CALGARY,
AB, Feb. 6, 2023 /CNW/ - Whitecap Resources
Inc. ("Whitecap" or the "Company") (TSX: WCP) is pleased to
announce that it has closed all three previously announced
dispositions of certain non-strategic assets for aggregate
consideration of $419 million,
including $394 million of cash, prior
to closing adjustments, and producing assets that consolidate the
working interest in one of our core assets.
Proceeds from the dispositions have been used to reduce net
debt1 to $1.5 billion
which accelerates achieving our net debt target of $1.3 billion to mid-2023, based on current strip
prices2. Our plan is to return 75% of free funds flow to
our shareholders, which includes our targeted $0.73 per share annual base dividend, once this
$1.3 billion net debt milestone is
achieved. The remaining 25% of free funds flow will be used to
continue to reduce debt and strengthen our balance sheet.
We have successfully monetized these non-strategic assets at
strong disposition metrics and look forward to demonstrating strong
operational performance on our core assets in 2023. We expect to
grow 2023 annual production to 160,000 – 162,000 boe/d3
from our 2022 annual production of 144,000 boe/d (13% production
per share growth1) on capital expenditures4
of $900 - $950
million.
We will be releasing our fourth quarter and year end 2022
results after market close on Wednesday,
February 22, 2023 and have scheduled a conference call and
webcast to begin promptly at 9:00 am
MT (11:00 am ET) on
Thursday, February 23, 2023.
The conference call dial-in number is:
1-888-390-0605 or (587) 880-2175 or (416) 764-8609
A live audio 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Shortly after the live webcast, an archived version will be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.
NOTES
1
|
Net debt is a capital
management measure. Production per share and production per share
growth are supplementary financial measures. Refer to the Specified
Financial Measures section in this press release for additional
disclosures.
|
2
|
See Note Regarding
Forward-Looking Statements for underlying commodity price and
exchange rate assumptions.
|
3
|
Disclosure of
production on a per boe basis in this press release
consists of the constituent product types and their respective
quantities disclosed herein. Refer to Barrel of Oil Equivalency and
Production and Product Type Information in this press release for
additional disclosure.
|
4
|
Referred to as
"Expenditures on property, plant and equipment" in our financial
statements.
|
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, 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 expectation to reach our next net debt target
of $1.3 billion in mid-2023; that we
plan to return 75% of free funds flow back to shareholders once our
$1.3 billion net debt milestone is
achieved, which includes our targeted $0.73 per share annual base dividend; that the
remaining 25% of free funds flow will be used to continue to reduce
debt and strengthen our balance sheet; and, our average daily
production (including by product type) forecast for 2022 and 2023
and our production per share growth and capital expenditure
forecast for 2023.
The forward-looking information is based on certain key
expectations and assumptions made by our management, including:
that we will continue to conduct our operations in a manner
consistent with past operations except as specifically noted herein
(and for greater certainty, the forward-looking information
contained herein excludes the potential impact of any acquisitions
or dispositions that we may complete in the future other than as
disclosed herein); the general continuance or improvement in
current industry conditions; the continuance of existing (and in
certain circumstances, the implementation of proposed) tax, royalty
and regulatory regimes; expectations and assumptions concerning
prevailing and forecast commodity prices, exchange rates, interest
rates, inflation rates, applicable royalty rates and tax laws,
including the assumptions specifically set forth herein; 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; the ability of OPEC+ nations
and other major producers of crude oil to adjust crude oil
production levels and thereby manage world crude oil prices; the
impact (and the duration thereof) of the ongoing military actions
between Russia and Ukraine and related sanctions on crude oil,
NGLs and natural gas prices; the impact of rising and/or sustained
high inflation rates and interest rates on the North American and
world economies and the corresponding impact on our costs, our
profitability, and on crude oil, NGLs and natural gas prices;
future production rates and estimates of operating costs and
development capital, including as specifically set forth herein;
performance of existing and future wells; reserve volumes and net
present values thereof; anticipated timing and results of capital
expenditures / development capital, including as specifically set
forth herein; 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; future dividend levels and share
repurchase levels; the impact of increasing competition; ability to
efficiently integrate assets and employees acquired through
acquisitions or asset exchange transactions; ability to market oil
and natural gas successfully; and our ability to access capital and
the cost and terms thereof. In addition, our expectation to reach
our net debt target of $1.3 billion
in mid-2023 is based on the following commodity pricing and
exchange rate assumptions: WTI of US$73.73/bbl, USD/CAD of $1.34 and AECO of C$2.77/GJ.
