April 23, 2025
WHITECAP RESOURCES INC. ANNOUNCES STRONG FIRST QUARTER RESULTS AND CONTINUED OPERATIONAL MOMENTUM
CALGARY, ALBERTA – Whitecap Resources Inc. ("Whitecap" or the "Company") (TSX: WCP) is pleased to report its operating and unaudited financial results for the three months ended March 31, 2025.
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 months ended March 31, 2025 which are available at www.sedarplus.ca and on our website at www.wcap.ca.
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Financial ($ millions except for share amounts) |
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Three Months ended Mar. 31 |
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2025 |
2024 |
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|
Petroleum and natural gas revenues |
|
|
942.2 |
868.3 |
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Net income |
|
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162.6 |
59.8 |
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Basic ($/share) |
|
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0.28 |
0.10 |
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Diluted ($/share) |
|
|
0.27 |
0.10 |
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Funds flow 1 |
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446.3 |
384.0 |
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Basic ($/share) 1 |
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0.76 |
0.64 |
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Diluted ($/share) 1 |
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|
0.75 |
0.64 |
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Dividends declared |
|
|
107.2 |
109.1 |
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Per share |
|
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0.18 |
0.18 |
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Expenditures on property, plant and equipment 2 |
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398.1 |
393.2 |
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Free funds flow 1 |
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48.2 |
(9.2) |
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Net Debt 1 |
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986.9 |
1,495.4 |
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Operating |
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Average daily production |
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|
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|
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Crude oil (bbls/d) |
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93,765 |
88,807 |
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NGLs (bbls/d) |
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22,167 |
19,403 |
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Natural gas (Mcf/d) |
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378,715 |
368,701 |
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Total (boe/d) 3 |
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179,051 |
169,660 |
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Average realized Price 1,4 |
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|
|
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Crude oil ($/bbl) |
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93.00 |
89.02 |
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NGLs ($/bbl) |
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38.09 |
34.77 |
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Natural gas ($/Mcf) |
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2.39 |
2.61 |
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Petroleum and natural gas revenues ($/boe) 1 |
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58.47 |
56.24 |
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Operating Netback ($/boe) 1 |
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|
|
|
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Petroleum and natural gas revenues1 |
|
|
58.47 |
56.24 |
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Tariffs 1 |
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(0.29) |
(0.44) |
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Processing & other income 1 |
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|
0.81 |
0.78 |
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Marketing revenues 1 |
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3.88 |
3.87 |
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Petroleum and natural gas sales 1 |
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62.87 |
60.45 |
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Realized gain on commodity contracts 1 |
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0.85 |
0.36 |
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Royalties 1 |
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(9.80) |
(9.43) |
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Operating expenses 1 |
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(13.57) |
(14.27) |
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Transportation expenses 1 |
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(2.35) |
(2.06) |
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Marketing expenses 1 |
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(3.79) |
(3.84) |
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Operating netbacks |
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34.21 |
31.21 |
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Share information (millions) |
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|
|
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Common shares outstanding, end of period |
|
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587.5 |
598.0 |
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Weighted average basic shares outstanding |
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587.5 |
598.0 |
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Weighted average diluted shares outstanding |
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|
592.4 |
601.7 |
MESSAGE TO SHAREHOLDERS
We are very pleased to advise that 2025 is off to an excellent start with first quarter production averaging 179,051 boe/d, including 115,932 bbl/d of total liquids, comprised of oil, condensate and natural gas liquids ("NGLs") and 378,715 mcf/d of natural gas. Production was over 6,000 boe/d higher than our internal forecast of 173,000 boe/d due to strong production from new wells brought on over the past six months as well as from base production continuing to exceed forecasts. Capital investments totalled $398 million to drill 86 (76.0 net) wells during the first quarter.
Our very active first quarter capital program averaged 14 rigs, three in the unconventional Montney and Duvernay and 11 across our conventional assets. We spud 4 (4.0 net) Montney wells at Kakwa in the first quarter and continued operations on three Duvernay 5-well (5.0 net) pads at Kaybob. We drilled a total of 82 (72.0 net) conventional wells in the first quarter.
