Yangarra Resources Ltd. — Interim / Quarterly Report 2024

Oct 30, 2024

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Yangarra Resources Ltd. Condensed Interim Consolidated Financial Statements For three and nine months ended September 30, 2024 and 2023

Yangarra Resources Ltd. Condensed Interim Consolidated Statements of Financial Position

(in thousands of Canadian dollars)

September 30 2024	December 31 2023
(unaudited) Assets Current Accounts receivable_(note 10a) $ 27,495 $ Prepaid expenses and inventory 9,854 Commodity contracts (note 10d)_ 435	(audited) 30,092 8,918 572
Total current assets 37,784 Non-current Property and equipment_(note 2)_ 775,135 Explorationand evaluationassets 35,668	39,582 759,967 35,668
Total assets $ 848,587 $	835,217
Liabilities Current Accounts payable and accrued liabilities $ 20,675 $ Bank debt_(note 3) – Commodity contracts(note 10d) 405 Current portion of lease obligations(note 4) 979 Current portionofdecommissioningliability (note 5)_ 545	36,599 1,057 997 1,151 513
Total current liabilities 22,604 Non-current Bank debt_(note 3) 115,655 Lease obligations(note 4) 701 Other liabilities 953 Decommissioning liability(note 5)_ 16,012 Deferred tax liability 128,060	40,317 120,000 1,231 953 15,469 120,649
Total liabilities 283,985	298,619
Shareholders' equity Share capital_(note 6)_ 197,013 Contributed surplus 33,516 Retained earnings 334,073	192,715 32,154 311,729
Total shareholders’ equity **564,602 **	536,598
Total liabilities and shareholders’ equity $ 848,587 $	835,217

Contingency (note 14)

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

2

Yangarra Resources Ltd. Condensed Interim Consolidated Statements of Income and Comprehensive Income For the three and nine months ended September 30 (unaudited, in thousands of Canadian dollars except per share amounts)

	Three months ended September 30 Nine months ended September 30	Three months ended September 30 Nine months ended September 30
	2024 2023 2024	2023
Revenue Petroleum and natural gas sales_(note 13)_ Royalties	$ 26,260$ 45,414 $ 102,403 (1,679) (3,087) **(6,275) **	$ 132,865 (11,729)
Commodity price risk contracts_(note 10c iii)_ Gain (loss) on commodity contract settlement Unrealized change in fair value of commodity contracts	24,581 42,327 96,128 297 78 (688) 67 (2,889) 455	121,136 548 (2,204)
	24,945 39,516 95,895	119,480
Expenses Production Transportation General and administrative Finance_(note 12) Share-based compensation(note 7) Abandonment expense Depletion and depreciation(note 2)_	5,943 7,271 19,174 1,375 1,873 5,067 877 1,231 4,027 2,980 3,386 8,964 840 416 2,548 91 – 91 7,690 10,182 26,269	22,299 4,983 4,166 9,605 1,301 – 30,053
	19,796 24,359 66,140	72,407
Income before tax Deferred taxexpense	5,149 15,157 29,755 1,185 3,670 7,411	47,073 12,844
Net income and total comprehensive income	$ 3,964$ 11,487$ 22,344	$ 34,229
Earnings per share(note 8) Basic Diluted	$ 0.04$ 0.12 $ 0.23 $ 0.04$ 0.11 $ 0.21	$ 0.37 $ 0.35

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

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Yangarra Resources Ltd. Condensed Interim Consolidated Statements of Changes in Equity For the nine months ended September 30 (unaudited, in thousands of Canadian dollars)

		2024		2023
Share capital(note 6)
Balance, beginning of period	$	192,715	$	179,688
Equity financing		–		13,009
Exercise of stock options		2,093		12
Fair value transferred on exercise of stock options		977		6
Fair value transferred on vesting of Restricted Share Units (“RSUs”)		1,228		–
Balance, end ofperiod		197,013		192,715
Contributed surplus
Balance, beginning of period		32,154		28,821
Share-based compensation_(note 7)_		3,567		2,574
Fair value transferred on exercise of stock options		(977)		(6)
Fairvalue transferred onvesting of RSUs		(1,228)		–
Balance, end of period		33,516		31,389
Retained earnings
Balance, beginning of period		311,729		265,065
Net income		22,344		34,229
Balance, end of period		334,073		299,294
Total shareholders’ equity	$	564,602	$	523,398

