Whitecap Resources Inc. announces 127% increase to 2012 year-end reserves and
provides operational update
CALGARY, Jan. 30, 2013 /CNW/ - Whitecap Resources Inc. ("Whitecap" or the
"Company") (TSX: WCP) is pleased to announce the results from its 2012
year-end oil and gas reserves evaluation and provide shareholders with an
2012 YEAR-END RESERVES
Whitecap's year-end 2012 reserves were evaluated by independent reserves
evaluator McDaniel & Associates Consultants Ltd. ("McDaniels"). The evaluation
of all of Whitecap's oil and gas properties was done 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"). Additional
reserve information as required under NI 51-101 will be included in the
Company's Annual Information Form which will be filed on SEDAR by March 22,
Highlights of the 2012 reserve report include:
-- Achieved finding and development ("F&D") costs of $18.07 per
proved plus probable boe, including changes in future
development costs, which results in a recycle ratio of 2.5
-- Achieved finding, development and acquisition ("FD&A") costs of
$20.94 per proved plus probable boe, including changes in
future development costs, which results in a recycle ratio of
-- Increased proved plus probable reserves by 127% to 87.5 MMboe
(69% oil and NGLs) and proved reserves by 138% to 60.9 MMboe
(70% oil and NGLs).
-- On a per share, fully diluted basis, increased proved plus
probable reserves by 30% and proved reserves by 36%.
-- Increased the proved developed producing component of total
proved reserves from 59% to 61% year over year. Total proved
reserves now represent 70% of total proved plus probable
reserves compared to 66% in the prior year.
-- Proved plus probable reserve additions replaced 1,054% of
production in the year and proved reserve additions replaced
788% of production.
-- The 2012 year-end reserves evaluation includes 289 undeveloped
drilling locations of which 91% have proved reserves assigned.
-- Maintained a long reserve life index of 14.0 years for proved
plus probable reserves and 9.8 years for proved reserves, based
on fourth quarter 2012 average production of 17,000 boe/d.
Summary of Reserves
As at December 31, 2012(
Gross company reserves((2))
Description Oil (Mbbl) Gas (MMcf) NGL (Mbbl) Total (Mboe)
Proved producing 21,954 72,265 3,182 37,181
Proved non-producing 290 4,278 15 1,017
Undeveloped 15,056 34,962 1,845 22,729
Total proved((3)) 37,300 111,505 5,043 60,927
Probable 15,702 52,273 2,159 26,573
Total proved plus
probable((3)) 53,002 163,778 7,201 87,500
((1)) Based on McDaniels' January 1, 2013 forecast prices.
((2)) Gross Company reserves are the Company's total working interest
before the deduction of any royalties and without including any
of the Company.
((3)) Numbers may not add due to rounding.
Summary of Before Tax Net Present Values
As at December 31, 2012((1))
Before Tax Net Present Value ($MM)
Description 0% 5% 10% 15% 20%
Proved producing $ 1,408 $ 1,030 $ 817 $ 682 $ 590
Proved non-producing 17 13 11 9 8
Undeveloped 619 376 240 157 101
Total proved $ 2,043 $ 1,419 $ 1,068 $ 848 $ 700
Probable((2)) 1,150 562 335 226 166
Total proved plus probable((2)) $ 3,194 $ 1,980 $ 1,402 $ 1,074 $ 865
((1)) Based on McDaniels' January 1, 2013 forecast prices.
((2)) Numbers may not add due to rounding.
Capital Program Efficiency
Based on the evaluation of our petroleum and natural gas reserves prepared in
accordance with NI 51-101 by our independent reserve evaluator, McDaniels, the
historical efficiency of our capital programs is summarized as follows:
2012 2011 Average
Excluding Future Development Costs
F&D costs((1)) $ 19.03 $ 14.59 $ 18.65
FD&A costs((2)) $ 22.04 $ 20.77 $ 21.70
Proved plus probable ($/boe)
F&D costs((1)) $ 14.87 $ 10.74 $ 15.06
FD&A costs((2)) $ 16.49 $ 14.97 $ 15.87
Proved plus probable 2.72 3.27 2.6
Including Future Development Costs
F&D costs((1)) $ 22.74 $ 24.13 $ 25.59
FD&A costs((2)) $ 27.78 $ 27.90 $ 28.27
Proved plus probable ($/boe)
F&D costs((1)) $ 18.07 $ 17.83 $ 21.90
FD&A costs((2)) $ 20.94 $ 20.80 $ 21.36
Proved plus probable 2.15 2.35 1.9
Q4 Operating netback per boe((3)) $ 44.92 $ 48.93 $ 40.49
((1)) The aggregate of the exploration and development costs incurred
most recent financial year and change during that year in
development costs generally will not reflect total finding and
costs related to reserve additions for that year.
