CALGARY,
AB, April 26, 2023 /CNW/ - Whitecap Resources
Inc. ("Whitecap" or the "Company") (TSX: WCP) is pleased to report
its operating and unaudited financial results for the three months
ended March 31, 2023.
Selected financial and operating information is outlined below
and should be read with Whitecap's unaudited interim consolidated
financial statements and related management's discussion and
analysis for the three months ended March
31, 2023 which are available at www.sedar.com and on our
website at www.wcap.ca.
Financial ($
millions except for share amounts
and percentages)
|
|
Three months ended
March 31
|
|
|
2023
|
2022
|
Petroleum and natural
gas revenues
|
|
|
883.7
|
1,003.9
|
Net income
|
|
|
262.6
|
652.3
|
Basic
($/share)
|
|
|
0.43
|
1.04
|
Diluted
($/share)
|
|
|
0.43
|
1.03
|
Funds flow
1
|
|
|
448.0
|
505.7
|
Basic ($/share)
1
|
|
|
0.74
|
0.81
|
Diluted
($/share) 1
|
|
|
0.73
|
0.80
|
Dividends
declared
|
|
|
87.7
|
47.1
|
Per
share
|
|
|
0.15
|
0.08
|
Expenditures on
property, plant and equipment 2
|
|
|
253.6
|
211.5
|
Total payout ratio (%)
1
|
|
|
76
|
51
|
Net Debt
1
|
|
|
1,471.1
|
1,093.3
|
Operating
|
|
|
|
|
Average daily
production
|
|
|
|
|
Crude oil
(bbls/d)
|
|
|
86,276
|
82,980
|
NGLs
(bbls/d)
|
|
|
16,655
|
14,591
|
Natural gas
(Mcf/d)
|
|
|
313,159
|
210,720
|
Total (boe/d)
3
|
|
|
155,124
|
132,691
|
Average realized Price
1,4
|
|
|
|
|
Crude oil
($/bbl)
|
|
|
91.73
|
111.93
|
NGLs
($/bbl)
|
|
|
47.50
|
54.64
|
Natural gas
($/Mcf)
|
|
|
3.56
|
5.07
|
Petroleum and natural
gas revenues ($/boe) 1
|
|
|
63.30
|
84.06
|
Operating Netback
($/boe) 1
|
|
|
|
|
Petroleum and
natural gas revenues
|
|
|
63.30
|
84.06
|
Tariffs
|
|
|
(0.54)
|
(0.52)
|
Processing &
other income
|
|
|
0.85
|
0.57
|
Marketing
revenues
|
|
|
4.63
|
4.91
|
Petroleum and natural
gas sales
|
|
|
68.24
|
89.02
|
Realized
gain/(loss) on commodity contracts
|
|
|
0.65
|
(6.52)
|
Royalties
|
|
|
(11.51)
|
(16.53)
|
Operating
expenses
|
|
|
(13.97)
|
(13.76)
|
Transportation
expenses
|
|
|
(2.13)
|
(2.08)
|
Marketing
expenses
|
|
|
(4.60)
|
(4.88)
|
Operating
netbacks
|
|
|
36.68
|
45.25
|
Share information
(millions)
|
|
|
|
|
Common shares
outstanding, end of period
|
|
|
603.0
|
626.3
|
Weighted average basic
shares outstanding
|
|
|
606.1
|
625.2
|
Weighted average
diluted shares outstanding
|
|
|
610.8
|
632.9
|
MESSAGE TO SHAREHOLDERS
Whitecap has had a strong start to the 2023 year generating
$448 million of funds flow in the
first quarter on capital expenditures of $254 million, resulting in $194 million of free funds flow1.
Return of capital to shareholders during the quarter totaled
$121 million or 62% of free funds
flow, consisting of $88 million of
dividends and $33 million of share
repurchases under our Normal Course Issuer Bid ("NCIB"). We remain
focused on generating strong returns on capital invested while
being committed to returning a significant amount of free funds
flow back to shareholders.
