CALGARY, AB, Oct. 14, 2021 /CNW/ - Whitecap Resources Inc.
("Whitecap" or the "Company") (TSX: WCP) is pleased to announce its
2022 budget, an accelerated fourth quarter 2021 capital program and
38% increase to its dividend.
Highlights
- 2022 Budget. Capital spending of $470 - $490 million
is expected to generate average production of 121,000 – 123,000
boe/d (73% liquids). The budget is $90
million lower than preliminary expectations, with
approximately $55 million due to
acceleration of capital into late Q4/21 to solidify service sector
requirements while optimizing the 2022 capital program, and
approximately $35 million from
continuation of the capital efficiency improvements achieved during
2021.
- Revised 2021 Guidance. Capital spending is now expected
to be $425 - $435 million which adds 39 (34.7 net) wells to
our Q4/21 program. Starting our 2022 capital program early and
locking in key services will help to ensure the efficient execution
of our 2022 capital plans. We are also increasing our 2021 average
production guidance to 111,000 – 112,000 boe/d (76% liquids)
primarily due to the continued outperformance of our base 2021
program and from the increase in fourth quarter capital.
- Dividend Increase. The Board of Directors has approved
an increase to the monthly dividend to $0.0225 per common share from $0.01625 per common share which equates to an
annual dividend of $0.27 per common
share. The increase will take effect beginning with the October
dividend payable in November. Inclusive of the dividend increase,
Whitecap expects to be able to fully fund its 2022 capital program
and dividend with funds flow down to approximately US$40/bbl WTI and at US$70/bbl WTI the dividend represents only 12% of
2022 funds flow, highlighting the sustainability of the increased
dividend level.
2022 Budget
Our 2022 budget includes capital spending of $470 - $490 million
to drill 163 (131.8 net) wells, resulting in average production of
121,000 – 123,000 boe/d (73% liquids). With the strategic
acquisitions completed in 2021, our natural gas production in 2022
is expected to be approximately 198,000 mcf/d, allowing our
shareholders to also benefit from the currently strong natural gas
prices in conjunction with increasing crude oil prices. In addition
to our drill, complete, equip and tie-in costs, we will be spending
approximately $85 million on
waterflood/enhanced oil recovery ("EOR") initiatives, including
$28 million for CO2
purchases, along with health, safety and environmental
initiatives.
Our budget is designed to generate significant free funds flow
by advancing our growth projects while maintaining our low base
decline rate of approximately 20%. At US$70/bbl WTI and C$3.75/GJ AECO, we forecast 2022 funds flow of
$1.4 billion and discretionary funds
flow (after capital spending and the increased dividend) of
approximately $740 million, resulting
in net debt of $260 million and a
debt to EBITDA ratio of 0.3x providing us with significant
optionality for continued enhancement to shareholder returns.
Further budget details and our breakdown by business unit is as
follows:
- Northern Alberta &
B.C. We expect to spend $165 -
$170 million to drill 18 (14.8 net)
wells, including 10 (6.8 net) Montney wells at Kakwa and Karr. Along with
maintaining one rig throughout the year at Kakwa and Karr, we
anticipate spending $15 -
$20 million to develop water handling
infrastructure to further improve operating costs, completion costs
and water management in the area. Our remaining 8 (8,0 net) wells
will target the Cardium and Charlie
Lake formations.
- Eastern Saskatchewan.
We expect to spend $135 -
$140 million to drill 62 (51.5 net)
wells. At Weyburn, we anticipate
drilling 15 (9.8 net) wells, including 10 (6.5 net) wells as part
of our next CO2 EOR expansion phase along with 5 (3.3
net) infill wells. Following up on our very successful 2021
conventional program, we plan to drill 39 (33.8 net) Frobisher wells, including 26 (22.3 net)
multi-leg horizontal wells. Our remaining 8 (7.9 net) wells are
targeting other Mississippian formations along with 1 (1.0 net)
Torquay well.