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

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Yangarra Resources Ltd. Condensed Interim Consolidated Statements of Cash Flows For the three and nine months ended September 30 (in thousands of Canadian dollars)

	Three months ended September 30 Nine months ended September 30
	2024 2023 2024 2023
Operating Net income for the period Add back non-cash items: Unrealized change in fair value of commodity contracts Finance expense_(note 12) Share-based compensation(note 7) Depletion and depreciation(note 2) Deferred tax expense Interest and finance costs paid(note 12) Decommissioning costs incurred(note 5) Change in non-cash working capital(note 9)_	$ 3,964 11,487 $ 22,344$ 34,229 (67) 2,889 (455) 2,204 2,980 3,386 8,964 9,605 840 416 2,548 1,301 7,690 10,182 26,269 30,053 1,185 3,670 7,411 12,844 (2,874) (3,036) (7,693) (8,764) (526) – (526) – 1,114 (2,999) (3,118) 763
Net cash flow from operating activities	14,306 25,995 55,744 82,235
Financing Issue of common shares Share issue costs Exercise of stock options_(note 6) Bank debt repayment(note 3) Lease obligations repayment(note 4) Lease interest paid(note 12)_ Other liabilitiesrepayment	– – – 17,250 – (5) – (1,274) – – 2,093 12 (1,880) (5,519) (5,995) (12,702) (248) (387) (851) (1,131) (32) (52) (110) (176) – – – (66)
Net cash flow used in financing activities	(2,160) (5,963) (4,863) 1,913
Investing Additions to property and equipment_(note 2) Additions to exploration and evaluation assets Change in non-cash working capital(note 9)_	(15,667) (25,334) (39,736) (78,013) – – – (264) 3,521 5,302 (11,145) (5,871)
Net cash flow used in investing activities	(12,146) (20,032) (50,881) (84,148)
Change in cash Cash, beginning of period	– – – – – – – –
Cash, end ofperiod	$ – $ –$ – $ –

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

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Yangarra Resources Ltd. Notes to the Condensed Interim Consolidated Financial Statements For the three and nine months ended September 30, 2024 and 2023 (unaudited, in thousands of Canadian dollars, except per share and per unit amounts)

1. Basis of preparation and statement of compliance and authorization

Yangarra Resources Ltd. ("Yangarra" or the “Company”) is a publicly-traded company involved in the production, exploration and development of resource properties in Western Canada. The address of the registered office is 1530, 715 – 5 Avenue SW, Calgary Alberta, T2P 2X6. These condensed interim consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Yangarra Resources Corp., Yangarra Production Partnership and Yangarra Holding Corp., after the elimination of intercompany transactions and balances.

These condensed interim consolidated financial statements are presented in Canadian dollars, which is the functional currency of the Company and its subsidiaries. The condensed interim consolidated financial statements were authorized for issuance by the Company’s Board of Directors on October 30, 2024.

These condensed interim consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS Accounting Standards”) and adhere to the guidance of International Accounting Standard 34 – Interim Financial Reporting. The Company has consistently applied the accounting, estimation and judgement policies described in the Company’s audited consolidated financial statements as at and for the year ended December 31, 2023 (the “Annual Financial Statements”) to all periods presented. These condensed interim consolidated financial statements have been prepared on a historical cost basis, except for certain financial instruments, stock options and RSUs which are recognized at fair value. All financial information is reported in Canadian dollars, unless otherwise noted. Certain information and disclosures normally included in the notes to the Annual Financial Statements prepared in accordance with IFRS Accounting Standards have been condensed or omitted. These condensed interim consolidated financial statements should be read in conjunction with the Annual Financial Statements.

