WHITECAP RESOURCES INC. ANNOUNCES SECOND QUARTER RESULTS

CALGARY, ALBERTA – Whitecap Resources Inc. ("Whitecap" or the "Company") (TSX: WCP) is pleased to report its operating and unaudited financial results for the three and six months ended June 30, 2023.

Selected financial and operating information is outlined below and should be read with Whitecap’s unaudited interim consolidated financial statements and related management’s discussion and analysis for the three and six months ended June 30, 2023 which are available at www.sedar.com and on our website at www.wcap.ca.

Financial ($ millions except for share amounts and percentages)	Three months ended June 30		Six months ended June 30
	2023	2022	2023	2022
Petroleum and natural gas revenues	797.9	1,262.0	1,681.6	2,265.9
Net income	175.4	380.7	438.0	1,033.0
Basic ($/share)	0.29	0.62	0.72	1.66
Diluted ($/share)	0.29	0.61	0.72	1.65
Funds flow 1	415.1	676.6	863.1	1,182.3
Basic ($/share) 1	0.69	1.09	1.43	1.90
Diluted ($/share) 1	0.68	1.08	1.41	1.88
Dividends declared	87.7	55.6	175.4	102.8
Per share	0.15	0.09	0.29	0.17
Expenditures on property, plant and equipment 2	217.8	87.9	471.4	299.4
Total payout ratio (%) 1	74	21	75	34
Net Debt 1	1,361.2	673.8	1,361.2	673.8
Operating
Average daily production
Crude oil (bbls/d)	82,649	85,657	84,452	84,326
NGLs (bbls/d)	15,448	13,465	16,048	14,025
Natural gas (Mcf/d)	294,412	199,026	303,734	204,841
Total (boe/d) 3	147,166	132,293	151,122	132,491
Average realized Price 1,4
Crude oil ($/bbl)	90.59	133.57	91.17	122.98
NGLs ($/bbl)	33.58	66.38	40.76	60.31
Natural gas ($/Mcf)	2.59	7.70	3.08	6.36
Petroleum and natural gas revenues ($/boe) 1	59.58	104.83	61.48	94.49
Operating Netback ($/boe) 1
Petroleum and natural gas revenues	59.58	104.83	61.48	94.49
Tariffs 1	(0.50)	(0.43)	(0.52)	(0.47)
Processing & other income 1	1.08	0.61	0.96	0.59
Marketing revenues 1	5.06	7.09	4.84	6.01
Petroleum and natural gas sales 1	65.22	112.10	66.76	100.62
Realized gain/(loss) on commodity contracts 1	0.89	(9.66)	0.77	(8.09)
Royalties 1	(9.57)	(20.08)	(10.56)	(18.31)
Operating expenses 1	(15.16)	(15.50)	(14.55)	(14.63)
Transportation expenses 1	(2.23)	(2.25)	(2.18)	(2.16)
Marketing expenses 1	(5.08)	(7.02)	(4.83)	(5.95)
Operating netbacks	34.07	57.59	35.41	51.48
Share information (millions)
Common shares outstanding, end of period	605.8	618.6	605.8	618.6
Weighted average basic shares outstanding	605.2	618.4	605.6	621.8
Weighted average diluted shares outstanding	609.2	625.1	610.1	627.5

MESSAGE TO SHAREHOLDERS

Whitecap benefitted from strong crude oil prices in the second quarter with our high quality oil-weighted assets, generating $415 million of funds flow and $197 million of free funds flow¹ after $218 million of capital expenditures.

Return of capital to shareholders consisted of $88 million of base dividends ($0.15 per share), resulting in 45% of free funds flow being returned to shareholders. Through the first six months of 2023, Whitecap has generated $392 million of free funds flow and returned 53% ($208 million) to shareholders by way of base dividends plus share repurchases.

Second quarter production of 147,166 boe/d included 98,097 bbls/d of total liquids production (oil, condensate and NGLs) and 294,412 mcf/d of natural gas production. Production per share⁵ increased 14% compared to the same quarter in 2022. The Alberta wildfires impacted production and operations during the quarter, resulting in assets being shut-in at various times throughout the month of May and into June. There was no significant damage to our assets and all production impacted by the wildfires is now back online. We would like to acknowledge our field personnel and their families as well as the first responders and emergency response agencies for their efforts in the affected communities over the past several months.

We spud a total of 43 (41.6 net) wells during the second quarter, 34 (32.6 net) wells in our East Division (formerly the Central Alberta and Saskatchewan business units), and 9 (9.0 net) wells in our West Division (formerly the Northern Alberta business unit) including our first 3-well Duvernay pad at Kaybob as well as a 3-well Montney pad at Kakwa. Break up conditions subsided early, allowing our East Division operations team to resume our capital program in June. Second quarter capital expenditures of $218 million included $177 million of drilling capital and $37 million of facilities expenditures.

We continue to fortify the balance sheet, further reducing net debt by $110 million to $1.36 billion at the end of the quarter which results in a debt to EBITDA ratio⁶ of 0.6 times and $1.74 billion of unused capacity.

We provide the following second quarter 2023 financial and operating highlights:

·      Funds Flow. Whitecap’s second quarter funds flow of $415 million, or $0.68 per share, continued to benefit from stronger liquids production than internally forecasted. Second quarter WTI prices in Canadian dollars averaged almost $100 per barrel, with differentials on our sour and medium grades of crude oil production narrowing towards historical averages and contributing to our crude oil realized price of over $90 per barrel.