- Western Saskatchewan.
We expect to spend $95 - $100 million to drill 60 (49.8 net) wells. Our
Viking asset continues to mature and along with operational
improvements, its base decline has shallowed, and it contributes
strong free cash flow for the Company. We anticipate drilling 35
(32.1 net) wells in the Viking in 2022 and 25 (17.7 net) wells in
Southwest Saskatchewan, with most
drills targeting the Atlas and Lower Shaunavon formations.
- Central Alberta. We
expect to spend $75 - $80 million to drill 23 (15.6 net) wells in
Central Alberta. This business
unit will utilize two rigs running through the first and third
quarters, with a program focused on further evaluation of the
multi-zone potential across our expanded land base. We plan to
drill 12 (10.0 net) Cardium wells, 9 (3.6 net) Glauconite wells and
2 (2.0 net) Ellerslie wells as
part of our 2022 program.
Revised 2021 Guidance
Our 2021 capital program has been increased to $425 - $435
million, adding 39 (34.7 net) wells into the fourth quarter.
The accelerated capital allows us to mobilize equipment and crews
prior to January 2022 providing us
with access to top tier equipment and labour for a larger portion
of our capital program. As a result, we now expect 2021 production
to average 111,000 – 112,000 boe/d (76% liquids). The accelerated
Q4/21 program includes 2 (2.0 net) conventional Montney oil wells at Sturgeon Lake, the first well of a 4 (4.0 net)
well pad targeting the Charlie
Lake, 3 (3.0 net) Cardium Wells in the Kaybob Area, 17 (17.0
net) Viking wells, 4 (1.9 net) wells in Southwest Saskatchewan, 5 (3.3 net) wells in
Weyburn and 7 (6.5 net)
Southeast Saskatchewan horizontal
wells.
Corporate Priorities
Whitecap's corporate priorities are balance sheet strength,
modest growth (3-5%) and sustainable and growing return of capital
to shareholders through dividends and share buybacks.
In 2022, we anticipate generating approximately $740 million of discretionary funds flow after
capital investments of $480 million
and dividend payments of $171 million
at US$70/bbl WTI. We expect to direct
approximately 50% of 2022 discretionary funds flow towards our
balance sheet to continue to build dry powder for disciplined and
targeted acquisitions, as well as New Energy initiatives. The
remaining 50% will be returned to shareholders through dividends
and targeted share buybacks. The base dividend is an integral part
of our return of capital priority and based on the current
commodity price environment, we will have the ability to
significantly increase the dividend again in 2022. We currently
have 26.3 million shares available to acquire on our NCIB which
expires May 20, 2022 and could
repurchase approximately 30 million common shares or 5% of our
common shares outstanding on an annual basis.
On behalf of our management team and Board of Directors, we
would like to thank our shareholders for their ongoing support.
Conference Call and Webcast
Whitecap has scheduled a conference call and webcast to begin
promptly at 8:00 am MT (10:00 am ET) on Thursday,
October 14, 2021.
The conference call dial-in number is:
1-888-390-0605 or (587) 880-2175 or (416) 764-8609
A live webcast of the conference call will be accessible on
Whitecap's website at www.wcap.ca by selecting "Investors", then
"Presentations & Events". Shortly after the live webcast, an
archived version will be available for approximately 14 days.