2. Property and equipment

		Oil and		Well and
		Natural Gas		Plant		Other
		Interests		Equipment		Assets		Total
Cost
Balance, December 31, 2023	$	891,024	$	167,466	$	19,359	$	1,077,849
Cash additions		33,275		5,557		904		39,736
Share-based compensation_(note 7)_		1,019		–		–		1,019
Decommissioning liability_(note 5)_		682		–		–		682
Balance, September 30, 2024	$	926,000	$	173,023	$	20,263	**$ **	1,119,286
Depletion and depreciation
Balance, December 31, 2023	$	282,156	$	24,053	$	11,673	$	317,882
Depletion and depreciation		22,904		1,998		482		25,384
ROU asset depreciation		–		–		885		885
Balance, September 30, 2024	$	305,060	$	26,051	$	13,040	$	344,151
At December 31, 2023	$	608,868	$	143,413	$	7,686	$	759,967
At September 30, 2024	$	620,940	$	146,972	$	7,223	$	775,135

At September 30, 2024, all of the Company’s properties are pledged as security for the bank debt (note 3). The calculation of depletion for the nine months ended September 30, 2024 included estimated future development costs of $595,564 (December 31, 2023 – $635,300) associated with the development of the Company’s proved plus probable reserves.

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Yangarra Resources Ltd. Notes to the Condensed Interim Consolidated Financial Statements For the three and nine months ended September 30, 2024 and 2023 (unaudited, in thousands of Canadian dollars, except per share and per unit amounts)

2. Property and equipment (continued)

Cash additions for the nine months ended September 30, 2024 include $593 (2023 – $754) of recoveries related to the Company's working interest in operated capital expenditure programs on which overhead has been charged in accordance with standard industry operating agreements and $200 (2023 – $138) of capitalized salaries and consulting expenses directly related to geological, drilling and completions.

Included in property and equipment at September 30, 2024 is $2,495 (December 31, 2023 – $3,381) of right-of-use (“ROU”) assets associated with the Company’s lease obligations.

Impairment

As at September 30, 2024 or December 31, 2023 there were no indicators of impairment for the Company’s CGU.

3. Bank debt

At September 30, 2024, the maximum amount available under the syndicated credit facility was $130,000 (December 31, 2023 – $135,000) comprised of a $105,000 (December 31, 2023 – $110,000) extendable revolving term credit facility and a $25,000 (December 31, 2023 – $25,000) operating facility. The amount available under these facilities is re-determined at least twice a year and is primarily based on the Company’s oil and gas reserves, the syndicate of lending institutions’ forecast commodity prices, the current economic environment and other factors as determined by the syndicate (the “Borrowing Base”). If the total advances made under the credit facilities are greater than the re-determined Borrowing Base, the Company has 60 days to repay any shortfall. The facilities last for a 364-day period and will be subject to the next 364-day extension by May 30, 2025. If not extended by May 30, 2025, the facilities will cease to revolve, and all outstanding balances will become repayable on May 30, 2026.

facilities will cease to revolve, and all outstanding balances will become repayable on May 30,	2026.
Balance, December 31, 2023 $ Repayment Accretion of debt transaction costs	121,057 (5,995) 593
Balance, September 30, 2024 $	115,655

As at September 30, 2024, the $115,655 (December 31, 2023 – $121,057) reported amount of bank debt was comprised of $15,083 (December 31, 2023 – $12,908) drawn on the operating facility and $101,401 (December 31, 2023 – $109,139) drawn on the revolving facility and net of unamortized transaction costs of $829 (December 31, 2023 – $990).

The Company is subject to a financial covenant requiring an adjusted working capital ratio above 1:1 (current assets plus the undrawn availability under the revolving facility, divided by the current liabilities less the drawn portion of the revolving facility and excluding unrealized commodity contracts). The Company was in compliance with this covenant as at September 30, 2024 and December 31, 2023. The facilities are secured by a general security agreement over all assets of the Company. The Company is required to ensure that not less than 30% of the forecasted daily production six months forward is hedged. The Company is in compliance with the hedging requirements.

