually strong second quarter last fiscal year.

    The profitability and cash flow support the reserve report and point to an unusually low-risk realizing those reserve values.

    This stock is a bargain with an enterprise value of 3 times cash flow.

    This idea was discussed in more depth with members of my private investing community, Oil & Gas Value Research. Get started today »

    Low-cost producer Yangarra Resources (OTCPK:YGRAF) will be profitable at considerably lower prices. This Canadian producer will have lower profits should oil and gas prices continue dropping. But the company will most likely report profits.

    The largest update in the March slide presentation was that the latest prices of the stock indicate WTI pricing at less than $20 per barrel. Only one time has that been at a significant level and that was back in the 1980s when Saudi Arabia decided to re-enter the market. In doing so, the Saudis pushed the oil prices back to $10 a barrel for a few years. However, this time around, the country has taken back market share with considerably less production to enter back into the market. Plus the coronavirus is very unlikely to last longer than its predecessors despite market fears to the contrary and dire predictions.

    This is important as this low-cost producer is less hedged than many of its contemporaries. For anyone who believes that current pricing will last a while, this company may not be worth looking at. But should history repeat, then by the end of summer we should be well on our way to an economic recovery with oil prices going back to something resembling normal.

    (Canadian Dollars Unless Otherwise Stated)

    Source: Yangarra Resources February 2020 Corporate Presentation

    These wells are profitable to drill all the way down to WTI $40. In fact most company managements would consider a 20% return as the threshold to drill for production. Therefore these wells apparently break even at some of the lowest WTI prices in the industry.

    (Canadian Dollars Unless Otherwise Specified)

    Source: Yangarra Resources Press Release February 6, 2020

    The relatively low breakeven points cited above combined with the cash flows reported by the company so far indicate the risk of achieving the realizations on the reserve report is below average. Reserve reports are often professional guesses about the future. The company still has to drill and produce those professional guesses. In this case, the future appears a little more predictable. Furthermore, the low costs appear to point towards a reasonable amount of resource recovery under a wide variety of industry scenarios. Therefore this particular reserve report can be relied upon more so than the reserve report of a high-cost operator.

    (Canadian Dollars Unless Otherwise Specified)

    Source: Yangarra Resources February 2020 Corporate Presentation

    The company's value has now declined to the point where it is equal to the time when I began following it, and it really had very minimal production. Evidently the market values all that production and cash flow growth at zero. Only the initial assets appear to matter right now.

    The justification for this is the price war and the coronavirus challenges. Yet we have been through both before and emerged relatively unscathed for the experience. There is absolutely no reason to believe that this time will be different even though some headlines scream otherwise.

    A few years ago, a stock offering followed to begin a drilling program that led to the current production. Much of that following production has been financed with debt because the well profitability has enabled the company to earn every increasing credit limits from its banks.

    Now the market value has declined so that it is a minimal addition to enterprise value. The company's enterprise value is roughly 3 times expected cash flow. Furthermore the costs and returns shown above allow this company to grow production materially even at considerably lower oil prices to be able to handle the current debt.

    There are a lot of competitors with much higher well break-even points than Yangarra that will suffer long before this company shows any kind of financial stress. In the meantime, management guides to a roughly 20% production increase while many in the industry are cutting back production.

    It should be noted that Canadian producers generally do not grow evenly throughout the fiscal year. The Spring Breakup in Canada often means that the second quarter is used for repairs and maintenance. Therefore drilling and production activities are seasonally low during the second quarter and begin again sometime during the third quarter.

    Traditionally the first and fourth quarters will show the most production growth from drilling and comp
  • L
    Leon Battista
    The whole company now trades for what they spent lately for new infrastructure. The minus here is that they haven't hedge, the plus is that they are a low cost producer, they have a big percentage of nat gas production which is sold in AECO prices, currently above $2 and they share price is too low....Insiders added 445,500 shares the last days and Eric Nuttall bought also shares, around a 4% stake.
  • L
    Leon Battista
    Canada Prepares Multi-Billion Dollar Bailout For Its Oil Industry
    Mar 20, 2020, 10:00 AM CDT

    The federal government of Canada is preparing a multibillion dollar financial aid package for the oil and gas industry and could announce it as soon as next week, the Globe and Mail reports, citing unnamed sources.
    One source told the Globe and Mail that Ottawa has prepared US$10.43 billion (C$15 billion) in financial aid for the industry, which, already struggling with low local crude prices, a pipeline shortage and a hostile investment environment has now been brought to its knees by the combination of weak demand created by the Covid-19 outbreak and the oil price war started by Saudi Arabia earlier this month.