·      Strong Liquids Production. Production of 147,166 boe/d was higher than internal expectations, after giving effect to the wildfire impact, with higher liquids production contributing to the strong second quarter funds flow. Our Southeast Saskatchewan conventional and Central Alberta Glauconite assets were the main drivers of the liquids outperformance during the quarter.

·      Return of Capital Focus. Whitecap’s second quarter dividends of $0.15 per share ($0.58 per share annualized) totalled $88 million, with year-to-date dividends plus share repurchases under our normal course issuer bid ("NCIB") equating to $208 million, or $0.34 per share. During the second quarter, we renewed our NCIB which allows for the purchase of up to 59.7 million shares, or 10% of the public float, to May 22, 2024.

·      Balance Sheet Strength. Quarter end net debt of $1.36 billion equated to a debt to EBITDA ratio of 0.6 times and an EBITDA to interest expense ratio⁶ of 28.8 times, both well within our debt covenants of not greater than 4.0 times and not less than 3.5 times, respectively. Over 60% of our long-term debt is not exposed to interest rate fluctuations, keeping our interest and financing costs low at just over $1.00 per boe in the second quarter.

OUTLOOK

Our 2023 capital budget of $900 ­­– $950 million is unchanged, while our production guidance of 157,000 – 159,000 boe/d has been adjusted from 160,000 – 162,000 boe/d to reflect the impact of the Alberta wildfires during the second quarter.

Whitecap has an extensive inventory of high quality unconventional drilling opportunities in the liquids-rich Alberta Montney and Duvernay, supplemented by oil-weighted conventional opportunities in the Peace River Arch, Central Alberta and Saskatchewan. For the full year 2023, we plan to drill 187 (160.0 net) wells in our East Division, from the 3,562 (2,974 net) wells in inventory⁷ and 32 (28.9 net) wells in our West Division, from the 3,022 (2,701 net) wells in inventory⁷. Our balanced portfolio of opportunities allows us to generate significant free funds flow while growing sustainably at 3% – 8% production per share⁵.

Since entering the Montney resource play at Kakwa in mid-2021, we have drilled 24 wells of which 17 wells have more than 3 months of production history. Of these 17 wells, 82% have achieved or are expected to achieve capital payout in less than 12 months. The economics of this play continue to rank top quartile within Whitecap’s portfolio and, in addition, we have identified multiple opportunities to further enhance our capital efficiencies in this play. For the second half of 2023, we plan to spud 15 (15.0 net) Montney wells and bring 8 (8.0 net) wells on production prior to the end of the year.

Commencement of our Duvernay program occurred during the second quarter with completions operations on our first 3-well pad recently concluding while the drilling on our second pad (4 wells) started in late June. Capital execution on our Duvernay program has been strong and we are encouraged by progress to-date, with the first pad expected to be on production through permanent facilities later in the third quarter and the second pad expected to be tied-in and on production in the fourth quarter.

As a result of the operational and financial impacts of the Alberta wildfires, we now expect to reach our $1.3 billion net debt milestone in the second half of 2023 at current strip prices⁸. We remain committed to our return of capital framework which will result in 75% of free funds flow being returned to shareholders upon reaching our $1.3 billion net debt milestone, including the targeted 26% dividend increase to $0.73 per share annually.

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 remainder of the year.

NOTES
¹    Funds flow, funds flow basic ($/share), funds flow diluted ($/share) and net debt are capital management measures. Total payout ratio, average realized price and per boe disclosure figures are supplementary financial measures. Operating netback and free funds flow are non-GAAP financial measures. Operating netbacks ($/boe) is a non-GAAP ratio. Refer to the Specified Financial Measures section in this press release for additional disclosure and assumptions.
²   Also referred to herein as "capital expenditures" and "capital spending".
³   Disclosure of production on a per boe basis in this press release consists of the constituent product types and their respective quantities disclosed herein. Refer to Barrel of Oil Equivalency and Production and Product Type Information in this press release for additional disclosure.
⁴   Prior to the impact of risk management activities and tariffs.
⁵    Production per share is the Company's total crude oil, NGL and natural gas production volumes for the applicable period divided by the weighted average number of diluted shares outstanding for the applicable period. Production per share growth is determined in comparison to the applicable comparative period.
⁶   Debt to EBITDA ratio and EBITDA to interest expense ratio are specified financial measures that are calculated in accordance with the financial covenants in our credit agreement.
⁷   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.
⁸   Based on the following strip commodity pricing and exchange rate assumptions for the second half of 2023: US$78.25/bbl WTI, $2.73/GJ AECO, USD/CAD of $1.32.

CONFERENCE CALL AND WEBCAST

Whitecap has scheduled a conference call and webcast to begin promptly at 9:00 am MT (11:00 am ET) on Thursday, July 27, 2023.

The conference call dial-in number is: 1-888-390-0605 or (587) 880-2175 or (416) 764-8609

A live webcast of the conference call will be accessible on Whitecap's website at www.wcap.ca by selecting "Investors", then "Presentations & Events". Shortly after the live webcast, an archived version will be available for approximately 14 days.

For further information:

Grant Fagerheim, President & CEO
or
Thanh Kang, Senior Vice President & CFO

Whitecap Resources Inc.
3800, 525 – 8th Avenue SW
Calgary, AB T2P 1G1
(403) 266-0767
www.wcap.ca
InvestorRelations@wcap.ca

Refer to full press release for forward looking statements and advisories.