The total standby fees on the revolving facility range, depending on the debt to EBITDA ratio, between 200 bps to 400 bps on bank prime borrowings and between 300 bps and 500 bps on bankers’ acceptances. The undrawn portion of the revolving facility is subject to a standby fee in the range of 75 bps to 125 bps.

During the nine months ended September 30, 2024, the weighted average effective interest rate for the bank debt was approximately 8.46% (nine months ended September 30, 2023 – 8.69%).

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Yangarra Resources Ltd. Notes to the Condensed Interim Consolidated Financial Statements For the three and nine months ended September 30, 2024 and 2023 (unaudited, in thousands of Canadian dollars, except per share and per unit amounts)

4. Lease obligations

The Company incurs lease payments related to the oil hauling fleet, operator/crew trucks and the head office. Leases are entered into and exited in coordination with specific business requirements which includes the assessment of the appropriate durations for the related leased asset.

Balance, December 31, 2023 $ Lease payments Accretion	2,382 (851) 149
Balance, September 30, 2024 $	1,680
Current $ Non-current $	979 701
Maturity analysis – contractual undiscounted cash flows Less than one year $ One to five years	979 905
Total undiscounted lease obligations Unrecognized imputed interest	1,884 (204)
Total lease obligation $	1,680

5. Decommissioning liability

The following table presents the reconciliation of the carrying amount of the liability associated with the decommissioning of the Company’s property and equipment:

Balance, December 31, 2023 $ Liabilities incurred Effect of change in estimates Accretion Expenditures	15,982 723 (41) 419 (526)
Balance, September 30, 2024 $	16,557
Current $ Non-current $	545 16,012

The current portion of decommissioning liability relates to wells the Company plans to abandon and reclaim in 2024 as part of the Alberta Energy Regulator’s mandatory spend target.

The following significant assumptions were used to estimate the decommissioning liability:

Undiscounted cash flows	$	21,719
Discount rate		2.73% - 4.17%
Inflation rate		2%
Weighted average expected timing of cash flows		5.5 years

6. Share capital

Issued common shares	_Number of shares _	Amount
Balance, December 31, 2023	94,801 $	192,715
Vested RSUs	460	1,228
Exercise of stock options	3,473	2,093
Fair value transferred on exercise of stock options	–	977
Balance, September 30, 2024	98,734$	197,013

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Yangarra Resources Ltd. Notes to the Condensed Interim Consolidated Financial Statements For the three and nine months ended September 30, 2024 and 2023 (unaudited, in thousands of Canadian dollars, except per share and per unit amounts)

7. Share-based compensation

In the nine months ended September 30, 2024, the Company issued 4,893 (2023 – 1,590) RSUs that vest equally over 3 years. The RSUs are exercisable in either cash or shares at the option of the Company. As it is the Company’s intention to settle in shares, the RSUs are treated as share-based compensation with a fair value on the date of issue of $1.11 (2023 – $2.67) per RSU.

The following table provides a continuity of RSUs outstanding:

The following table provides a continuity of RSUs outstanding:
	Number of
	RSUs
Balance, December 31, 2023	1,590
Granted	4,893
Vested	(460)
Forfeited	(376)
Balance, September 30, 2024	5,647

The following table provides a continuity of stock options outstanding:

	Number of	Weighted –
	stock	average
	options	exercise price
Balance, December 31, 2023	7,604	$1.08
Exercised	(3,473)	(0.60)
Forfeited	(1,462)	(2.31)
Balance, September 30, 2024	2,669	$1.02

The following provides a summary of the stock options outstanding as at September 30, 2024:

Range of exercise price Number outstanding	Weighted-average remaining contractual life (years) Weighted- average exercise price	Number exercisable	Weighted- average exercise price
$ 0.45 – $ 0.49 5 $ 0.50 – $ 1.00 1,538 $ 1.01 – $ 1.50 895 $ 1.51 – $ 2.00 5 $ 2.00 – $ 2.50 209 $ 2.51–$ 3.00 17	1.00 $ 0.45 0.95 0.60 1.66 1.35 2.13 1.65 2.54 2.45 2.50 2.90	5 1,538 895 5 198 17	$ 0.45 0.60 1.35 1.65 2.45 2.90
2,669	1.32 $1.02	2,658	$1.01

During the nine months ended September 30, 2024, the Company recognized $2,548 (2023 – $1,301) of share-based compensation in the condensed interim consolidated statements of income and comprehensive income. During the nine months ended September 30, 2024, the Company capitalized $1,019 (2023 – $1,273) of share-based compensation to property and equipment (note 2).

