News Releases

WHITECAP RESOURCES INC. REPORTS STRONG PRODUCTION PER SHARE GROWTH AND PROVIDES NEW ENERGY UPDATE

CALGARY, ALBERTA – Whitecap Resources Inc. ("Whitecap" or the "Company") (TSX: WCP) is pleased to report its operating and unaudited consolidated financial results for the three and nine months ended September 30, 2022. 

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 nine months ended September 30, 2022 which are available at www.sedar.com and on our website at www.wcap.ca.

FINANCIAL AND OPERATING HIGHLIGHTS

Financial ($000s except for share amounts and percentages)	Three months ended September 30		Nine months ended September 30
	2022	2021	2022	2021
Petroleum and natural gas revenues	1,070,509	678,115	3,336,375	1,740,527
Net income	324,464	1,514,633	1,357,454	1,552,826
Basic ($/share)	0.53	2.40	2.19	2.64
Diluted ($/share)	0.53	2.37	2.17	2.62
Funds flow 1	546,788	293,741	1,729,121	748,072
Basic ($/share)	0.89	0.46	2.80	1.27
Diluted ($/share)	0.88	0.46	2.77	1.26
Dividends paid or declared	67,232	30,807	169,991	83,772
Per share	0.11	0.05	0.28	0.14
Expenditures on property, plant and equipment 2	208,004	135,204	507,529	293,486
Total payout ratio (%) 1	50	57	39	50
Net Debt 1	2,192,263	1,313,871	2,192,263	1,313,871
Operating
Average daily production
Crude oil (bbls/d)	85,137	77,188	84,599	74,063
NGLs (bbls/d)	16,513	10,279	14,863	10,368
Natural gas (Mcf/d)	264,886	170,807	225,076	150,979
Total (boe/d) 3	145,798	115,935	136,975	109,594
Average realized Price 4,5
Crude oil ($/bbl)	111.64	81.02	119.13	73.75
NGLs ($/bbl)	55.87	45.64	58.65	37.36
Natural gas ($/Mcf)	4.56	3.79	5.65	3.49
Petroleum and natural gas revenues ($/boe) 5	79.81	63.58	89.22	58.17
Operating Netback ($/boe) 1,5
Petroleum and natural gas revenues	79.81	63.58	89.22	58.17
Tariffs	(0.39)	(0.43)	(0.44)	(0.41)
Processing & other income	0.74	0.83	0.64	0.77
Marketing revenue	6.03	4.29	6.02	3.57
Petroleum and natural gas sales	86.19	68.27	95.44	62.10
Realized loss on commodity contracts	(2.20)	(6.83)	(5.98)	(5.13)
Royalties	(16.29)	(10.24)	(17.58)	(9.07)
Operating expenses	(14.85)	(13.71)	(14.71)	(13.61)
Transportation expenses	(2.27)	(2.29)	(2.20)	(2.23)
Marketing expenses	(6.00)	(4.32)	(5.97)	(3.60)
Operating netbacks	44.58	30.88	49.00	28.46
Share information (000s)
Common shares outstanding, end of period	610,610	631,991	610,610	631,991
Weighted average basic shares outstanding	611,904	632,101	618,471	588,750
Weighted average diluted shares outstanding	617,911	638,060	624,504	593,407

MESSAGE TO SHAREHOLDERS

Whitecap delivered another strong quarter with the successful execution of its $208 million capital program to achieve average production of 145,798 boe/d in the third quarter, well ahead of our internal expectations. Production per share¹ increased 11% compared to the second quarter of this year and 30% compared to the same quarter in the prior year.

The efficient execution of our capital program and strong operational results generated $339 million of free funds flow⁶ in the third quarter, of which $138 million was returned to shareholders through our base dividend ($67 million) and share repurchases ($71 million) at an average cost of $8.45 per share.

We successfully closed the acquisition of XTO Energy Canada ("XTO") on August 31^st for net cash consideration of $1.7 billion, after working capital adjustments, resulting in quarter end net debt of $2.2 billion and a debt to EBITDA ratio⁷ of 0.8 times. Total credit capacity is now $3.1 billion providing us with significant financial flexibility going forward.

Whitecap drilled 84 (68.4 net) wells during the quarter including 60 (46.7 net) wells in Saskatchewan, 13 (12.0 net) wells in Central Alberta, and 11 (9.7 net) wells in Northern Alberta & B.C.

We highlight the following third quarter 2022 financial and operating results:

·      Production Outperformance. Third quarter production of 145,798 boe/d included one month of the XTO acquired volumes and increased 30% per share compared to Q3/21. Outperformance on our base assets continued while execution of optimization opportunities contributed to production outperforming our internal expectations of 142,000 – 144,000 boe/d.