First quarter production of 155,124 boe/d included 102,931
bbls/d of total liquids production (oil, condensate and NGLs) and
313,159 mcf/d of natural gas production, as successful first
quarter drilling programs in our Central
Alberta and Saskatchewan
business units resulted in higher liquids production than
internally forecasted. Our 2023 budget was set in the third quarter
of last year using average forecasted AECO prices of $5.00/GJ, which have since deteriorated to
approximately $2.00/GJ for summer
2023 and approximately $2.50/GJ for
the year. As a result, early in the first quarter we began actively
re-allocating capital and production additions to focus more on our
assets that generate a stronger netback at current price levels. We
spud a total of 69 (60.8 net) wells during the first quarter, 50
(46.0 net) wells in the oil prone areas in Saskatchewan, 13 (10.6 net) wells in
Central Alberta, and 6 (4.2 net)
wells in Northern Alberta.
Net debt at the end of the first quarter was $1.47 billion, a decrease of over $400 million from December
31, 2022, with disposition proceeds and excess funds flow
contributing to the decrease. We have now reduced net debt by over
$700 million in the seven months
since the closing of the XTO Energy Canada acquisition, while at
the same time we have returned $264
million (or $0.43 per share)
to shareholders through our base dividend plus share repurchases
under our NCIB.
We provide the following first quarter 2023 financial and
operating highlights:
- Funds Flow. Whitecap's first quarter funds flow of
$448 million, or $0.73 per share, was strong and reflective of
higher liquids production than internally forecasted. As we expect
to be cash taxable in 2023 at current strip prices, we have
recorded current income tax expense of $0.93 per boe; however, due to commodity price
volatility, our expectation for cash taxability may change over the
course of the year.
- Return of Capital Focus. Whitecap's first quarter
dividends of $0.15 per share
($0.58 per share annualized)
increased 32% compared to the fourth quarter of 2022 and increased
93% compared to the same quarter in 2022. Total capital returned to
shareholders of $0.20 per share
includes $33 million of share
repurchases under our NCIB. We have repurchased a total of 16.5
million shares on our current NCIB and intend to renew it upon
expiry on May 20, 2023.
- Balance Sheet Strength. Quarter end net debt of
$1.47 billion equated to a debt to
EBITDA ratio5 of 0.5 times and an EBITDA to interest
expense ratio5 of 37.1 times, both well within our debt
covenants of not greater than 4.0 times and not less than 3.5
times, respectively. At our stress case price deck of US$50/bbl WTI and $3.00/GJ AECO, our net debt of $1.47 billion represents a debt to EBITDA ratio
of only 1.3 times, highlighting the strength of our balance
sheet.
- Refined Capital Allocation. First quarter capital
spending of $254 million was lower
than our original estimate of over $300
million as we have modified our drilling schedule and
re-allocated capital towards higher netback oil weighted projects
in subsequent quarters due to low AECO natural gas prices. In
addition, a now resolved supply chain delay has shifted
approximately $40 million of
Montney capital to the second and
third quarters. We remain flexible and diligent to shift capital
across our asset base and Business Units to maximize our funds
flow.
OPERATIONS UPDATE
Central Alberta
Our first quarter Glauconite program consisted of 8 (7.2 net)
wells drilled, of which 4 (4.0 net) wells have been brought on
production and the remaining are expected by the end of June. Our
full-year program includes 15 (13.8 net) Glauconite wells and, as
part of the re-allocation of our capital program, we have added 5
(4.4 net) high liquid yield wells and deferred 1 (0.5 net) lower
liquid yield wells.
The expansion of our Glauconite asset base over the past few
years has proven to be beneficial as our operated Glauconite
program continues to outperform our expectations. Four recently
drilled wells with over a year of production history have achieved
an average rate of 660 boe/d per well (71% liquids) which compares
to our expected IP(365) rate of 590 boe/d (52% liquids).
Development of the Pembina Cardium Unit 11 ("PCU 11") continues
to progress, having drilled 7 (3.9 net) wells since mid-2022,
including 2 (1.1 net) injection wells. The 3 (1.7 net) wells
drilled in the second half of 2022 have 90 days of production
history with average rates of 420 boe/d (93% liquids) per well or
over 80% above our IP(90) budget expectations of approximately 230
boe/d. Our full-year program includes 12 (6.6 net) Cardium wells in
PCU 11 and 14 (8.4 net) total Cardium wells in the greater Pembina
area.
