WHITECAP RESOURCES INC. ANNOUNCES RECORD 2022 PER SHARE RESULTS AND STRONG YEAR END RESERVES GROWTH
CALGARY, AB, Feb. 22, 2023 /CNW/ - Whitecap Resources Inc. ("Whitecap" or the "Company") (TSX: WCP) is pleased to report its operating and audited financial results for the quarter and year ended December 31, 2022, and its 2022 year end reserves evaluation.
Selected financial and operating information is outlined below and should be read with Whitecap's audited annual consolidated financial statements and related management's discussion and analysis for the three and twelve months ended December 31, 2022 which are available at www.sedar.com and on our website at www.wcap.ca.
MESSAGE TO SHAREHOLDERS
2022 was an exceptional year for Whitecap with operational and financial results exceeding expectations. Production in the fourth quarter averaged 166,392 boe/d, ahead of our guidance of 165,000 boe/d despite unexpected downtime due to the extreme cold weather in December. We achieved record annual production of 144,389 boe/d on capital expenditures of $687 million, compared to guidance of 144,000 boe/d and $670 - $690 million, respectively.
Our 2022 year end reserves report highlights efficient and profitable organic growth with proved developed producing ("PDP") reserves per share increasing 19% and with our PDP finding and development ("F&D") cost1 of $13.20 per boe generating a recycle ratio1 of 3.6x. We continue to enhance long-term sustainability with total proved ("TP") finding, development and acquisitions ("FD&A") cost1 of $16.15 per boe generating a recycle ratio of 2.9x and growing TP reserves per share by 49% over the prior year.
The XTO Energy Canada ("XTO") acquisition, which closed on August 31, 2022 for net cash consideration of $1.7 billion, was transformational to Whitecap as it added 32,000 boe/d from the Montney and Duvernay formations in Northwest Alberta and included 672,000 acres of land with over 2,000 drilling locations5, significantly increasing the sustainability of our dividend plus growth model.
Our strategy of operational execution enhanced by strategic acquisitions once again resulted in significant per share growth for our shareholders. Compared to the prior year, production per share6 increased 25%, funds flow per share increased 105%, free funds flow per share increased 137% and reserves per share also increased significantly in all categories.
Whitecap generated record funds flow of over $2.3 billion, and after capital expenditures of $687 million, had free funds flow1 of $1.6 billion. 2022 was also another year of significant capital returns to shareholders. We started 2022 with a monthly dividend of $0.0225 per share and increased it by 63% to end 2022 at $0.0367 per share. Subsequent to year end, we increased the monthly dividend by another 32% to $0.0483 per share. We also repurchased 25 million common shares at an average price of $9.72 per share for total capital returned to shareholders (dividends plus share repurchases) of $480 million in 2022.
After the closing of the XTO acquisition, net debt was $2.2 billion and was quickly reduced to $1.9 billion (13%) within four months with the significant free funds flow generated by our consolidated asset base. Subsequent to year end, we further reduced net debt to $1.5 billion through the disposition of several non-strategic assets.
We highlight the following fourth quarter and full year 2022 financial and operating results:
- Record Funds Flow. Whitecap generated $2.3 billion of funds flow in 2022 ($3.74 per share), the highest in the Company's thirteen-year history and 82% higher than the second highest funds flow per share year in 2014. Fourth quarter funds flow of $594 million ($0.97 per share) was the second highest quarterly funds flow in Company history and was the first full quarter that included the acquired XTO assets. Full year and fourth quarter 2022 operating netback of $47.03 per boe and $42.26 per boe, respectively, were 56% and 22% higher than the full year and fourth quarter of 2021, respectively.
- Strong Operational Performance. Full year 2022 average production of 144,389 boe/d was a 25% increase on a per share basis over 2021, while fourth quarter production of 166,392 boe/d was up 15% over the third quarter and 43% over the fourth quarter of 2021, both on a per share basis. Asset level outperformance continued in the fourth quarter with average production exceeding fourth quarter guidance of 165,000 boe/d, despite extreme cold weather that reduced our production by approximately 10,000 boe/d for five days in December.
- Return of Capital Strategy. Shareholder returns totalled $480 million in 2022, including $237 million in base dividends plus $243 million of share repurchases. Our current annual base dividend of $0.58 per share is 49% higher than the $0.39 per share paid in 2022, which was already 86% higher than our base dividend of $0.21 per share paid in 2021. We remain focused on sustainable increases to our base dividend supplemented by share repurchases and/or special dividends to meet our return of capital framework.
