CALGARY, Feb. 10, 2016 /CNW/ – Whitecap Resources Inc. (“Whitecap” or the “Company”) (TSX: WCP) is pleased to present the results of our independent 2015 year end oil and gas reserves evaluation prepared by McDaniel & Associates Consultants Ltd. (“McDaniels”).
Since inception, Whitecap has been focused on acquiring high quality assets and further developing them to maximize return on capital for shareholders. In 2015, we invested approximately $1 billion (unaudited) into the development and expansion of our existing core areas which has resulted in record production in the fourth quarter of 2015 of approximately 42,000 boe/d which is 400 boe/d higher than our initial forecast. The invested capital added 74.6 MMboe (84% oil and NGLs) of total proved plus probable reserves at a strong finding, development and acquisition (“FD&A”) cost of $18.27/boe including changes in future development capital (“FDC”). We also achieved a record low finding and development (“F&D”) cost of $6.97/boe including changes in FDC. The resulting recycle ratios are 2.0x on FD&A and 5.2x on F&D based on an operating netback of $36.11/boe for 2015. Reserves per share grew in all categories with total proved plus probable reserves of 278.9 MMboe (77% oil and NGLs) at year end providing a reserve life index of 18.7 years.
The financial and operational information below is based on estimates and are unaudited.
2015 RESERVE HIGHLIGHTS
Proved Developed Producing (“PDP”)
- Increased PDP reserves by 22% to 113.2 MMboe (75% oil and NGLs) and 4% per fully diluted share.
- Added 14.0 MMboe of PDP reserves at an F&D cost of $12.57/boe which generated a recycle ratio of 2.9x.
- Our 2015 drilling program resulted in PDP reserve additions replacing 93% of production and, when including PDP acquisition reserves, replaced 236% of production.
- PDP reserves represent 57% of total proved reserves and 41% of total proved plus probable reserves on a reserve basis.
- Positive PDP technical revisions of 12.0 MMboe of which 7.0 MMboe (58%) is related to well or pool performance being better than previously forecast in the prior year reserve report and 4.4 MMboe (37%) is related to the outperformance of our waterflood properties.
- Increased the PDP net present value of the future net revenue discounted at 10% (“NPV10”) to $1.9 billion or $6.39 per fully diluted share.
Total Proved (“TP”)
- Increased TP reserves by 29% to 200.0 MMboe (77% oil and NGLs) and 10% per fully diluted share.
- Added 17.8 MMboe of TP reserves at an F&D cost of $8.86/boe, including changes in FDC, which generated a recycle ratio of 4.1x.
- Our 2015 drilling program resulted in TP reserve additions replacing 120% of production and, when including TP acquisition reserves, replaced 400% of production.
- TP reserves comprise 72% of total proved plus probable reserves on a reserve basis and 72% on an NPV10 basis.
- Increased the TP NPV10 by 7% to $3.0 billion or $9.86 per fully diluted share.
Total Proved Plus Probable (“TPP”)
- Increased TPP reserves by 27% to 278.9 MMboe (77% oil and NGLs) and 8% per fully diluted share.
- Added 18.2 MMboe of TPP reserves at an F&D cost of $6.97/boe, including changes in FDC, which generated a recycle ratio of 5.2x.
- Achieved FD&A costs of $18.27 per TPP boe, including FDC, which results in a recycle ratio of 2.0x.
- Our 2015 drilling program resulted in TPP reserve additions replacing 122% of production and, when including TPP acquisition reserves, replaced 499% of production.
- Increased the TPP NPV10 by 10% to $4.1 billion or $13.61 per fully diluted share despite a 40% decrease in McDaniels’ US$ WTI forecast in 2016.
2015 YEAR END RESERVES
Our 2015 year end reserves were evaluated by independent reserves evaluator McDaniels in accordance with the definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook (“COGE Handbook”) and National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities (“NI 51-101”) as of December 31, 2015. Additional reserve information as required under NI 51-101 will be included in our Annual Information Form which will be filed on SEDAR on or before March 30, 2016.