Northern Alberta
Our Montney assets generate
robust economics in the current pricing environment and initial
upside has been captured with shorter clean up periods than
originally budgeted and strong liquids rates. Our most recent
4-well Montney pad at Kakwa came
on production in late 2022 and has average production rates of
1,201 boe/d (52% liquids) per well over the first 150 days on
production, which is in line with our expectations on a total
production basis but exceeding our expectations of 40% liquids
yields. Production optimization efforts on the post-clean up period
of our Montney wells are ongoing
and we project capital payout on these wells within eight months of
coming on production.
In addition to proactively making capital program adjustments as
a result of falling natural gas prices, supply chain issues
encountered in the first quarter have delayed on production dates
for our most recent two pads. This delay has since been resolved
with drilling and completions activities continuing and on-stream
dates are now expected by the end of the second quarter. Since
acquiring the Kakwa assets in mid-2021, asset level performance has
been strong and with the expansive Montney drilling inventory we look forward to
many years of consistent growth going forward.
We have been advancing a thorough technical review of our
Duvernay acreage as well as
offsetting developments since acquiring the assets in the fall of
2022 and, as a result, we have commenced drilling a 3-well
Duvernay pad at Kaybob (11-34) and
expect it to be on production in the third quarter. In addition, as
part of the re-allocation of our capital program, we have
substituted a 4-well Duvernay pad
in place of a Montney pad at Lator
which was expected to have lower liquids rates than these specific
Duvernay wells. The 4-well pad
will be drilled after the 11-34 pad and is expected to be on
production in the fourth quarter of this year.
Saskatchewan
In Southeast Saskatchewan we
drilled a total of 14 (14.0 net) Frobisher horizontal wells, with a mix of
single, dual and triple leg wells. Early results from the program
are encouraging with the 5 (5.0 net) wells that have been on
production for more than 60 days achieving IP(60) average rates of
207 boe/d per well which were over 20% higher than expectations.
Our two-rig program will commence once break up conditions subside,
and we plan to drill 43 (37.9 net) Mississippian conventional wells
in the second half of the year.
Our first quarter Southwest
Saskatchewan program was very successful, highlighted by our
three Lower Shaunavon wells that significantly outperformed
expectations. Two of the Lower Shaunavon wells were extension wells
to the North of existing development and will have a positive
impact of up to 30 locations6. In total we drilled 11
(9.7 net) producing wells across four medium oil formations along
with 18 (16.3 net) Viking horizontal light oil wells during the
first quarter with results at or above our expectations.
BOARD OF DIRECTORS NOMINEE
Whitecap is pleased to announce that Vineeta Maguire will stand for election as an
independent director to our Board of Directors at the upcoming
Annual Meeting of the Shareholders ("Annual Meeting") on
May 17, 2023. Ms. Maguire is an
independent businesswoman with over thirty years of experience in
the oil and gas industry. Prior to her retirement from Ovintiv Inc.
earlier this year, Ms. Maguire was Vice President, Supply
Management Services, North America
during the period of 2014 to 2023 and Vice President, Canadian
Operations during the period of 2012 to 2014.
Ms. Maguire holds a Bachelor of Applied Science (Chemical
Engineering) from the University of British
Columbia and a Master of Science (Chemical Engineering) from
the University of Calgary and is a
member of the Association of Professional Engineers and
Geoscientists of Alberta. Ms. Maguire has received the Supply Chain
Management Designation (SCMP) and is currently pursuing the
Institute of Corporate Directors Designation (ICD.D). Ms. Maguire
is also currently Vice Chair of the Board of Directors of
Alberta Easter Seals and an Advisor
of the Haskayne School of Business (Supply Chain and Logistics
Advisory Board) at the University of
Calgary.
Whitecap continues to work towards increasing diversity at all
levels of our business. The addition of Ms. Maguire to our board of
directors achieves our target of not less than 30% representation
by women on our Board by the end of 2023 and reflects our
commitment to diversity at our highest level while maintaining
strong technical and governance guidance.
Whitecap is also announcing that one of our founding directors,
Mr. Gregory S. Fletcher, is retiring
from our Board of Directors and is not seeking re-election at the
upcoming Annual Meeting. Our Board of Directors and management team
are extremely grateful for Mr. Fletcher's valuable contributions
and guidance as a director since September
2010 and wish to thank him for his years of service.
OUTLOOK
The outlook for Whitecap remains strong and resilient as we
continue to focus on operational excellence in 2023 with an
unchanged capital budget of $900 –
$950 million and average production
guidance of 160,000 – 162,000 boe/d.
