CALGARY, May 4, 2016 /CNW/ – 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, 2016.
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 (“MD&A”) which are available at www.sedar.com and on our website at www.wcap.ca.
FINANCIAL AND OPERATING HIGHLIGHTS |
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Three months ended March 31 |
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Financial ($000s except per share amounts) |
2016 |
2015 |
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Petroleum and natural gas sales |
112,106 |
132,639 |
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Funds flow (1) |
67,997 |
109,933 |
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Basic ($/share) |
0.22 |
0.43 |
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Diluted ($/share) |
0.22 |
0.43 |
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Net income (loss) |
1,605 |
(29,403) |
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Basic ($/share) |
0.01 |
(0.12) |
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Diluted ($/share) |
0.01 |
(0.12) |
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Dividends paid or declared |
41,854 |
47,541 |
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Per share |
0.14 |
0.19 |
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Total payout ratio (%) (1) |
128 |
112 |
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Development capital expenditures |
45,238 |
76,015 |
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Property acquisitions |
21,291 |
58,330 |
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Property dispositions |
(101,635) |
(2,663) |
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Net debt outstanding (1) |
800,302 |
867,148 |
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Operating |
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Average daily production |
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Crude oil (bbls/d) |
29,561 |
25,623 |
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NGLs (bbls/d) |
3,205 |
2,689 |
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Natural gas (Mcf/d) |
61,547 |
60,237 |
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Total (boe/d) |
43,024 |
38,351 |
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Average realized price (2) |
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Crude oil ($/bbl) |
36.54 |
48.74 |
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NGLs ($/bbl) |
10.69 |
17.99 |
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Natural gas ($/Mcf) |
1.91 |
2.93 |
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Total ($/boe) |
28.63 |
38.43 |
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Netback ($/boe) |
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Petroleum and natural gas sales |
28.63 |
38.43 |
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Realized hedging gain |
6.25 |
14.59 |
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Royalties |
(3.75) |
(5.15) |
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Operating expenses |
(9.08) |
(10.58) |
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Transportation expenses |
(0.89) |
(1.49) |
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Operating netbacks (1) |
21.16 |
35.80 |
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General and administrative |
(1.35) |
(1.49) |
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Interest and financing |
(2.45) |
(2.46) |
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Cash netbacks (1) |
17.36 |
31.85 |
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Share information (000s) |
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Common shares outstanding, end of period |
314,403 |
253,595 |
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Weighted average basic shares outstanding |
303,205 |
253,540 |
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Weighted average diluted shares outstanding |
305,551 |
256,597 |
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Notes: |
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(1) Funds flow, total payout ratio, net debt, operating netbacks and cash netbacks do not have a standardized |
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(2) Prior to the impact of hedging activities. |
MESSAGE TO OUR SHAREHOLDERS
In the first quarter of 2016, Whitecap continued to demonstrate both strong operational performance and financial discipline. Record production of 43,024 boe/d was achieved on capital spending of $45.2 million which was within our forecast of 43,000 boe/d and at the low end of our anticipated capital spending of $45 to $55 million, respectively.
We achieved excellent capital efficiencies from our first quarter drilling program with results continuing to outperform our initial expectations as further detailed in our March 2, 2016 press release. We successfully drilled 24 (23.6 net) oil wells in the quarter including 15 (14.8 net) horizontal Viking wells in west central Saskatchewan, 4 (3.9 net) horizontal Cardium wells in Pembina, 1 (1.0 net) horizontal Cardium well in southwest Alberta, 2 (2.0 net) Dunvegan wells in northwest Alberta and 2 (1.9) Boundary Lake (Triassic) wells in British Columbia.
Our focus on long term profitability in the current low commodity price environment has resulted in cash costs being reduced by 13% to $17.52/boe from $20.21/boe in Q4/2015. Since Q1/2014 we have reduced our cash costs by 28%. In addition to cost reduction initiatives, we have taken concrete steps to ensure that Whitecap maintains a strong balance sheet and is well positioned to capitalize on opportunities as they arise. These proactive steps include the disposition of midstream facilities for $70 million (Whitecap maintains control and operatorship and can repurchase at any time), a bought deal equity financing for net proceeds of $91.6 million and adjusting our monthly dividend to a more sustainable level of $0.0233 per share ($0.28 per share annually).
Quarterly Highlights
- Increased average production by 12% to a record 43,024 boe/d in Q1/2016 compared to 38,351 boe/d in Q1/2015 and 2% higher than Q4/2015 production of 42,067 boe/d.
- Generated strong operating netbacks of $21.16/boe and cash netbacks of $17.36/boe despite WTI averaging US$33.45/bbl in Q1/2016. This was achieved by an effective risk management program and our focus on reducing controllable costs.
- Cost optimization and reduction initiatives have resulted in a 17% reduction to operating and transportation costs to $9.97/boe in Q1/2016 compared to $12.07/boe in Q1/2015.
- General and administrative costs remain one of the lowest in our peer group at $1.35/boe allowing us to maintain our current staffing levels that will ensure we continue to improve upon our best in class capital efficiencies.
- Funds flow of $68 million ($0.22/share) in Q1/2016 was down 38% compared to $109.9 million ($0.43/share) in Q1/2015. Higher production in Q1/2016 was more than offset by significantly lower crude oil and natural gas prices relative to Q1/2015.
- Executed a very successful drilling program in Q1/2016 spending $45.2 million in the quarter drilling 24 (23.6 net) wells with a 100% success rate.
- Further strengthened our balance sheet with the disposition of certain midstream facilities for $70 million and successfully closed a bought deal equity financing for net proceeds of $91.6 million.
OUTLOOK
Although we remain cautiously optimistic on a modest crude oil recovery from current levels in late 2016 or early 2017, we have successfully refocused Whitecap’s operating cost and capital structure as well as our dividend for the current pricing environment. Whitecap is well positioned to profitably grow production per share and pay a sustainable dividend all within the funds flow that our high quality light oil assets generate.
Through this downturn our risk management program has proved very successful, generating realized hedging gains of $170.8 million in 2015 and an estimated $89 million in 2016. We actively manage our hedge portfolio and systematically enter into new commodity hedges to provide a level of predictability to funds flow and to protect corporate economic returns. Refer to note 5 of our first quarter financial statements for incremental hedge positions we have entered into subsequent to the year end.
The Government of Alberta introduced the new Modernized Royalty Framework (“MRF”) on January 29, 2016 with further details released on April 21, 2016. These details provide the necessary information for oil and gas producers and other stakeholders to evaluate investing in Alberta. We believe that the MRF will be neutral to slightly positive compared to the previous Alberta Royalty Framework (“ARF”) across Whitecap’s core plays, within expected price ranges. In particular, the MRF is expected to benefit low cost producers like Whitecap with higher productivity wells.
Whitecap remains focused on long term sustainable per share growth while paying a modest dividend to shareholders. With our return on capital strategy, we believe that we are well positioned to provide strong returns to shareholders in this environment. We again thank you for your support of Whitecap.