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Yangarra Resources Ltd. Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended September 30, 2024 and 2023 (unaudited, in thousands of Canadian dollars, except per share and per unit amounts)

8. Earnings per common share

Basic earnings per share was calculated as follows:

	Three months ended September 30 Nine months ended September 30
	2024 2023 2024 2023
Net income for the period Weighted average number of shares (basic) Issued common shares at beginning of period Effect of common shares issued in the period	$ 3,964 $ 11,487 $ 22,344$ 34,229 98,734 94,801 94,801 87,985 – – 3,081 4,659
Weighted averagenumberofcommonshares-basic	98,734 94,801 97,882 92,644
Net incomeper share - basic	0.04 0.12 0.23 0.37
Diluted earnings per share was calculated as follows:	Three months ended September30 Nine months ended September30
	2024 2023 2024 2023
Weighted average number of shares (diluted) Weighted average number of shares (basic) Effect of outstanding options Effect of outstanding RSUs	98,734 94,801 97,882 92,644 672 3,652 717 3,816 5,647 1,590 5,647 1,590
Weighted averagenumberofcommonshares-diluted	105,053 100,043 104,246 98,050
Net incomeper share - diluted	0.04 0.11 0.21 0.35

The average market value of the Company’s shares for purposes of calculating the dilutive effect of stock options and RSUs was based on quoted market prices for the period that the stock options and RSUs were outstanding. For the three months ended September 2024, 1,126 (2023 – 1,246) options were excluded based on an average share price of $1.07 (2023 – $1.83) for the period. For the nine months ended September 30, 2024, 1,034 (2023 – 4,246) options were excluded as they were out of the money based on an average share price of $1.12 (2023 – $1.94) for the period.

9. Change in non-cash working capital

9. Change in non-cash working capital
	Three months ended September30 Nine	months ended September30
	2024 2023 **2024 **	2023
Accounts receivable $ 2,053 $ (5,378)$ 2,597 Prepaid expenses and inventory (846) (791) (936) Accounts payable and accrued liabilities 3,428 8,472 (15,924) $ 4,635 $ 2,303$ (14,263) The change in non-cash working capital has been allocated to the following activities: Operating $ 1,114 $ (2,999)$ (3,118) Investing 3,521 5,302 (11,145) $ 4,635 $ 2,303 $ **(14,263) **	$ 2,053 $ (5,378)$ 2,597 (846) (791) (936) 3,428 8,472 **(15,924) **	$ 78 (825) (4,361)
	$ 4,635 $ 2,303$ **(14,263) **	$ (5,108)
		$ 763 (5,871)
	$ 4,635 $ 2,303 $ **(14,263) **	$ (5,108)

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Yangarra Resources Ltd. Notes to the Condensed Interim Consolidated Financial Statements For the three and nine months ended September 30, 2024 and 2023 (unaudited, in thousands of Canadian dollars, except per share and per unit amounts)

10. Financial instruments and financial risk management

a. Accounts receivable and credit risk

Purchasers of the Company’s natural gas and liquids are subject to credit review to minimize the risk of non-payment. As at September 30, 2024, the maximum credit exposure is the carrying amount of the accounts receivable of $27,495 (December 31, 2023 – $30,092).

The maximum exposure to credit risk for accounts receivable by type of customer was:

	September 30, 2024 December 31,2023
Natural gas and liquids marketers Partners on joint operations Other	$ 7,788$ 11,906 15,422 14,458 4,285 3,728
	$ 27,495$ 30,092

The Company historically has not experienced any significant collection issues with its natural gas and liquids marketers. The majority of revenue accruals and receivables from natural gas and liquids marketers were received in October 2024.