As referenced earlier, we have elected to modify our drilling
schedule and have reallocated capital within our core operating
regions and are concentrating our efforts on higher netback assets
with timing changes resulting in a large portion of our production
additions occurring in the third and fourth quarters of this year.
Our forecasted fourth quarter production is expected to average
approximately 170,000 boe/d, which represents 10% per share
growth7 relative to the fourth quarter of 2022 after
adjusting for the recently completed dispositions.
We remain committed to our return of capital framework which
will result in 75% of free funds flow being returned to
shareholders upon reaching our $1.3
billion net debt milestone, including the targeted 26%
dividend increase to $0.73 per share
annually. We expect to reach the $1.3
billion net debt milestone by mid-2023 at current strip
prices8.
On behalf of our employees, management team and Board of
Directors, we would like to thank our shareholders for their
support and look forward to updating you on our progress throughout
the year.
NOTES
|
1
|
Funds flow, funds flow
basic ($/share), funds flow diluted ($/share) and net debt are
capital management measures. Total payout ratio, average realized
price, and petroleum and natural gas revenues figures are
supplementary financial measures. Operating netback and free funds
flow are non-GAAP financial measures. Operating netbacks ($/boe) is
a non-GAAP ratio. Refer to the Specified Financial Measures section
in this press release for additional disclosure and
assumptions.
|
2
|
Also referred to herein
as "capital expenditures" and "capital spending".
|
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, Initial
Production Rates and Product Type Information in this press release
for additional disclosure.
|
4
|
Prior to the impact of
risk management activities and tariffs.
|
5
|
Debt to EBITDA ratio
and EBITDA to interest expense ratio are specified financial
measures that are calculated in accordance with the financial
covenants in our credit agreement.
|
6
|
Disclosure of drilling
locations in this press release consists of unbooked locations and
their respective quantities on a gross and net basis as disclosed
herein. Refer to Drilling Locations in this press release for
additional disclosure.
|
7
|
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 (adjusted for
dispositions).
|
8
|
Based on the following
commodity pricing and exchange rate assumptions for the full year
2023: US$75.26/bbl WTI, $2.49/GJ AECO, USD/CAD of $1.36.
|
CONFERENCE CALL AND WEBCAST
Whitecap has scheduled a conference call and webcast to begin
promptly at 9:00 am MT (11:00 am ET) on Thursday,
April 27, 2023.
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, 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 focus on generating strong returns on capital
invested while being committed to returning a significant amount of
free funds flow back to shareholders; our expectation to be cash
taxable in 2023 at current strip prices and that such expectation
may change over the course of the year due to commodity price
volatility; our intention to renew our NCIB upon expiry on
May 20, 2023; our forecast that our
quarter end net debt of $1.47 billion
represents a debt to EBITDA ratio of only 1.3 times at a stress
case price deck of US$50/bbl WTI and
$3.00/GJ AECO; our expectation that
we can shift capital across our asset base and Business Units to
maximize our funds flow; our expectation that the remaining wells
from our first quarter Glauconite program will be brought on
production by the end of June; our expectation that we will drill
15 (13.8 net) Glauconite wells, 12 (6.6 net) Cardium wells in PCU
11, and 14 (8.4 net) total Cardium wells in 2023; generate robust
economics in the current pricing environment; our projection to
achieve capital payout on our most recent 4-well Montney pad at Kakwa within eight months of
coming on production; our expectation to bring our two most recent
Montney pads on production by the
end of the second quarter; the anticipated benefits of our
Montney drilling inventory
including our belief that asset level performance in the
Montney will continue for many
years; our expectation that the 11-34 Duvernay pad will be on production in the
third quarter; our expectation to drill a 4-well Duvernay pad after the 11-34 pad and that
liquids rates will be higher than a Montney pad at Lator; our expectation that the
4-well Duvernay pad will come on
production in the fourth quarter of 2023; our expectation that we
will begin a two-rig program in Southeast
Saskatchewan once break up conditions subside; our
expectation to drill 43 (37.9 net) Mississippian conventional wells
in the second half of the year; our belief that two of the Lower
Shaunavon wells drilled in the first quarter will have a positive
impact of up to 30 locations; our belief that the outlook for
Whitecap remains strong and resilient; our focus on operational
excellence in 2023; our forecasts for average daily production
(including by product type) and capital expenditures for 2023; our
belief that re-allocated capital will be concentrated on higher
netback assets; our forecast that a large portion of our production
additions will occur in the third and fourth quarters; our
forecasts for average daily production (including by product type)
and production per share growth for the fourth quarter of 2023;
that we remain committed to our return of capital framework which
will result in 75% of free funds flow being returned to
shareholders upon reaching our $1.3
billion net debt milestone, which includes our targeted
$0.73 per share annual dividend; and,
our expectation to reach the $1.3
billion net debt milestone by mid-2023 at current strip
prices.
