whitecap resources inc. announces acquisition of a controlling interest in a premier sweet light oil pool, $125 million financing, increased dividend by 12% and increased 2014 guidance

August 20, 2014

WHITECAP RESOURCES INC. ANNOUNCES ACQUISITION OF A CONTROLLING INTEREST IN A PREMIER SWEET LIGHT OIL POOL, $125 MILLION FINANCING, INCREASED DIVIDEND BY 12% AND INCREASED 2014 GUIDANCE

CALGARY, ALBERTA – Whitecap Resources Inc. (“Whitecap” or the “Company”) (TSX: WCP) is pleased to announce that we have successfully entered into agreements to acquire and consolidate a controlling interest in a premier conventional Nisku light sweet oil pool at Elnora, Alberta located just 50 miles east of our Garrington core area for total cash consideration of approximately $266.7 million (the “Acquisition”). The Acquisition adds 2,500 boe/d (90% oil and NGLs) of high netback production of which 2,000 boe/d (96% oil and NGLs) is associated with the Elnora Nisku light oil pool. The Acquisition also includes strategic facilities consisting of two oil batteries, water disposal infrastructure and pipelines which will be important for future low cost production growth.

Whitecap also announces that it has entered into an unrelated letter of intent with a private oil and gas company to dispose of approximately 600 boe/d of non-core production for proceeds of $57 million (the “Disposition”).

The Acquisition will be funded with a concurrent $125 million bought deal equity financing (the “Financing”), proceeds from the Disposition and bank debt. 

STRATEGIC RATIONALE

The key benefits to Whitecap shareholders pro forma the Acquisition, Disposition and the Financing are as follows:
  • Adds significant and controllable free cash flow of $6.1 million in 2014, $49.6 million in 2015 and $73.1 million in 2016. Whitecap expects the free cash flow over the next 5 years to be in excess of $273 million.

  • 2014 accretion on a fully diluted share basis of 1% on cash flow, production, net asset value and on total proved plus probable reserves based on an estimated closing date of October 1, 2014.

  • 2015 accretion on a fully diluted share basis of 5% on cash flow and production.

  • Acquisition adds high netback, light oil production with 0% decline over the next 2 years and reduces our base production decline rate by 1% to 23% in 2015.

  • Improves our corporate capital efficiencies as minimal future development capital is required to significantly grow production and cash flow.

  • Expands Whitecap’s control of high netback, long life waterflood assets under management.

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