Note Regarding Forward-Looking Statements
This press release contains forward-looking statements and
forward-looking information (collectively "forward-looking
information") within the meaning of applicable securities laws
relating to the Company's plans and other aspects of our
anticipated future operations, management focus, priorities,
strategies, financial, operating and production results and
business opportunities. Forward-looking information typically uses
words such as "anticipate", "believe", "continue", "trend",
"sustain", "project", "expect", "forecast", "budget", "goal",
"guidance", "plan", "objective", "strategy", "target", "intend",
"estimate", "potential", or similar words suggesting future
outcomes, statements that actions, events or conditions "may",
"would", "could" or "will" be taken or occur in the future,
including statements about our strategy, plans, focus, objectives,
priorities and position. In particular, and without limiting the
generality of the foregoing, this press release contains
forward-looking information with respect to: our budgeted 2021 and
2022 capital expenditures; average production and liquids
weighting for 2021 and 2022; our 2021 Q4/21 and 2022 drilling
programs; that starting our 2022 capital program early will help to
ensure the efficient execution of our 2022 capital plans; our
ability to fully fund forecast 2022 capital expenditures and the
dividend down to US$40/B WTI; that
our proposed dividend will represent only 12% of anticipated 2022
funds flow; our 2022 natural gas production and the anticipated
benefits to be derived therefrom; our 2022 capital spending
allocation plans including waterflood/enhanced oil recovery
initiatives, CO2 purchases, and health, safety, and
environmental initiatives; our expectation that the 2022 budget
will deliver significant free funds flow; our anticipated 2022
funds flow, discretionary funds flow, net debt and debt to EBITDA
ratio and the underlying assumptions; our anticipated 2022
dividends; our 2022 decline rate; our budgeted 2022 capital
expenditures and well counts broken down by business unit; our
anticipation for 2022 capital expenditures on water handling
infrastructure; our anticipation to direct 50% of discretionary
funds flow to the balance sheet and 50% being returned to
shareholders; and our the ability to significantly increase the
dividend again in 2022.
The forward-looking information is based on certain key
expectations and assumptions made by our management, including
expectations and assumptions concerning prevailing commodity
prices, exchange rates, interest rates, applicable royalty rates
and tax laws; the impact (and the duration thereof) that the
COVID-19 pandemic will have on (i) the demand for crude oil, NGLs
and natural gas, (ii) our supply chain, including our ability to
obtain the equipment and services we require, and (iii) our ability
to produce, transport and/or sell our crude oil, NGLs and natural
gas; future production rates and estimates of operating costs;
performance of existing and future wells; reserve volumes;
anticipated timing and results of capital expenditures; the success
obtained in drilling new wells; the sufficiency of budgeted capital
expenditures in carrying out planned activities; the timing,
location and extent of future drilling operations; the state of the
economy and the exploration and production business; results of
operations; performance; business prospects and opportunities; the
availability and cost of financing, labour and services; the impact
of increasing competition; ability to efficiently integrate assets
and employees acquired through acquisitions, ability to market oil
and natural gas successfully and our ability to access capital.
Although we believe that the expectations and assumptions on
which such forward-looking information is based are reasonable,
undue reliance should not be placed on the forward-looking
information because Whitecap can give no assurance that they will
prove to be correct. Since forward-looking information addresses
future events and conditions, by its very nature they involve
inherent risks and uncertainties. These include, but are not
limited to: the risks associated with the oil and gas industry in
general such as operational risks in development, exploration and
production; pandemics and epidemics; delays or changes in plans
with respect to exploration or development projects or capital
expenditures; the uncertainty of estimates and projections relating
to reserves, production, costs and expenses; health, safety and
environmental risks; commodity price and exchange rate
fluctuations; interest rate fluctuations; marketing and
transportation; loss of markets; environmental risks; competition;
incorrect assessment of the value of acquisitions; failure to
complete or realize the anticipated benefits of acquisitions or
dispositions; ability to access sufficient capital from internal
and external sources; failure to obtain required regulatory and
other approvals; reliance on third parties and pipeline systems;
and changes in legislation, including but not limited to tax laws,
production curtailment, royalties and environmental regulations.
Our actual results, performance or achievement could differ
materially from those expressed in, or implied by, the
forward-looking information and, accordingly, no assurance can be
given that any of the events anticipated by the forward-looking
information will transpire or occur, or if any of them do so, what
benefits that we will derive therefrom. Management has included the
above summary of assumptions and risks related to forward-looking
information provided in this press release in order to provide
security holders with a more complete perspective on our future
operations and such information may not be appropriate for other
purposes.