We provide the following first quarter 2025 financial and operating highlights:
· Production Growth. Production of 179,051 boe/d (65% liquids) increased 6% compared to the first quarter of 2024. Production volumes were stronger than our internal forecast on the unconventional Montney and Duvernay as well as on the conventional assets with new production higher than expectations and stronger base volumes across the portfolio.
· Funds Flow. First quarter funds flow of $446 million ($0.75 per share) was 17% higher on a per share basis than the first quarter of 2024 and 7% higher than the fourth quarter of 2024. Free funds flow totalled $48 million after capital investments of $398 million during the quarter.
· Return of Capital. We returned $107 million ($0.1824 per share) in base dividends to shareholders with an average annualized yield of 7.5% in the first quarter. Our annual base dividend of $0.73 per share represents a stable return of capital to our shareholders through commodity price cycles.
· Balance Sheet Strength. Net debt of $987 million at the end of the first quarter equates to a net debt to annualized funds flow ratio1 of 0.6 times with significant available liquidity on our credit facility.
OPERATIONS UPDATE
Unconventional
At Kaybob, our first pad that utilized a wine rack design has now been on production for 180 days, achieving an IP180 rate of 1,100 boe/d (39% liquids). The second wine rack style pad was recently brought on production through permanent facilities, and we are very encouraged by initial results. Observed and interpreted reservoir performance of these first two pads to date has met or exceeded our expectations, validating our assessment that this approach has the potential to improve economic return characteristics in this area by increasing recoveries on these lands. This approach is applicable to a significant portion of our future inventory at Kaybob. We recently finished drilling our third wine rack style pad at 06-05 which is a 5-well (5.0 net) pad.
At Kakwa, we recently tied in our 16-17 3-well (1.5 net) pad into permanent facilities. Drilling and completions operations on this pad, our first triple bench pad at northwest Kakwa, were successful and initial flow test results are also encouraging. We are currently drilling a 4-well (4.0 net) pad at east Kakwa, which will be drilled at a six well per section spacing, consistent with our successful inter-well spacing pilots drilled at Kakwa in 2023.
At Musreau, we incurred minor unplanned plant downtime during the first quarter impacting a portion of the facility. Following the outage, production returned to its condensate-limited capacity of approximately 17,500 boe/d with an additional 5,000 boe/d of productive capacity from the sixteen wells available at this time. Our fifth Montney pad at Musreau will be drilled and completed beginning in the second half of 2025 and is forecast to be on production in early 2026 as plant capacity becomes available.
The newly planned Lator 04-13 facility is progressing as planned with 90% of long lead items being ordered and detailed engineering being advanced. Development will commence in 2026 and completion of the 35,000 – 40,000 boe/d facility is on track for late 2026/early 2027.
Conventional
Our conventional assets continued to deliver high confidence and repeatable results as we had another strong first quarter that exceeded expectations after overcoming drilling delays due to cold weather in February. The most active areas during the first quarter included the drilling of 39 (36.3 net) Viking wells in West Saskatchewan, 13 (12.0 net) Frobisher wells in East Saskatchewan and 8 (7.1 net) Glauconite wells in Alberta.
Our Glauconite program has been particularly strong as results have continued to exceed expectations. The switch to monobore drilling has driven a 10% cost reduction, while enhanced infrastructure and egress access have unlocked greater production capacity across the area – delivering stronger results and improved economics. Our most recent five (5.0 net) Glauconite development wells with greater than 90 days of production history have achieved an average IP90 rate of 963 boe/d (52% liquids) per well, exceeding our type curve by 27%.
