Yangarra Resources Ltd T.YGR

ATB research report on production update

[personal]

The ATB Quick Take: On February 1st, after market close, YGR released its 2021 reserves report and provided an operations update which included the release of key Q4 metrics. Overall, we view the event as neutral (a balance of positive and negative news items), with this year’s reserve report hitting the reset button and right-sizing what were clearly previously overbooked reserve volumes. While some may experience some short-term ‘sticker shock’ from the negative technical revisions, in our view, the risk of the Company’s reserves bookings should have been apparent to investors given the Company’s recent production track record and should have been largely priced into investor expectations. On the other hand, with the reset, YGR has now turned a corner that provides easier reserve comps for growth going forward, and Q4 production beating both street estimates and guidance, despite challenging cold weather operating conditions in Q4/21 (10.1 mboe/d vs cons. 10.0 mboe/d), is an exciting positive development. The Company also showed a CF beat in the quarter ($0.38/sh vs cons. $0.34/sh). YGR currently trades at a discounted valuation to its peers (1.4x EV/PDP vs peers at 3.9x); 2022e EV/DACF of 2.4x vs peers at 3.7x), while holding a 2022e D/CF of 1.4x (vs peers at 1.1x).

[Hendrick3]

Have to admit that the reserve adjustments meant absolutely nothing to me. The FFO and production beat and the insanely low EV/FFO multiple is what has got me excited. I have bought 60,000 more shares

[Mickey2]

holy cow another 60k? lets go Yangarra.

[Hendrick3]

They are giving it away Mickey. I will sell it back to them at $2.50

[fullyautomatic]

Thanks for posting. I knew the reaction wasn't going to roses this morning, although VOL is was churning good, which I think we need. Timing on reserve report is unexpected and one cannot help but wonder if they are trying to stave off a takeover, otherwise couldn't newer wells (west ferrier) be added to RR if reported with Q1?  I agree with ATB we should of all seen a techincal

[kavern23]

Fully this may be strategic timing.... Why would YGR release the results of the 6 wells first and then wait later to release this resresrves thing........ The results from the 6 well pad are likely going to be out  by Feb 14th. I think to get good share price momentum...get this press release out fof the way. Need hit with the West Ferrier wels.

[fullyautomatic]

My thought would have been the new wells would have boosted PDP numbers, maybe you are right and they just wanted this out of the way.....

[kavern23]

Probably saving the new wells for next years reserve report.... This report today was just "good enough" that they didnt need extra. If commodity prices were lower...yeah they may have included new wells. But you wouldnt want to include the new wells unless needed. Save it for next years reserve report.  We know it is good.

[kavern23]

In a potential buy out what price do you need fully? You wont be happy wth over 3?

[fullyautomatic]

No, I would chose not to tender at 3. My PT is $3.50 min Of course I would be up either way, it's tough having latched on the laggard here, so I will be stubborn.....

[kavern23]

I am hoping this could be one of the things the "shorters" were sitting short in YGR for...and that some covered today...hence the volume and relatively stable share price today. We got lucky and are getting breaks similar to IPO in 2020. But consider this if you were in the shoes of these animal shorters. If WTI was 65 bucks right now...and YGR released todays reserve report

[cfliesser]

How much does this matter, if they still have 20 years of drilling? If this company is valued at <5 years of FCF, why does anything past 20 years matter? Will the world even need oil in 20 years? I feel like losing a couple years of reserves does nothing if you have enough reserves to drill till oil is basically worthless.

[kavern23]

it doesnt matter now cliff.... But it matters to the bank who need reserve report to keep debt faculty at 210M.... Everything is fine.

[kavern23]

To test this theory....I need to find an example of a company that has a future reserve adjustment coming and see if they are attacked by shorts as well. Going to be hard to find as YGR was so unique in having that kind of reserve value with only like 160 wells drilled... Need to put my thinking cap on...one must exist....other then YGR

[fullyautomatic]

Yeah. Worth a look. YGR is a tough comparision to other public co's. Who is going balls to the wall like them? To be clear the market has not looked favorablbly on them. I have a huge lost time opportunity here. JFC I had evenly split postions in TVE SRX JOY and YGR at the bottom. I sold JOY at $2.00 JFC. SRX stolen by takeover and did ok at TVE. All now rolled into one BIG pile here Now PRQ

[Rational43]

The market has gone loony.  I benefited from a huge PRQ run up lately, having bought not that long ago.  To see PRQ market cap near YGR is absurd.  Not that PRQ is expensive, YGR is just that cheap.   It will change, and when it does, it will change dramatically, like it did for OBE, and GXE, and IPO, and others.

[TheRexmember]

PRQ was such a dumpster dive. the debt holders really took it in the teeth. Amazing what one awesome well does to the stock price... almost 1000 boe/d with restricted facility access.  YGR reserves are weaker according to the engineering assumptions this year but there can be technical revisions back up with some stronger wells or new completion techniques. Or by using a higher price deck.

[Mickey2]

what you are missing here for PRQ is the hedges will roll off at end of Q1. Revenue per barrel will increase substantially.