    The provincial government has been discussing the credit aid package with Ottawa, too. The industry is taking part as well. The Globe and Mail reports a letter signed by 65 industry executives asking Prime Minister Justin Trudeau to set up an equivalent to the U.S. Troubled Asset Relief Program and use it to buy distressed assets. In addition, the industry is asking for a suspension of the carbon tax and all income taxes.

    “Our companies collectively represent over 100,000 working Canadians,” the executive wrote.
  • E
    Eric
    I get Canadian oil isn’t the hottest commodity but to value this company like this is absurd
  • L
    Leon Battista
    Investors who take an interest in Yangarra Resources Ltd. (TSE:YGR) should definitely note that the Vice President of Operations, Lorne Simpson, recently paid CA$0.31 per share to buy CA$312k worth of the stock. That certainly has us anticipating the best, especially since they thusly increased their own holding by 236%, potentially signalling some real optimism.

    Note that insiders have bought more than a million shares lately.
  • L
    Leon Battista
    Great combo: AECO at C$2.10, Edmonton mixed sweet at C$50
    it was a good combo last week. It's an even better combo today because oil has risen significantly since last week but YGR's stock has lagged so far and it should be above C$1 now, so it will most likely close the gap in the next days once people are less hesitant and realize that oil prices are not going to drop in the next months.

    First, it's summer time and the summer driving season is kicking off.
    Second, oil rig count dropped again in the U.S. yesterday, so the shale oil supply has collapsed. Third, the OPEC deal will also remain in place, based on the latest news.

    Specifically, AECO exceeded C$2.10 again yesterday and has remained flat at about C$2 for the entire Q2 so far.

    WTI closed at US$39 yesterday and the differential with Edmonton mixed sweet is about US$3, so Edmonton mixed sweet oil is sold about C$50 per bbl today.

    For reference, YGR was selling its Edmonton mixed sweet above C$60 in 2019, so we are very close today and we are still in Q2.

    YGR does not produce any WCS-priced oil (medium or heavy).

    YGR sells all its oil at Edmonton mixed sweet price (light).

    So YGR keeps making money now even in Q2 because its operating cost is less than C$10 per boe. You can hardly find another energy producer who is making money now at these prices. YGR is the lowest cost energy producer in Canada with operating costs being less than C$10 per boe.

    Given also that YGR's CapEx in Q2 is very low due to Spring Break-up and the recent cost reduction initiatives, YGR generates now free cash flow that goes to debt reduction in Q2.

    Thanks also to the significant recovery in oil prices over the last weeks, I believe YGR will let us know in the next weeks that it has tied up the 4 oil-weighted wells that have already been completed and are waiting to be put on stream.
  • L
    Leon Battista
    Alberta's natural gas storage is at 13 years low:

    September data:
    "Alberta natural gas storage levels remain on track to start the next heating season at a 13-year low.
    Still, while Alberta gas storage has been lagging well behind in terms of average injection rates and storage levels for many months now, forward winter contract prices for the Western Canadian gas price benchmark of AECO have budged only a little. There is potential for an improvement in storage injection rates during October after a recent regulatory approval affecting the Alberta gas pipeline system, but there is little time remaining in the current injection season to make much of a difference in inventory levels going into winter."
  • L
    Leon Battista
    AECO C prices are 300 per cent higher than one year ago. YGR has no hedges in its NG production. The new NG implement has helped NG prices in Canada to recover and mostly, to avoid high volatility. With AECO around 2 dollars, YGR reported a profitable Q1/2020, with lower oil production but with new wells completed already and ready to produce, when oil prices will be better.
  • D
    Dan Doby
    150% beat on earnings, nothing but BUY ratings and $6 estimates, yet the stock goes down. Anybody know why ?
  • L
    Leon Battista
    Not too long ago, WTI crashed to $27 and YGR sunk to $0.43. Two months later, WTI was up 44% to $39 and YGR was up 137% to $1.02. And this is for an unknown, junior oilco before they hit the bio.

    Can you remember the cause for that crash? Will you remember the cause for this crash, 4 years from now?

    Did you buy the screaming fire-sale bargains when everybody was crying the blues? And, did you double your money in 2 months?

    Today is no different except now YGR is even cheaper than then trading at a NAV10(1P) of pennies on the dollar and has a P/E of 1.2...not 18 like the overall market. Give your head a shake, scrape together all the cash you got and back up the truck and load up. Have patience and triple again your money.
  • s
    sami
    Insiders are buying again this week. It's on its way to 3$ 👍👍👍
  • B
    Bilge
    Where are my earnings ugh, I wanna enjoy that crude oil price recovery
  • T
    Thunder84
    hold on tight 3.00 is on its way
  • T
    Thunder84
    let get over that 1.10 mark and keep going.
  • D
    Dan
    looks like a good time to buy