September 19, 2024
WHITECAP RESOURCES INC. PROVIDES OPERATIONAL UPDATE, ENTERS INTO NEW UNSECURED CREDIT FACILITY AND RELEASES INVESTMENT GRADE CREDIT RATING
CALGARY, ALBERTA – Whitecap Resources Inc. ("Whitecap" or the "Company") (TSX: WCP) is pleased to announce operational highlights that demonstrate continued production momentum and closing of our new unsecured credit facilities concurrent with the release of our investment grade credit rating.
Operations Update
Whitecap has had excellent operational success in the first half of 2024 and the outperformance continues in the third quarter with our base level of production exceeding expectations along with our team’s ability to mitigate downtime during planned and unplanned events. The operational success achieved year to date is forecasted to result in annual production close to the high end of our 167,000 – 172,000 boe/d1 guidance.
Development of our unconventional Montney and Duvernay assets continues to progress positively. We recently brought on our third Montney four well pad (4.0 net) and are now drilling our fourth Montney four well pad (4.0 net) at Musreau. At present, we have reached design condensate capacity at our 05-09 battery of approximately 11,000 bbl/d which, at current condensate to gas ratios, limits our gas throughput to approximately 80% of nameplate capacity for total production of approximately 17,500 boe/d. Our first two pads continue to outperform both on a total and condensate production basis, averaging 1,573 boe/d (71% liquids) per well and includes an average of 1,050 bbl/d of condensate per well over the first 120 days of production. As a result of the capacity limitations at the 05-09 battery, our third pad is currently producing at restricted rates.
We recently brought on production our 11-34B three well Duvernay pad (3.0 net) at Kaybob which has achieved IP90 average rates of 1,428 boe/d (34% liquids) per well, which is within our range of expectations. We have also finished frac operations on our 11-14B five-well Duvernay pad (5.0 net) which is our first pilot with laterals offset vertically by 15 metres in an attempt to limit interaction between wells and to increase vertical coverage of our overall development. We look forward to sharing the results from that pad once production data is available.
At Lator, we are completing the first and drilling the second of our two well delineation program with results expected in the first quarter of 2025. These wells will be informative to our upcoming development in this area. As well, we are moving forward with the completion of our detailed engineering and design work and obtaining the required regulatory approvals for our new Lator facility after our final investment decision was made earlier this summer
With regards to our conventional assets, they have continued to perform well in the third quarter, with our operations team focused on capital reduction and inventory enhancement initiatives. We recently finished drilling our second monobore well in the Glauconite and have realized 10% cost savings per well. We plan to drill up to two additional monobore Glauconite wells prior to year end.
In Saskatchewan, we are drilling two open hole multi-lateral ("OHML") pilot wells in the second half of the year. Our first OHML well in the State A, which stratigraphically lies within the Frobisher formation, was successfully drilled in the third quarter and brought on production in September. If successful, drilling OHML wells into the State A has the potential to add an incremental two to three years to our existing Southeast Saskatchewan light oil inventory. We also recently spud our second OHML pilot well in the Viking in Western Saskatchewan.
Corporate Update
Whitecap is pleased to announce a public investment grade credit rating of BBB (low), with a stable trend, by DBRS Limited ("Morningstar DBRS"). We have had a private investment grade credit rating of BBB (low) since December 2022 and the now public rating further validates our strong financial position and reflects our balanced portfolio of opportunities along with asset duration. Whitecap remains committed to maintaining low leverage and ample liquidity while efficiently developing our multi-decade drilling inventory and generating increased profitability through commodity price cycles.
Concurrent with the release of our public investment grade credit rating, Whitecap entered into a new $2 billion unsecured covenant-based credit facility (the "New Facility") with our syndicate of banks which replaces Whitecap's existing secured credit and term loan facilities. The New Facility has a total debt to EBITDA2 covenant of not greater than 4.0 times, an EBITDA to interest expense2 covenant of not less than 3.5 times and a debt to capitalization covenant2 of not greater than 60%. At June 30, 2024, our debt to EBITDA ratio was 0.6 times, our EBITDA to interest expense ratio was 27.6 times and our debt to capitalization was 18%. The existing $195 million of senior secured notes, which mature December 2026 with a coupon of 3.9%, will be amended to make conforming changes to the New Facility agreement and to reflect an investment grade credit rating structure.
The New Facility along with our investment grade credit rating allows us to access the investment grade bond market to diversify our debt structure into a deeper market that provides for longer tenors and a lower cost of funding for Whitecap. We view the investment grade bond market as an important part of our capital structure going forward.
NOTES
1 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.
2 Total debt to EBITDA ratio, EBITDA to interest expense ratio and debt to capitalization are specified financial measures that are calculated in accordance with the financial covenants in our New Facility.
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.
