November 14, 2016
whitecap resources inc. announces $300 million capital budget and 15% production per share growth for 2017
November 14, 2016
WHITECAP RESOURCES INC. ANNOUNCES $300 MILLION CAPITAL BUDGET AND 15% PRODUCTION PER SHARE GROWTH FOR 2017
CALGARY, ALBERTA -Whitecap Resources Inc. ("Whitecap" or the "Company") (TSX: WCP) is pleased to announce that its Board of Directors has approved a $300 million capital budget for 2017 that is anticipated to deliver top quartile production per share growth of 15%. The 2017 capital program and the annual dividend of $0.28 per share is expected to be fully funded by internally generated funds flow without the use of a dividend re-investment program.
2017 Budget
We are excited about the outlook for our company as we have been able to strategically assemble and integrate an enviable suite of high quality oil assets that have predictable production profiles, balanced decline rates, strong netbacks and a large repeatable development drilling inventory. The 2017 capital budget is designed to achieve meaningful production per share growth in combination with enhancing Whitecap’s net asset value and sustainability. This is accomplished by balancing our capital program between short payout and high rate of return projects and waterflood and enhanced oil recovery ("EOR") projects for long-term value creation and decline mitigation. Whitecap’s overarching objective is to provide sustainable returns for our shareholders by focusing on cost discipline and return on capital employed. We maintain the operational flexibility to either reduce our capital program if commodity prices significantly weaken from current levels or potentially accelerate our capital program in the second half of 2017 if there is a meaningful and sustained improvement in commodity prices. We have stress tested our capital budget down to a WTI price of US$40/bbl which results in a total payout ratio of 104% and net debt to funds flow of 2.2x for 2017 compared to our current budget forecast which results in a total payout ratio of 75% and net debt to funds flow of 1.3x using a WTI price of US$55/bbl.
The capital investment of $300 million in 2017 includes the drilling of 187 (163.8 net) development oil wells which are anticipated to deliver annual production of 57,000 boe/d compared to 45,700 boe/d in 2016, an increase of 25% (15% per share). We plan to allocate $234 million of our capital program towards drilling, completion, equipping and tie-in of new wells, along with recompletions and workovers of existing wells, $38 million on waterflood and EOR projects, $16 million on facilities and $12 million on health, safety, environment and other costs. Of the $234 million in drilling capital, 30% or $71 million is anticipated to target EOR/waterflood pools that exhibit shallower decline profiles and produce at lower decline rates for a longer period of time compared to typical resource play wells.
We will continue to apply extended reach horizontal ("ERH") drilling technology to enhance economic returns in each of our core areas. We have a robust inventory of 3,040 (2,455.2 net) oil development drilling locations of which 22% or 654 (534.3 net) wells are ERH locations.