In the fourth quarter of 2024 available infrastructure capacity allowed us to drill our first Cardium wells at Wapiti since the fourth quarter of 2022. We have now drilled 9 (8.4 net) wells in the past six months with 3 (3.0 net) having 90 days of production history, achieving an average IP90 rate of 650 boe/d (81% liquids), which is 44% above our type curve for the area. This program featured an optimized completion design, which was established by applying our advanced completions workflows currently being utilized in our unconventional assets. This design has aided these strong early results, providing improvement to area expectations, and is a good example of how our shared workflows can improve our overall asset base.
COMBINATION WITH VEREN INC.
On March 10, 2025, Whitecap and Veren Inc. ("Veren") announced a strategic combination (the "Combination"), to create a leading light oil and condensate producer with concentrated assets in the Alberta Montney and Duvernay. The combined company will be the largest Alberta Montney and Duvernay landholder, a prominent light oil producer in Saskatchewan and will leverage the combined asset base and technical expertise to drive incremental improvements to profitability and superior returns to shareholders.
Under the terms of the business combination agreement, Veren shareholders will receive 1.05 common shares of Whitecap for each Veren share held. Whitecap management will lead the combined company, and the Board of Directors will be comprised of seven current Whitecap directors and four current Veren directors, including Craig Bryksa, President and CEO of Veren.
The Combination has received approval from the Competition Bureau, in the form of a No Action Letter, and Whitecap and Veren filed a joint information circular with securities regulators on April 4, 2025. Shareholder votes for both companies will occur on May 6, 2025, and upon receipt of approval by the Court of King's Bench of Alberta of the Combination, as well as other customary closing conditions, the Combination is expected to close on or about May 12, 2025.
OUTLOOK
Upon closing of the Combination, or shortly thereafter, Whitecap will provide updated 2025 production and capital guidance. The pro forma entity will be well positioned to manage through the current market volatility with its balance sheet strength, vast portfolio of high return, quick capital payout drilling opportunities and a management team that has successfully navigated through previous commodity price cycles including the COVID-19 pandemic price environment.
Our strategic priorities are as follows:
· Balance Sheet Strength. Pro forma net debt at the end of 2025 is anticipated to be approximately $3.5 billion which equates to a net debt to annualized funds flow ratio of 1.0 times5 and 1.4 times at US$50/bbl WTI and $2.00/GJ AECO. We are targeting unutilized debt capacity of approximately $1.6 billion in 2025. Our objective is to ensure that our capital expenditures and dividends paid to shareholders are fully covered by funds flow to maintain our balance sheet strength.
· Capital Expenditures. Our long-term organic production growth target is 3% – 5% per share6 enhanced by share repurchases with the flexibility to adjust our production growth rate to prioritize free funds flow generation. We are actively optimizing our 2025 pro forma capital programs in both the unconventional and conventional assets in response to current lower crude oil prices as well as for the cost uncertainty due to tariffs and will provide updated guidance on closing of the Combination, or shortly thereafter.
· Return of Capital. The annual base dividend of $0.73 per share provides shareholders with a stable and reliable cash flow stream through commodity price cycles.
The combined company's high-quality portfolio of assets, track record of execution and realization of the identified synergies will provide for greater resiliency through commodity price cycles and increased profitability going forward.
On behalf of our employees, management team and Board of Directors, we would like to thank our shareholders for their continued support.
NOTES
1 Annualized funds flow, funds flow, funds flow basic ($/share), funds flow diluted ($/share) and net debt are capital management measures. Average realized price, net debt to annualized funds flow ratio and per boe disclosure figures are supplementary financial measures. Operating netback and free funds flow are non-GAAP financial measures. Operating netback ($/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 investments".
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, Initial Production Rates & Product Type Information in this press release for additional disclosure.
4 Prior to the impact of risk management activities and tariffs.
5 Based on the following commodity pricing and exchange rate assumptions for the remainder of 2025: US$65/bbl WTI, $2.50/GJ AECO and USD/CAD of $1.39.
6 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.
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, April 24, 2025.
The conference call dial-in number is: 1-888-510-2154 or (403) 910-0389 or (437) 900-0527
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.
