CALGARY, Dec. 14, 2017 /CNW/ – Whitecap Resources Inc. (“Whitecap” or the “Company”) (TSX: WCP) is pleased to announce that it has now closed its previously announced acquisition of high quality light oil assets in southeast Saskatchewan, which includes current production of approximately 14,800 boe/d for cash consideration of $940 million before closing adjustments (the “Acquisition”).
Crude oil prices remain well supported in the US$55 to US$60/bbl WTI range relative to our crude oil price assumption of US$54/bbl WTI used when we announced the Acquisition on November 13, 2017. Whitecap takes a disciplined approach to acquisitions with strict criteria used for evaluation of opportunities that are focused on improving the Company’s near-term and long-term strength and sustainability. The attributes of the Acquisition include a low production decline rate of 3.7%, high operating netbacks, a long reserve life index and growth opportunities that have strong capital efficiencies. The Acquisition is accretive on all key operational and financial measures and is an underpinning asset that will provide significant free funds flow annually.
Concurrent with closing of the Acquisition, Whitecap’s borrowing base has been increased to $1.7 billion from $1.3 billion. As part of the $1.7 billion borrowing base increase, Whitecap intends to issue $195 million in senior secured notes which will have an annual coupon rate of 3.9% and mature in 9 years. The closing of the senior secured notes is expected to be on December 20, 2017, at which time Whitecap will then have $595 million of term debt at very attractive long-term fixed interest rates with terms of five, seven and nine years. These notes, combined with the resulting bank credit facility of $1.1 billion, provide Whitecap with $1.7 billion of total borrowing capacity. Whitecap continues to maintain a strong balance sheet with 2018 estimated net debt to funds flow of 1.6 times and considerable financial flexibility with approximately 50% of our net debt under long-term notes and approximately $500 million of unutilized credit capacity based on our estimated 2018 net debt.
Whitecap is also pleased to announce that a cash dividend of Cdn. $0.0245 per common share in respect of December operations will be paid on January 15, 2018 to shareholders of record on December 31, 2017. This dividend is an eligible dividend for the purposes of the Income Tax Act (Canada). As a result of the Acquisition and our reduced decline profile, lower payout ratio, funds flow per share growth and free funds flow, the monthly dividend of $0.0245 per common share will be further increased by 5% to $0.0257 per share ($0.3084 per share annualized) effective for the January 2018 dividend as previously announced on November 13, 2017.
The Acquisition was partially funded through a $92.5 million non-brokered private placement (the “Private Placement”) and a concurrent $332.5 million bought deal equity financing co-led by National Bank Financial Inc. and TD Securities Inc. (the “Prospectus Offering” and collectively, with the Private Placement, the “Financings”) which closed on December 4, 2017. Pursuant to the Financings, Whitecap issued 48,297,000 subscription receipts at a price of $8.80 per subscription receipt for gross proceeds of approximately $425 million. In accordance with their terms, each subscription receipt was exchanged for one common share upon the closing of the Acquisition and the proceeds from the sale of the subscription receipts were released from escrow. Holders of subscription receipts are not required to take any action in order to receive common shares.
Whitecap Resources Inc. is an oil-weighted growth company that pays a sustainable monthly cash dividend to its shareholders. We are focused on profitable per share growth on our existing assets enhanced by opportunistic and accretive oil-based acquisitions. Whitecap’s common shares are traded on the Toronto Stock Exchange under the symbol WCP. For further information about Whitecap please visit our website at www.wcap.ca.