Yangarra Resources (YGR-TSX | BUY, $2.25 PT)
Yangarra is expected to release Q4/19 results on March 5, after market. Our Q4/19
production estimate is 13,658 boe/d, below consensus at 13,994 boe/d (range 13,000 boe/d to 14,834 boe/d). Our Q4/19 CFPS estimate is $0.31, in line with
consensus estimates of $0.31 (range $0.28 to $0.34).
With Q4 results we will be looking for an update on the company’s 2019 drilling
program and production levels. The company bumped up its 2019 capital program
by $10M, with funds used to drill two wells and complete four during the fourth
quarter. 2019 was a challenging year for the company, as well results came in
below historical levels.
However, recent public data shows strong well results from
Cheddar, which could return capital efficiencies to historical levels, and lead to a rerating of the stock.
Potential catalysts:
Refining completion techniques. YGR continues to refine completion techniques,
particularly as it looks to maximize success and inventory with downspacing.
Recent results at Cheddar suggest early success
Step-out wells. YGR continues to add acreage through land sales and property
deals. Success in step out wells could add to drilling inventory and increase our
C-NAV.
YGR currently trades at 2.4x 2020E EV/DACF, below its junior and intermediate
peers at 3.6x. Our target of $2.25 is unchanged and is a 0.3x multiple of our C-NAV
and reflects a 2020E EV/DACF multiple of 3.2x.
Canaccord Genuity Corp. (Canada)
Anthony Petrucci| Analyst - 1.403.691.7807
apetrucci@cgf.com Dennis Fong, P.Eng.| Analyst - 1.403.508.3884
dfong@cgf.com Meagan Adamson, P. Geo, MBA| Associate -
1.403.691.7811
madamson@cgf.com Pulkit Sabharwal, MBA| Associate - 1.403.508.3837
psabharwal@cgf.com