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); 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; that going forward the COVID-19
pandemic will not have a material impact 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.
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, and by its very nature it involves
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 our expectation to be cash taxable in 2023 at current
strip prices, Whitecap's forecast 2023 capital expenditures, our
forecast for reaching net debt of $1.3
billion by mid-2023 at current strip prices, our targeted
annual base dividend level of $0.73
per share, and the percent of free funds flow to be returned to
shareholders upon reaching our net debt target of $1.3 billion 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.
Drilling Locations
This press release discloses unbooked drilling inventory.
Unbooked locations are internal estimates based on our prospective
acreage and an assumption as to the number of wells that can be
drilled per section based on industry practice and internal review.
Unbooked locations do not have attributed reserves or resources.
The unbooked locations disclosed herein consist of:
- 30 (30.0 net) Lower Shaunavon drilling locations.
Unbooked locations consist of drilling locations that have been
identified by management as an estimation of our multi-year
drilling activities based on evaluation of applicable geologic,
seismic, engineering, production and reserves information. There is
no certainty that we will drill all of these drilling locations and
if drilled there is no certainty that such locations will result in
additional oil and gas reserves, resources or production. The
drilling locations on which we drill wells will ultimately depend
upon the availability of capital, regulatory approvals, seasonal
restrictions, oil and natural gas prices, costs, actual drilling
results, additional reservoir information that is obtained and
other factors. While certain of the unbooked drilling locations
have been de-risked by drilling existing wells in relative close
proximity to such unbooked drilling locations, other unbooked
drilling locations are farther away from existing wells where
management has less information about the characteristics of the
reservoir and therefore there is more uncertainty whether wells
will be drilled in such locations and if drilled there is more
uncertainty that such wells will result in additional oil and gas
reserves, resources or production.
Production, Initial Production Rates & 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"),
except as noted below.
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.
Any reference in this news release to initial production rates
(IP(60), IP(90), IP(150), IP(365)) are useful in confirming the
presence of hydrocarbons, however, such rates are not determinative
of the rates at which such wells will continue production and
decline thereafter. While encouraging, readers are cautioned not to
place reliance on such rate in calculating the aggregate production
for Whitecap.
The Company's average daily production for the quarter ended
March 31, 2023 and 2022, the average
daily production rate per well for (1) the recent Glauconite wells
(IP(365) and budget), (2) the recent PCU 11 Cardium wells (IP(90)
and budget), (3) the recent 4-well Montney pad at Kakwa (IP(150)), and (4) the
recent Frobisher wells (IP(60)),
and the forecast average daily production for 2023 (mid-point) and
the fourth quarter of 2023 disclosed in this press release consists
of the following product types, as defined in NI 51-101 (other than
as noted above with respect to condensate) and using a conversion
ratio of 1 Bbl : 6 Mcf where applicable:
Whitecap
Corporate
|
Q1/2023
|
Q1/2022
|
2023 Guidance
(Mid-point)
|
Q4/2023
Guidance
|
Light and medium oil
(bbls/d)
|
76,917
|
79,406
|
72,500
|
76,450
|
Tight oil
(bbls/d)
|
9,359
|
3,574
|
13,000
|
12,500
|
Crude oil
(bbls/d)
|
86,276
|
82,980
|
85,500
|
88,950
|
|
|
|
|
|
NGLs
(bbls/d)
|
16,655
|
14,591
|
17,000
|
18,000
|
|
|
|
|
|
Shale gas
(Mcf/d)
|
158,024
|
51,605
|
207,000
|
226,600
|
Conventional natural
gas (Mcf/d)
|
155,135
|
159,115
|
144,000
|
151,700
|
Natural gas
(Mcf/d)
|
313,159
|
210,720