·      Strong Funds Flow. Third quarter funds flow of $547 million or $0.88 per share was up 91% as compared to Q3/21. Funds flow per share was the second highest quarterly result in Company history, and includes the impact of one-time transaction costs of $11 million relating to the XTO acquisition and higher operating costs primarily related to third quarter Alberta power prices averaging over 80% and over 120% higher than Q2/22 and Q3/21, respectively.

·      Return of Capital Focus. Dividends paid during the third quarter were $67 million or $0.11 per share, which were 22% and 137% higher on a per share basis than Q2/22 and Q3/21, respectively. Including $71 million of share repurchases under our normal course issuer bid ("NCIB"), total capital returned to shareholders was $138 million during the quarter.

·      Balance Sheet Strength. Quarter end net debt of $2.2 billion represents a debt to EBITDA ratio of 0.8x and EBITDA to interest expense ratio⁷ of 55.2x, well within our covenant limits of not greater than 4.0x and not less than 3.5x, respectively. Our balance sheet is in excellent shape and provides significant financial flexibility to manage through commodity price cycles.

OUTLOOK

Integration of the XTO assets has been seamless given our existing expertise in the Montney. Since May 2021, we have brought on production 12 Montney wells with 4 more wells to be on stream by the end of the year, and we are expecting to drill another 23 (21.4 net) Montney wells at Kakwa in 2023. Our four-well 12-33 pad has now achieved an average production rate of 1,900 boe/d (36% liquids) per well over the first 120 days on production, while the three-well 14-13 pad has now been on for 270 days, achieving an average per well production rate of 1,660 boe/d (29% liquids)³. These results continue to exceed our initial expectations, further validating the high quality of inventory acquired.

We are currently operating 9 drilling rigs and we expect operational momentum to continue into the fourth quarter with average production increasing by 13% to approximately 165,000 boe/d (65% liquids). We now expect 2022 production to average 144,000 boe/d (70% liquids) which is at the high end of our previous guidance. Our expectations for 2022 capital expenditures of $670 - $690 million are unchanged which is expected to result in the Company reaching our $1.8 billion net debt milestone prior to year end at current strip prices⁸.

Our 2023 budget of $900 - $950 million and average production guidance of 170,000 – 172,000 boe/d (64% liquids) is unchanged and is expected to result in the Company reaching our final net debt milestone of $1.3 billion in mid-2023⁸. Once we achieve our net debt milestone of $1.3 billion, we anticipate returning 75% of free funds flow back to shareholders which includes a targeted annual base dividend of $0.73 per share.

NEW ENERGY UPDATE

Whitecap's New Energy team continues to advance our Fort Saskatchewan carbon hub with our partners in Alberta and our Belle Plaine/Regina carbon hub in Saskatchewan with spending on pre-FID ("final investment decision") work, seismic and evaluation wells. In addition to these two projects, Whitecap, along with our partners, was successful in being selected by the Government of Alberta to pursue the development of two additional strategically located carbon hubs to transport and permanently sequester CO₂ emissions captured from sources in Central and Southern Alberta.

·         Rolling Hills Hub. Whitecap and AltaGas Ltd. ("AltaGas") have partnered for a potential open-access carbon sequestration hub to the northwest of Calgary in Southern Alberta. The project has identified multiple CO₂ emission sources in the area and includes facilities owned and operated by both Whitecap and AltaGas. The project's next step is to commence a technical evaluation with a potential in-service date of 2026.

·         Central Alberta Hub. Whitecap and Wolf Midstream have partnered for a potential open-access carbon sequestration hub east of Red Deer in Central Alberta. The hub will be connected to the Alberta Carbon Trunk Line and will leverage this existing infrastructure along with our subsurface knowledge in the area. The project's next step is to commence a technical evaluation with a potential in-service date of 2027.

We will continue to advance these projects forward to provide safe and reliable transportation and storage solutions for industrial parties. We are confident that our technical expertise and experience operating existing carbon sequestration projects both in Saskatchewan and Alberta will provide the necessary support for industrial parties wishing to pursue decarbonization plans at an accelerated pace.

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 through the remainder of the year and into 2023.

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, October 27, 2022.

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

A live audio 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 further information:

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

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

NOTES
¹    Funds flow, funds flow basic ($/share), funds flow diluted ($/share) and net debt are capital management measures. Total payout ratio and production per share are supplementary financial measures. Operating Netback is a non-GAAP financial measure and 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".
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 and Product Type Information in this press release for additional disclosure.
⁴   Prior to the impact of risk management activities and tariffs.
⁵   Supplementary financial measure. Refer to the "Supplementary Financial Measures" section of the Company’s MD&A for the three and nine months ended September 30, 2022, which is incorporated herein by reference, and available on SEDAR at www.sedar.com.
⁶    Free funds flow is a non-GAAP financial measure. Refer to the Specified Financial Measures section in this press release for additional disclosure and assumptions.
⁷    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.
⁸    See Note Regarding Forward-Looking Statements for underlying commodity price and exchange rate assumptions.

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