- Balance Sheet Strength. Whitecap's year end net debt of $1.9 billion equates to a debt to EBITDA ratio7 of 0.7x and EBITDA to interest expense ratio7 of 45.4x, both well within our bank covenants of not greater than 4.0x and not less than 3.5x respectively. Net debt has been reduced to $1.5 billion on total debt capacity of $3.1 billion with the closing of three non-strategic asset dispositions subsequent to year end, further strengthening the Company's balance sheet.
2022 Year End Reserves
Our 2022 year end reserves were excellent across all categories and metrics as strong operational execution was enhanced by our successful acquisition strategy. We continue to see significant synergies through the integration of assets acquired since late 2020 and, when combined with operational outperformance, has led to increased profitability for our shareholders.
The strategic acquisitions completed in 2022, most notably the XTO acquisition with assets in the Montney and Duvernay, have further enhanced our unconventional asset base, adding multi-decade growth potential to complement our low decline, high netback conventional oil asset base. Pro forma the recent dispositions, we now have 6,584 (5,675 net) drilling locations5 of which only 36% of such locations have been booked in our reserve report, which provides us with over 25 years of profitable and sustainable growth in production and funds flow.
We highlight the following 2022 year end reserve report results:
- Focused on Per Share Results. PDP reserves increased 18% to 377.2 million boe, TP reserves increased 47% to 803.5 million boe and total proved plus probable ("TPP") reserves increased 58% to 1,218.3 million boe, compared to the prior year. On a per share basis, PDP reserves increased 19%, TP reserves increased 49% and TPP reserves increased 61%.
- Long-Term Sustainability. PDP, TP and TPP reserve life index ("RLI") of 6.2 years, 13.2 years and 20.1 years, respectively, reflects our unique asset base, which combines low decline, long life oil weighted assets with a deep inventory of unconventional high impact assets, providing for long-term sustainable and profitable growth.
- Profitable Growth Drives Strong Recycle Ratios. Our TP FD&A cost of $16.15 per boe and TPP FD&A cost of $12.28 per boe generated recycle ratios of 2.9x and 3.8x, respectively. Our PDP F&D cost of $13.20 per boe generated a recycle ratio of 3.6x and reflects strong operational execution by our teams in 2022. Our TP and TPP recycle ratios increased 32% and 43%, respectively as compared to 2021.
- Growing Net Present Value per Share. PDP NPV, using a 10% discount rate1, increased by 42% to $10.67 per share, TP NPV increased by 77% to $19.08 per share and TPP NPV increased by 81% to $27.60 per share, as compared to the prior year. The NPV calculations performed by McDaniel used an average 2023-2027 WTI price of US$78.51/bbl (three consultants average).
Outlook
Our focus in 2023 is continued operational execution to achieve our production guidance of 160,000 – 162,000 boe/d (13% production per share growth) and our capital expenditure guidance of $900 - $950 million.
Our 2023 financial milestones we look forward to reporting to shareholders on are (1) achieving net debt of $1.3 billion which represents a debt to EBITDA ratio of 1.0x at a stress test price deck of US$50/bbl WTI and $3.50/GJ AECO, (2) further increasing our monthly dividend by 26% to $0.0608 per share ($0.73 per share/annum), and (3) returning 75% of free funds flow back to shareholders which includes our targeted annual dividend of $0.73 per share.
Our balance sheet is in excellent shape, with net debt currently at $1.5 billion which represents a debt to EBITDA ratio of 0.7x at current strip prices8 and provides us with $1.6 billion of undrawn capacity. Our balance sheet will continue to strengthen further to approximately $1.0 - $1.2 billion by year end 2023.
Over the next five years, we are targeting organic production growth to 200,000 boe/d, which is forecasted to generate over $4.5 billion of free funds flow (~$7.35 per share) at US$75/bbl WTI and $3.50/GJ AECO.
Our strategy is to provide shareholders with sustainable production per share growth (3% - 8% per year) combined with a stable and growing dividend. Beyond 2023, we will continue to look for opportunities to enhance our organic growth plans and long-term value through business development initiatives.
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.
-----------------------------------------------------------------------
Source
https://www.newswire.ca/news-releases/whitecap-resources-inc-announces-record-2022-per-share-results-and-strong-year-end-reserves-growth-843645255.html
No comments:
Post a Comment