Readers are cautioned that the foregoing lists of factors are
not exhaustive. Additional information on these and other factors
that could affect our operations or financial results are included
in reports on file with applicable securities regulatory
authorities and may be accessed through the SEDAR website
(www.sedar.com).
These forward-looking statements are made as of the date of this
press release and we disclaim any intent or obligation to update
publicly any forward-looking information, whether as a result of
new information, future events or results or otherwise, other than
as required by applicable securities laws.
This press release contains future-oriented financial
information and financial outlook information (collectively,
"FOFI") about Whitecap's 2022 budgeted capital investments,
dividends, funds flow, discretionary funds flow, year-end net debt
and debt to EBITDA ratio; and 2021 budgeted capital investments,
all of which are subject to the same assumptions, risk factors,
limitations, and qualifications as set forth in the above
paragraphs. The actual results of operations of Whitecap and the
resulting financial results will likely vary from the amounts set
forth in this press release and such variation may be material.
Whitecap and its management believe that the FOFI has been prepared
on a reasonable basis, reflecting management's best estimates and
judgments. However, because this information is subjective and
subject to numerous risks, it should not be relied on as
necessarily indicative of future results. Except as required by
applicable securities laws, Whitecap undertakes no obligation to
update such FOFI. FOFI contained in this press release was made as
of the date of this press release and was provided for the purpose
of providing further information about Whitecap's anticipated
future business operations. Readers are cautioned that the FOFI
contained in this press release should not be used for purposes
other than for which it is disclosed herein.
Oil and Gas Advisories
References to crude oil or natural gas production in this press
release refer to the light and medium crude oil and conventional
natural gas, respectively, product types as defined in National
Instrument 51-101, Standards of Disclosure for Oil and Gas
Activities ("NI 51-101").
"Boe" means barrel of oil equivalent based on 6 mcf
of natural gas to 1 bbl of oil. Boe may be misleading, particularly
if used in isolation. A boe conversion ratio of 6:1 is based on an
energy equivalency conversion method primarily applicable at the
burner tip and does not represent a value equivalency at the
wellhead. In addition, given that the value ratio based on the
current price of crude oil as compared to natural gas is
significantly different from the energy equivalency of 6:1,
utilizing a conversion on a 6:1 basis may be misleading as an
indication of value.
Production
|
Crude oil
(bbls/d)
|
NGLs
(bbls/d)
|
Natural
gas (Mcf/d)
|
Total
(boe/d) (1)
|
Revised 2021
Guidance
|
74,600 –
75,200
|
10,100 –
10,400
|
157,800 –
158,400
|
111,000 –
112,000
|
2022
Budget
|
78,000 –
79,200
|
10,300 –
10,600
|
196,200 –
199,200
|
121,000 –
123,000
|
Note:
|
(1)
|
Disclosure of
production on a per boe basis of amounts in the above table in this
press release consists of the constituent product types and their
respective quantities disclosed in this table.
|
Non-GAAP Measures
This press release includes non-GAAP measures as further
described herein. These non-GAAP measures do not have a
standardized meaning prescribed by International Financial
Reporting Standards ("IFRS" or, alternatively, "GAAP") and,
therefore, may not be comparable with the calculation of similar
measures by other companies. See the Company's Management's
Discussion and Analysis of financial condition and results of
operation for the period ended June 30,
2021 for a reconciliation of the non-GAAP measures.
"Debt to EBITDA" is calculated in accordance with
the Company's credit agreements, copies of which may be accessed
through the SEDAR website (www.sedar.com).
"Discretionary funds flow" represents funds flow
less expenditures on property, plant and equipment ("PP&E") and
dividends. Management believes that discretionary funds flow
provides a useful measure of Whitecap's ability to increase returns
to shareholders and to grow the Company's business.
SOURCE Whitecap Resources Inc.