The Company’s accounts receivables are aged as follows:

ompany’s accounts receivables are aged as follows:
As at	September 30, 2024 December 31, 2023
Under 30 days 30 to 60 days 60 to 90 days Over 90 days	$ 14,934$ 21,751 306 263 159 1,971 12,096 6,107
	$ 27,495$ 30,092

As at September 30, 2024, 99% (December 31, 2023 – 94%) of the over 90-day receivables are due from four (December 31, 2023 – two) industry partners, for which a significant portion of the balances are in dispute (note 14). The Company has performed an analysis of each partner’s financial situation and has determined they have the ability to pay.

b. Liquidity risk

As at September 30, 2024 the contractual maturities of the Company’s obligations are as follows:

		Carrying Amount	Contractual Cash Flows	Less than 1 Year	1-2 Years	2-5 Years
Accounts payable and accrued liabilities		$ 20,675	$ 20,675	$ 20,675	$ –	$ –
Bank debt (note 3)		115,655	116,484	–	116,484	–
Lease obligations (note 4)		1,680	1,884	979	538	367
Other liabilities		953	953	–	–	953
Commodity contracts		405	405	405	–	–
		$ 139,368	$ 140,401	$ 22,059	$ 117,022	$ 1,320

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Yangarra Resources Ltd. Notes to the Condensed Interim Consolidated Financial Statements For the three and nine months ended September 30, 2024 and 2023 (unaudited, in thousands of Canadian dollars, except per share and per unit amounts)

10. Financial instruments and financial risk management (continued)

c. Market risk

The Company has exposure to the following market risks:

i. Interest rate risk

Interest rate risk is the risk that future cash flows will fluctuate as a result of changes in market interest rates. The Company is exposed to interest rate fluctuations on its bank debt which bears interest at a floating rate and to mitigate this risk, the Company may enter into interest rate contracts. For the nine months ended September 30, 2024, if interest rates had been 1% lower with all other variables held constant, net income would have been $895 (nine months ended September 30, 2023 – $972) higher, due to lower interest expense. An equal and opposite impact would have occurred had interest rates been higher by the same amount. The Company had no interest rate contracts in place as at September 30, 2024.

ii. Currency risk

Foreign currency exchange rate risk is the risk that the fair value or future cash flows will fluctuate as a result of changes in foreign exchange rates. All of the Company’s petroleum and natural gas sales are denominated in Canadian dollars, however, the underlying market prices in Canada for petroleum and natural gas are impacted by changes in the exchange rate between the Canadian and United States dollar. The sensitivity of the fair value of a 10% change in foreign exchange rates would have an immaterial impact on the condensed interim consolidated statements of income and comprehensive income.

iii. Commodity price risk Commodity price risk is the risk that the fair value or future cash flows will fluctuate as a result of changes in commodity prices.

As at September 30, 2024, the Company was committed to the following commodity price risk contracts:

	Year Volume Term Reference Type Strike Price Fair Value
	Natural Gas
	2024 3,000 GJ/d Jul 24 - Dec 24 AECO - 7A Put CAD $1.50 $ 118
	2024 4,400 GJ/d Jul 24 - Dec 24 AECO - 7A Put CAD $1.50 164
	2024 2,800 GJ/d Oct 24 AECO - 7A Put CAD $1.25 49
	2024 2,800 GJ/d Nov 24 AECO - 7A Put CAD $1.25 (6)
	2024 2,600 GJ/d Dec 24 AECO - 7A Collar CAD $1.50 - $4.234 –
	2025 10,000 GJ/d Jan 25 AECO - 7A Collar CAD $1.25 - $6.014 (2)
	2025 10,000 GJ/d Feb 25 AECO - 7A Collar CAD $1.50 - $5.575 3
	Oil
	2024 400 bbl/d Jul 24 - Dec 24 WTI - USD Put USD $50.00 (120)
	2024 800 bbl/d Jul 24 - Dec 24 WTI - USD Put USD $50.00 (234)
	2024 450 bbl/d Oct 24 WTI - USD Put USD $50.00 (7)
	2024 450 bbl/d Nov 24 WTI - USD Put USD $50.00 (4)
	2024 450 bbl/d Dec 24 WTI - USD Collar USD $50.00 - 100.60 5
	2025 1,650 bbl/d Jan 25 WTI - USD Collar USD $50.00 - 98.50 30
	2025 1,650 bbl/d Feb 25 WTI-USD Collar USD $50.00-93.00 34
	Total $ 30

