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Thursday, October 14, 2021

Whitecap Resources Inc. Announces 2022 Budget, 2021 Guidance Update and Increased Cash Returns to Shareholders

Whitecap Resources Inc. Announces 2022 Budget, 2021 Guidance Update and Increased Cash Returns to Shareholders

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Company Profile

Whitecap Resources Inc is a Canada-based oil and gas company. The Company is engaged in the business of acquiring, developing and holding interests in petroleum and natural gas properties and assets. It is focused on acquiring sustainable assets with Discovered Petroleum Initially In Place (DPIIP) and low current recovery factors and moving them through the development chain by converting contingent resources , probable reserves, producing reserves (cash flow). Its portfolio of assets has stable production and low base declines, which provide its shareholders with a predictable cash flow stream for monthly dividend payments.

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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 lower than preliminary expectations, with approximately due to acceleration of capital into late Q4/21 to solidify service sector requirements while optimizing the 2022 capital program, and approximately 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 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 /bbl WTI and at /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 on waterflood/enhanced oil recovery ("EOR") initiatives, including $28 million for CO 2 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 1.4 billion funds flow of 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) 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 formations.

Eastern Saskatchewan. We expect to spend $135-$140 million to drill 62 (51.5 net) wells. At , we anticipate drilling 15 (9.8 net) wells, including 10 (6.5 net) wells as part of our next CO 2 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) 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) 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 , 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 . 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) 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 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 oil wells at , the first well of a 4 (4.0 net) well pad targeting the , 3 (3.0 net) Cardium Wells in the Kaybob Area, 17 (17.0 net) Viking wells, 4 (1.9 net) wells in , 5 (3.3 net) wells in and 7 (6.5 net) 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 and dividend payments of at /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 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.

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Source

https://money.tmx.com/en/quote/WCP/news/4556656875502689/Whitecap_Resources_Inc_Announces_2022_Budget_2021_Guidance_Update_and_Increased_Cash_Returns_to_Shareholders

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Update...Dateline...October 16, 2021

Insiders buy as Whitecap Resources makes new highs

Whitecap Resources Inc... The stock has broken out to new 52-week highs over the past month, and insiders have bought the rally. On Oct. 8, vice-president Michael Nerbas bought 2,000 common shares in the public market at $7.63. Later, on Oct. 12, senior officer Travis Bjarne Tweit also bought 2,000 shares at $7.52. Insider buying near 52-week highs is generally a bullish sign. So far this year, there have been no senior officer or director public market sales reported.

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Insider report, Ted Dixon


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