Summary of Reserves
(Forecast Pricing)
As at December 31, 2015 (1)
Company Share Reserves (2) |
||||
Description |
Oil (Mbbl) |
Gas (MMcf) |
NGL (Mbbl) |
Total (Mboe) |
Proved producing |
76,929 |
169,278 |
8,046 |
113,188 |
Proved non-producing |
228 |
3,488 |
52 |
862 |
Proved undeveloped |
63,646 |
99,886 |
5,609 |
85,902 |
Total proved (3) |
140,803 |
272,652 |
13,707 |
199,952 |
Probable |
52,979 |
117,819 |
6,287 |
78,902 |
Total proved plus probable (3) |
193,782 |
390,471 |
19,994 |
278,854 |
(1) |
Based on McDaniels’ January 1, 2016 forecast prices. |
(2) |
Company share reserves are the Company’s total working interest reserves before the deduction of any royalties and including any royalty interests payable to the Company. |
(3) |
Numbers may not add due to rounding. |
Total FDC to develop TP reserves is $1.5 billion undiscounted ($1.2 billion discounted at 10%) and to develop TPP reserves is $1.6 billion undiscounted ($1.3 billion discounted at 10%).
Summary of Before Tax Net Present Values
(Forecast Pricing)
As at December 31, 2015 (1)
Before Tax Net Present Value ($MM) (2) |
||||||||||
Discount Rate |
||||||||||
Description |
0% |
5% |
10% |
15% |
20% |
|||||
Proved producing |
3,691 |
2,566 |
1,947 |
1,569 |
1,319 |
|||||
Proved non-producing |
16 |
10 |
7 |
5 |
4 |
|||||
Undeveloped |
2,635 |
1,625 |
1,050 |
700 |
475 |
|||||
Total proved (3) |
6,342 |
4,201 |
3,004 |
2,275 |
1,798 |
|||||
Probable |
3,978 |
1,916 |
1,140 |
778 |
579 |
|||||
Total proved plus probable (3) |
10,319 |
6,117 |
4,143 |
3,053 |
2,377 |
|||||
Per fully diluted share |
$33.89 |
$20.09 |
$13.61 |
$10.02 |
$7.81 |
(1) |
Based on McDaniels’ January 1, 2016 forecast prices. |
(2) |
Includes abandonment and reclamation costs as defined in NI 51-101. |
(3) |
Numbers may not add due to rounding. |
Pricing Assumptions
The reserve evaluation was based on McDaniels’ forecast pricing and foreign exchange rates at January 1, 2016 as outlined below.
Year |
WTI Cushing Oklahoma ($US/Bbl) |
Edmonton Par Price 40° API ($Cdn/ Bbl) |
AECO Gas Price ($Cdn/ MMbtu) |
INFLATION RATES %/Year (1) |
EXCHANGE RATE ($US/$Cdn) (2) |
|||||
Forecast |
||||||||||
2016 |
45.00 |
56.60 |
2.70 |
– |
0.730 |
|||||
2017 |
53.60 |
66.40 |
3.20 |
2.00 |
0.750 |
|||||
2018 |
62.40 |
72.80 |
3.55 |
2.00 |
0.800 |
|||||
2019 |
69.00 |
80.90 |
3.85 |
2.00 |
0.800 |
|||||
2020 |
73.10 |
83.20 |
3.95 |
2.00 |
0.825 |
|||||
2021 |
77.30 |
88.20 |
4.20 |
2.00 |
0.825 |
|||||
2022 |
81.60 |
93.30 |
4.45 |
2.00 |
0.825 |
|||||
2023 |
86.20 |
98.70 |
4.70 |
2.00 |
0.825 |
|||||
Thereafter |
+2%/yr |
+2%/yr |
+2%/yr |
2.00 |
0.825 |
(1) |
Inflation rate for costs. |
(2) |
Exchange rate used to generate the benchmark reference prices in this table. |
Performance Measures
The following table highlights annual performance ratios based on the evaluation of our petroleum and natural gas reserves prepared by McDaniels.