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Yangarra Resources Ltd. Notes to the Condensed Interim Consolidated Financial Statements For the three and nine months ended September 30, 2024 and 2023 (unaudited, in thousands of Canadian dollars, except per share and per unit amounts)

10. Financial instruments and financial risk management (continued)

d. Fair value of financial instruments

As the Company had a limited value of derivatives in place as at September 30, 2024, the sensitivity of the fair value of a 10% volatility in commodity prices would have an immaterial impact on unrealized gains (losses) reported in the condensed interim consolidated statements of income and comprehensive income.

The following table summarizes the carrying value and fair value of the Company’s risk management assets and liabilities.

Financial Assets Financial assets at fair value through profit or loss: Commodity contracts Financial Liabilities Financial liabilities at fair value through profit or loss: Commodity contracts	Measurement Level	September 30, 2024 December 31, 2023
		Carrying Amount Fair Value Carrying Amount Fair Value
	2 2	$ 435 $ 435 $ 572 $ 572 $ 405 $ 405 $997 $997

11. Capital disclosures

The Company’s objective when managing capital is to maintain a flexible capital structure which will allow it to execute its capital expenditure program, which includes expenditures in oil and gas activities which may or may not be successful. Therefore, the Company monitors the level of risk incurred in its capital expenditures to balance the proportion of debt and equity in its capital structure.

The Company considers its capital structure to include shareholders’ equity and debt:

	September	30, 2024		December31,2023
Shareholders’ equity	$	564,602	$	536,598
Bank debt	$	115,655	$	121,057

The Company monitors capital based on annual cash flow from operating activities before changes in non-cash working capital and capital expenditure budgets, which are updated as necessary and are periodically reviewed and approved by the Board of Directors.

At September 30, 2024 and December 31, 2023, the Company’s capital structure was subject to the banking covenant disclosed in note 3. No changes were made to the capital policy in 2024.

12. Finance expense

12. Finance expense
	Three months ended September 30 Nine months ended September 30
	2024 2023 2024 2023
Cash interest and finance costs Lease interest paid Accretion of decommissioning liability_(note 5) Accretion of debt transaction costs(note 3) Accretion of lease obligations(note 4)_	$ 2,874 $ 3,036 $ 7,693 $ 8,764 32 52 110 176 146 129 419 364 214 182 593 370 (286) (13) 149 (69)
	$ 2,980 $ 3,386 $ 8,964 $ 9,605

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Yangarra Resources Ltd. Notes to the Condensed Interim Consolidated Financial Statements For the three and nine months ended September 30, 2024 and 2023 (unaudited, in thousands of Canadian dollars, except per share and per unit amounts)

13. Revenue

The Company derives its revenue from contracts with customers primarily through the sale of commodities at a point in time representing the following major product types:

	Three months ended September 30 Nine months ended September 30
	2024 2023 2024 2023
Crude Oil Natural Gas Natural Gas Liquids	$ 15,348 $ 21,045 $ 59,307$ 65,372 2,385 11,487 15,816 35,370 8,527 12,882 27,280 32,123
	$ 26,260 $ 45,414$ 102,403$ 132,865

At September 30, 2024, receivables from contracts with customers, which are included in accounts receivables from natural gas and liquids marketers and partners on joint operations (note 10(a)), were $15,422 (December 31, 2023 – $14,363).

14. Contingency

In the normal conduct of operations, there are pending claims by and against the Company. Litigation is subject to many uncertainties, and the outcome of individual matters is not predictable with assurance. In the opinion of management, based on the advice and information provided by its legal counsel, the final determination of these other litigations will not materially affect the Company’s financial position or results of operations.

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