|
351,000
|
378,300
|
|
|
|
|
|
Total
(boe/d)
|
155,124
|
132,691
|
161,000
|
170,000
|
Initial Production
Rates
|
Recent
Glauconite
IP(365) per well
|
Budget
Glauconite well
IP(365)
|
Recent PCU 11
Cardium IP(90)
per well
|
Budget PCU 11
Cardium well
IP(90)
|
Light and medium oil
(bbls/d)
|
298
|
140
|
363
|
190
|
Tight oil
(bbls/d)
|
-
|
-
|
-
|
-
|
Crude oil
(bbls/d)
|
297
|
140
|
363
|
190
|
|
|
|
|
|
NGLs
(bbls/d)
|
166
|
170
|
26
|
16
|
|
|
|
|
|
Shale gas
(Mcf/d)
|
-
|
-
|
-
|
-
|
Conventional natural
gas (Mcf/d)
|
1,170
|
1,680
|
186
|
144
|
Natural gas
(Mcf/d)
|
1,170
|
1,680
|
186
|
144
|
|
|
|
|
|
Total
(boe/d)
|
660
|
590
|
420
|
230
|
Initial Production
Rates
|
|
|
Recent Montney
IP(150) per well
|
Recent Frobisher
IP(60) per well
|
Light and medium oil
(bbls/d)
|
|
|
-
|
197
|
Tight oil
(bbls/d)
|
|
|
568
|
-
|
Crude oil
(bbls/d)
|
|
|
568
|
197
|
|
|
|
|
|
NGLs
(bbls/d)
|
|
|
53
|
7
|
|
|
|
|
|
Shale gas
(Mcf/d)
|
|
|
3,480
|
-
|
Conventional natural
gas (Mcf/d)
|
|
|
-
|
18
|
Natural gas
(Mcf/d)
|
|
|
3,480
|
18
|
|
|
|
|
|
Total
(boe/d)
|
|
|
1,201
|
207
|
SPECIFIED FINANCIAL MEASURES
This press release includes various specified financial
measures, including non-GAAP financial measures, non-GAAP ratios,
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.
"Average realized prices" for crude oil, NGLs and natural
gas are supplementary financial measures calculated by dividing
each of these components of petroleum and natural gas revenues,
disclosed in Note 15 "Revenue" to the Company's unaudited interim
consolidated financial statements for the three months ended
March 31, 2023, by their respective
production volumes for the period.
"Free funds flow" is a non-GAAP financial
measure calculated as funds flow less expenditures on
property, plant and equipment ("PP&E"). Management believes
that free funds flow provides a useful measure of Whitecap's
ability to increase returns to shareholders and to grow the
Company's business. Free funds flow is not a standardized financial
measure under IFRS and, therefore, may not be comparable with the
calculation of similar financial measures disclosed by other
entities. The most directly comparable financial measure to free
funds flow disclosed in the Company's primary financial statements
is cash flow from operating activities. Refer to the "Cash Flow
from Operating Activities, Funds Flow and Payout Ratios" section of
our management's discussion and analysis for the three months ended
March 31, 2023 which is incorporated
herein by reference, and available on SEDAR at www.sedar.com. In
addition, see the following table which reconciles cash flow from
operating activities to funds flow and free funds flow:
|
|
Three months ended
Mar. 31,
|
($
millions)
|
|
|
2023
|
2022
|
Cash flow from
operating activities
|
|
|
468.6
|
390.6
|
Net change in non-cash
working capital items
|
|
|
(20.6)
|
115.1
|
Funds flow
|
|
|
448.0
|
505.7
|
Expenditures on
PP&E
|
|
|
253.6
|
211.5
|
Free funds
flow
|
|
|
194.4
|
294.2
|
Total payout ratio
(%)
|
|
|
76
|
51
|
Funds flow per share,
basic
|
|
|
0.74
|
0.81
|
Funds flow per share,
diluted
|
|
|
0.73
|
0.80
|
"Funds flow", "funds flow basic ($/share)" and "funds
flow diluted ($/share)" are capital management measures and are
key measures of operating performance as they demonstrate
Whitecap's ability to generate the cash necessary to pay dividends,
repay debt, make capital investments, and/or to repurchase common
shares under the Company's NCIB. Management believes that by
excluding the temporary impact of changes in non-cash operating
working capital, funds flow, funds flow basic ($/share) and funds
flow diluted ($/share) provide useful measures of Whitecap's
ability to generate cash that are not subject to short-term
movements in non-cash operating working capital. Whitecap reports
funds flow in total and on a per share basis (basic and diluted),
which is calculated by dividing funds flow by the weighted average
number of basic shares and weighted average number of diluted
shares outstanding for the relevant period. See Note 5(e)(ii)
"Capital Management – Funds Flow" in the Company's unaudited
interim consolidated financial statements for the three months
ended March 31, 2023 for
additional disclosures.