2015 |
2014 |
2013 |
Three Year |
||
Proved Developed Producing |
|||||
F&D (1) |
$12.57 |
$21.84 |
$23.98 |
$18.19 |
|
F&D recycle ratio (2) |
2.9 |
2.1 |
1.8 |
2.4 |
|
FD&A (3) |
$29.46 |
$29.62 |
$27.30 |
$29.06 |
|
FD&A recycle ratio (2) |
1.2 |
1.5 |
1.6 |
1.4 |
|
Production replacement (4) |
236% |
437% |
319% |
323% |
|
RLI (years) (5) |
7.6 |
7.8 |
7.3 |
7.6 |
|
Total Proved |
|||||
F&D (1) |
$8.86 |
$19.03 |
$18.63 |
$14.45 |
|
F&D recycle ratio (2) |
4.1x |
2.4x |
2.3x |
3.1x |
|
FD&A (3) |
$23.11 |
$26.43 |
$23.36 |
$24.32 |
|
FD&A recycle ratio (2) |
1.6x |
1.7x |
1.8x |
1.7x |
|
Production replacement (4) |
400% |
610% |
566% |
508% |
|
RLI (years) (5) |
13.4 |
13.1 |
13.1 |
13.2 |
|
Total Proved Plus Probable |
|||||
F&D (1) |
$6.97 |
$13.80 |
$15.52 |
$11.14 |
|
F&D recycle ratio (2) |
5.2x |
3.3x |
2.7x |
4.0x |
|
FD&A (3) |
$18.27 |
$19.56 |
$18.31 |
$18.73 |
|
FD&A recycle ratio (2) |
2.0x |
2.3x |
2.3x |
2.2x |
|
Production replacement (4) |
499% |
833% |
723% |
662% |
|
RLI (years) (5) |
18.7 |
18.5 |
18.4 |
18.5 |
(1) |
F&D costs are calculated as the sum of development capital plus the change in FDC for the period divided by the change in reserves that are characterized as development for the period. |
(2) |
Recycle ratio is calculated as operating netback divided by F&D or FD&A costs. Operating netback is calculated as revenue (including realized hedging gains and losses) minus royalties, operating expenses, and transportation expenses. Our operating netback in 2015 was $36.11/boe. |
(3) |
FD&A costs are calculated as the sum of development capital plus acquisition capital plus the change in FDC for the period divided by the change in total reserves for the period. |
(4) |
Production replacement ratio is calculated as total reserve additions (including acquisitions net of dispositions) divided by annual production. Whitecap averaged 40,953 boe/d in 2015. |
(5) |
Reserve life index (“RLI”) is calculated as total Company share reserves divided by annual production. |
2016 Outlook
Crude oil prices remain under continued pressure as near term supply exceeds current demand fundamentals. While it is difficult to predict when we will see a more balanced supply/demand outlook, we are taking advantage of current market conditions to further improve our capital efficiencies and cost structure to enhance our full cycle well economics and return on capital employed. While we have seen significant cost savings to date, even greater savings are required to provide acceptable rates of return for shareholders at current commodity prices. We remain focused on profitable development of our high quality asset base and maximizing return on investment for shareholders.
We continue to protect our balance sheet as commodities remain at these low levels to ensure that we are well positioned for the longer term. In a normalized price environment we would expect to drill approximately 100 – 150 wells annually from our large high quality inventory of 3,111 low risk, light oil locations, however, at this time we have elected to drill only 23 wells this year.
The current commodity price environment provides Whitecap with strong corporate value adding opportunities including working interest consolidations in our core operating areas, reductions in controllable costs and advancement of waterflood initiatives to strengthen our overall long term operational and financial sustainability.
Additional Information
Whitecap is a dividend paying, oil-weighted company focused on providing sustainable monthly dividends to its shareholders and per share growth through a combination of accretive oil-based acquisitions and organic growth on existing and acquired assets. For further information about Whitecap please visit our website at www.wcap.ca.