January 19, 2016
Whitecap Adapts To Current Pricing Environment And Provides Revised Outlook For 2016
January 19, 2016
WHITECAP ADAPTS TO CURRENT PRICING ENVIRONMENT AND PROVIDES REVISED OUTLOOK FOR 2016
CALGARY, ALBERTA -Whitecap Resources Inc. ("Whitecap" or the "Company") announces that in response to the severe decline in crude oil prices in the past few weeks, we are implementing multiple initiatives to adapt to the lower prices. Our priority in the current commodity price environment is to protect our balance sheet and to re-calibrate our business plan to ensure long-term sustainability while being positioned for an eventual commodity price recovery.
Capital Reduction
Whitecap's Board of Directors have agreed to a 53% reduction to our 2016 capital program to $70 million from our previous guidance on December 15, 2015 of $150 million. The deterioration in crude oil prices has dramatically affected our project economics and we therefore believe that reducing our capital spending in this environment will maximize long-term value for our shareholders as we continue to focus on return on capital employed. The revised 2016 capital program of 23 (22.3 net) wells includes 15 (14.8 net) Viking light oil wells in west central Saskatchewan, 5 (4.9 net) Cardium light oil wells in West Pembina and Ferrier, 2 (2.0 net) light oil horizontal wells in the Deep Basin and 1.0 (0.6 net) well in Boundary Lake. Our corporate focus on waterfloods across our asset base creates a low base production decline rate of 20% and provides a stable base level of production and funds flow which requires lower sustaining capital requirements. This revised capital program allows us to generate sufficient funds flow to maintain a total payout ratio of less than 100% at current strip pricing.