"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 months ended
March 31, 2023 for additional
disclosures. The following table reconciles the Company's long-term
debt to net debt:
Net Debt ($
millions)
|
|
|
Mar. 31,
2023
|
Dec. 31,
2022
|
Long-term
debt
|
|
|
1,336.7
|
1,844.6
|
Accounts
receivable
|
|
|
(405.8)
|
(480.2)
|
Deposits and prepaid
expenses
|
|
|
(18.1)
|
(22.7)
|
Accounts payable and
accrued liabilities
|
|
|
529.2
|
549.1
|
Dividends
payable
|
|
|
29.1
|
22.3
|
Net Debt
|
|
|
1,471.1
|
1,913.1
|
"Operating netback" is a non-GAAP financial measure determined
by adding marketing revenues and processing & other income,
deducting realized losses on commodity risk management contracts or
adding realized gains on commodity risk management contracts and
deducting tariffs, royalties, operating expenses, transportation
expenses and marketing expenses from petroleum and natural gas
revenues. The most directly comparable financial measure to
operating netback disclosed in the Company's primary financial
statements is petroleum and natural gas sales. Operating netback is
a measure used in operational and capital allocation decisions.
Operating netback is not a standardized financial measure under
IFRS and, therefore, may not be comparable with the calculation of
similar financial measures disclosed by other entities. For further
information, refer to the "Operating Netbacks" section of our
management's discussion and analysis for the three months ended
March 31, 2023, which is incorporated
herein by reference, and available on SEDAR at www.sedar.com. A
reconciliation of operating netbacks to petroleum and natural gas
revenues is set out below:
|
|
Three months ended
Mar. 31,
|
Operating Netbacks
($ millions)
|
|
|
2023
|
2022
|
Petroleum and natural
gas revenues
|
|
|
883.7
|
1,003.9
|
Tariffs
|
|
|
(7.6)
|
(6.3)
|
Processing & other
income
|
|
|
11.8
|
6.8
|
Marketing
revenues
|
|
|
64.7
|
58.7
|
Petroleum and natural
gas sales
|
|
|
952.6
|
1,063.1
|
Realized gain (loss)
on commodity contracts
|
|
|
9.1
|
(77.8)
|
Royalties
|
|
|
(160.7)
|
(197.4)
|
Operating
expenses
|
|
|
(195.1)
|
(164.3)
|
Transportation
expenses
|
|
|
(29.8)
|
(24.8)
|
Marketing
expenses
|
|
|
(64.2)
|
(58.3)
|
Operating
netbacks
|
|
|
511.9
|
540.5
|
"Operating netback ($/boe)" is a non-GAAP ratio calculated by
dividing operating netbacks by the total production for the period.
Operating netback is a non-GAAP financial measure component of
operating netback per boe. Operating netback per boe is not a
standardized financial measure under IFRS and, therefore may not be
comparable with the calculation of similar financial measures
disclosed by other entities. Presenting operating netback on a per
boe basis allows management to better analyze performance against
prior periods on a comparable basis.
"Petroleum and natural gas revenues ($/boe)" is a
supplementary financial measure calculated by dividing this
component of petroleum and natural gas sales, disclosed in Note 15
"Revenue" to the Company's unaudited interim consolidated financial
statements for the three months ended March
31, 2023, by the Company's total production volumes for the
period.
"Total payout ratio" is a supplementary financial
measure calculated as dividends paid or declared plus expenditures
on PP&E, divided by funds flow. Management believes that total
payout ratio provides a useful measure of Whitecap's capital
reinvestment and dividend policy, as a percentage of the amount of
funds flow.
Per Share Amounts
Per share amounts noted in this press release are based on fully
diluted shares outstanding unless noted otherwise.
SOURCE Whitecap Resources Inc.