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 risk that the funds that we ultimately return to
shareholders through dividends and/or share buybacks is less than
currently anticipated and/or is delayed, whether due to the risks
identified herein or otherwise; the risk that any of our material
assumptions prove to be materially inaccurate, including our 2023
forecasts (including for commodity prices and exchange rates); 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; risks associated with increasing
costs, whether due to high inflation rates, high interest rates,
supply chain disruptions or other factors; health, safety and
environmental risks; commodity price and exchange rate
fluctuations; interest rate fluctuations; inflation 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 on acceptable
terms or at all; failure to obtain required regulatory and other
approvals; reliance on third parties and pipeline systems; changes
in legislation, including but not limited to tax laws, production
curtailment, royalties and environmental regulations; and the risk
that the amount of future cash dividends paid by us and/or shares
repurchased for cancellation by us, if any, will be subject to the
discretion of our Board of Directors and may vary depending on a
variety of factors and conditions existing from time to time,
including, among other things, fluctuations in commodity prices,
production levels, capital expenditure requirements, debt service
requirements, operating costs, royalty burdens, foreign exchange
rates, contractual restrictions contained in our debt agreements,
and the satisfaction of the liquidity and solvency tests imposed by
applicable corporate law for the declaration and payment of
dividends and/or the repurchase of shares – depending on these and
various other factors, many of which will be beyond our control,
our dividend policy and/or share buyback policy and, as a result,
future cash dividends and/or share buybacks, could be reduced or
suspended entirely. 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 and 2023 average daily production
(and production per share growth in 2023 over 2022) and 2023
capital expenditures, the timing of reaching our net debt target of
$1.3 billion, our targeted annual
base dividend level and the timing thereof, the percent of free
funds flow to be returned to shareholders based on reaching our net
debt target of $1.3 billion, and the
percent of free funds flow to be used to strengthen our balance
sheet on reaching our net debt target and the timing thereof 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 herein 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
Barrel of Oil Equivalency
"Boe" means barrel of oil equivalent. All boe conversions
in this press release are derived by converting gas to oil at the
ratio of six thousand cubic feet ("Mcf") of natural gas to one
barrel ("Bbl") of oil. Boe may be misleading, particularly if used
in isolation. A Boe conversion rate of 1 Bbl : 6 Mcf is based on an
energy equivalency conversion method primarily applicable at the
burner tip and does not represent a value equivalency at the
wellhead. Given that the value ratio of oil compared to natural gas
based on currently prevailing prices is significantly different
than the energy equivalency ratio of 1 Bbl : 6 Mcf, utilizing a
conversion ratio of 1 Bbl : 6 Mcf may be misleading as an
indication of value.
Production and Product Type Information
References to petroleum, crude oil, natural gas liquids
("NGLs"), natural gas and average daily production in this press
release refer to the light and medium crude oil, tight crude oil,
conventional natural gas, shale gas and NGLs product types, as
applicable, as defined in National Instrument 51-101 ("NI
51-101").
NI 51-101 includes condensate within the NGLs product type. The
Company has disclosed condensate as combined with crude oil and
separately from other NGLs since the price of condensate as
compared to other NGLs is currently significantly higher, and the
Company believes that this crude oil and condensate presentation
provides a more accurate description of its operations and results
therefrom. Crude oil therefore refers to light oil, medium oil,
tight oil and condensate. NGLs refers to ethane, propane, butane
and pentane combined. Natural gas refers to conventional natural
gas and shale gas combined.
The mid-point of the Company's forecast average daily production
for the full year 2022 and 2023 disclosed in this press release
consists of the following product types, as defined in NI 51-101
and using a conversion ratio of 1 Bbl : 6 Mcf where applicable:
|
2022
Guidance
|
2023
Guidance
(mid-point)
|
Light and medium oil
(bbls/d)
|
80,550
|
72,500
|
Tight oil/condensate
(bbls/d)
|
5,400
|
13,500
|
Crude oil
(bbls/d)
|
85,950
|
86,000
|
|
|
|
NGLs
(bbls/d)
|
15,555
|
17,600
|
|
|
|
Shale gas
(Mcf/d)
|
99,400
|
207,000
|
Conventional natural
gas (Mcf/d)
|
155,570
|
137,400
|
Natural gas
(Mcf/d)
|
254,970
|
344,400
|
|
|
|
Total
(boe/d)
|
144,000
|
161,000
|
SPECIFIED FINANCIAL MEASURES
This press release includes various specified financial
measures, including capital management measures and supplementary
financial measures as further described herein. These financial
measures are not standardized financial measures under
International Financial Reporting Standards ("IFRS" or,
alternatively, "GAAP") and, therefore, may not be comparable with
the calculation of similar financial measures disclosed by other
companies.
"Net Debt" is a capital management measure that
management considers to be key to assessing the Company's
liquidity. See Note 5(e)(i) "Capital Management – Net Debt and
Total Capitalization" in the Company's unaudited interim
consolidated financial statements for the three and nine months
ended September 30, 2022 and in the
Company's audited annual consolidated financial statements for the
year ended December 31, 2021 for
additional disclosures.
"Production per share" is the Company's total crude oil,
NGL and natural gas production volumes for the applicable period
divided by the weighted average number of diluted shares
outstanding for the applicable period. "Production per share
growth" is determined in comparison to the applicable
comparative period.
Per Share Amounts
Per share amounts noted in this press release are based on fully
diluted shares outstanding.
SOURCE Whitecap Resources Inc.