WHITECAP RESOURCES INC. ANNOUNCES PARTIAL INFRASTRUCTURE DISPOSITIONS FOR $520 MILLION, FID ON NEW LATOR FACILITY AND STRATEGIC PARTNERSHIP WITH PEMBINA GAS INFRASTRUCTURE
Topaz Transaction
Whitecap and Topaz have executed a purchase and sale agreement whereby Topaz acquired a 50% working interest in the Musreau Facility for gross proceeds of
Whitecap completed the commissioning and start-up of our Musreau Facility which includes natural gas compression capacity of 43,000 mcf/d and condensate stabilization capacity of 12,500 bbl/d. It was completed in mid-March, ahead of schedule and under budget, and after bringing on our first eight wells, the facility throughput has ramped up to 14,000 boe/d. Our
Whitecap and PGI have entered into a purchase and sale agreement whereby PGI will acquire a 50% working interest in the
We have also reached a positive final investment decision on our Lator Facility. The Lator area represents the next stage of meaningful growth for Whitecap with 90,000 acres and up to 450 identified top tier
Our partnership with PGI also allows Whitecap to access PGI and Pembina's vast network of infrastructure and midstream assets across
Financial Summary
The long-term take-or-pay commitments, synergies from our strategic partnership with PGI, interest expense savings and tax adjustments have a minimal net impact to our forecasted 2025 and long-term funds flow2,3.
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Gross Proceeds |
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After-Tax Proceeds |
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2025 EBITDA Impact1 |
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2025 Funds Flow Impact2 |
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Avg. 2025-2029 EBITDA Impact1 |
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Avg. 2025-2029 Funds Flow Impact2 |
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Notes: (1) EBITDA impact reflects working interest dispositions and synergies from the PGI |
Outlook
Whitecap's balance sheet is in excellent shape and will be further strengthened with proceeds from the partial sale of the infrastructure assets. Given the significant strength in our balance sheet, we expect to allocate approximately
On behalf of our employees, management team and Board of Directors, we would like to thank our shareholders for their continued support and look forward to updating them on our progress for the remainder of the year.
NOTES
1 |
Disclosure of drilling locations in this press release consists of proved, probable, and 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. |
2 |
Based on the following commodity pricing and exchange rate assumptions for 2025 and the 2025-2029 period: |
3 |
Funds flow and net debt are capital management measures. Per boe figures are supplementary financial measures. Refer to the Specified Financial Measures section in this press release for additional disclosure and assumptions. |
4 |
Based on the following strip commodity pricing and exchange rate assumptions for the remainder of 2024: |
5 |
Debt to EBITDA ratio is a specified financial measure that is calculated in accordance with the financial covenants in our credit agreement. |
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 belief that Musreau wells will produce upwards of 75% liquids from two
The forward-looking information is based on certain key expectations and assumptions made by our management, including: that the disposition to PGI will occur on the terms and timing disclosed herein; 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 those 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 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 in the
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 it involves inherent risks and uncertainties. These include, but are not limited to: the risk that our disposition to PGI does not close on the terms and/or on the timetable currently anticipated or at all; the risk that the funds that we ultimately return to shareholders through dividends and/or share repurchases 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 2024 and 2025-2029 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, including the risk that weather events such as wildfires, flooding, droughts or extreme hot or cold temperatures forces us to shut-in production or otherwise adversely affects our operations; 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 risks; 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; the risk that going forward we may be unable 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 (including emissions) regulations; the risk that we do not successfully defend against previously disclosed and ongoing reassessments received from the
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.sedarplus.ca).
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 forecast 2025 and 2025-2029 EBITDA and funds flow and the impact thereon of the partial infrastructure monetization; the amount of funds that we anticipate allocating to share repurchases in the second half of the year; and our resulting forecast for 2024 net debt, 2024 Debt/EBITDA and unused credit capacity, 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 drilling inventory in two categories: (i) booked locations (proved and probable); and (ii) unbooked locations. Booked locations represent the summation of proved and probable locations, which are derived from
- Of the 450 (431.5 net) drilling locations identified herein, 46 (46 net) are proved locations, 46 (46 net) are probable locations, and 358 (339.5 net) are unbooked 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.
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.
"EBITDA" is a non-GAAP financial measure. The most directly comparable financial measure that is disclosed in our financial statements is net income. EBITDA is calculated as earnings before interest, taxes, depreciation and amortization, and is adjusted for non-cash items, transaction costs and extraordinary and non-recurring items such as material acquisitions or dispositions. Management uses EBITDA to compare principal business activities across historical periods to future financial forecasts and in assessment of our historical and future financial leverage. Whitecap's EBITDA for the year ended
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Year ended |
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($ millions) |
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2023 |
Net income and other comprehensive income |
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889.0 |
Interest expense |
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83.5 |
Total income tax expense |
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281.7 |
Depletion, depreciation, and amortization |
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865.2 |
Non-cash items |
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(130.1) |
EBITDA |
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1,989.3 |
"
Funds flow", is a capital management measure and is a key measure of operating performance as it demonstrates 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 normal course issuer bid. Management believes that by excluding the temporary impact of changes in non-cash operating working capital, funds flow provides a useful measure of Whitecap's ability to generate cash that are not subject to short-term movements in non-cash operating working capital. Whitecap's funds flow for the year ended
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Net Debt" is a capital management measure that management considers to be key to assessing the Company's liquidity. Whitecap's net debt as at
"$/boe" disclosures for the impact of the partial sale of the infrastructure assets on our forecast 2025 and 2025-2029 EBTIDA and funds flow are supplementary financial measures that are calculated by dividing each of these respective non-GAAP measures by our forecast total production volumes for the respective periods.
SOURCE