((2)) The capital expenditures include the announced purchase price
corporate acquisitions rather than the amounts allocated to
plant and equipment for accounting purposes. The capital
also exclude capitalized administration costs and transaction
((3)) Recycle ratio is calculated as operating netback divided by
(proved plus probable). Operating netback is calculated as
(including realized hedging gains and losses) minus royalties,
and operating expenses and transportation expenses.
In addition to our 2012 year-end reserves evaluation noted above, McDaniels is
also conducting an evaluation of our economic contingent resources, the
results of which will be released later in the first quarter 2013.
In the fourth quarter of 2012, Whitecap achieved record production of
approximately 17,000 boe/d, a 118% increase on an absolute basis and a 25%
increase per share, fully diluted, over our fourth quarter 2011 average
production of 7,806 boe/d. The production increase is 8% over our third
quarter 2012 average production of 15,795 boe/d. Our 2012 average annual
production is approximately 14,000 boe/d, a 148% increase on an absolute basis
and a 40% increase per share, fully diluted, over our 2011 average annual
production of 5,657 boe/d.
We drilled a total of 114 (91.0 net) wells all targeting oil with a 100%
success rate in 2012 of which 30 (26.2 net) wells were drilled in the fourth
quarter of 2012. Our extensive inventory of low risk development drilling
opportunities, predictable and stable production base and associated hedging
program will allow us to pay meaningful and consistent dividends as well as
continue to focus on per share growth in production, reserves and cash flow.
In West Central Saskatchewan, we drilled 10 (10.0 net) wells in the fourth
quarter of 2012 and have plans to drill an additional 19 (17.4 net) in the
first quarter of 2013 all targeting Viking light oil. We continue to achieve
production results that are at or above our type curves. Our drilling and
completion costs continue to be optimized with our last six wells averaging
$772,000 per well to drill and complete, approximately 6% lower than our type
In the Garrington area of West Central Alberta, Whitecap drilled 5 (5.0 net)
oil wells in the fourth quarter of 2012 and anticipates drilling an additional
10 (5.2 net) wells in the first quarter of 2013. As a result of optimizing our
completion methods, we have recently experienced better than anticipated early
production rates from our Cardium horizontal wells. Our last 7 wells have
averaged 390 boe/d (92% oil and NGLs) over their first 30 days of production
which is a 43% improvement on our current type curve.
Whitecap drilled 7 (4.9 net) Cardium oil wells in the greater Pembina area of
West Central Alberta in the fourth quarter of 2012 and plans to drill an
additional 6 (6.0 net) wells in the first quarter of 2013. We continue to
optimize our drilling and completion methods and are achieving production
results that are exceeding our current type curve. The last 10 wells have an
average IP(30) rate of 301 boe/d (94% oil and NGLs) which is 39% higher than
our current type curve.
Whitecap continues to advance and monitor the progress of the waterflood
development in its Valhalla North Montney oil play in the Peace River Arch
area of Alberta since increasing the water injection from 1,600 boe/d to 5,600
boe/d in the second quarter of 2012. Production increases as a result of
increased water injection are expected to be realized in the next 6 - 24
months. In the fourth quarter of 2012, Whitecap drilled 1 (0.5 net) Montney
oil well and 1 (1.0 net) horizontal Dunvegan oil well and anticipates drilling
an additional 2 (1.0 net) wells in the first quarter of 2013. We plan to
expand the Montney waterflood area to the west in the second and third
quarters of 2013.
In the Fosterton area of southwest Saskatchewan, we drilled 5 (4.7 net)
development oil wells and have increased our current production to
approximately 700 boe/d (90% oil) from the third quarter average production
volume of 300 boe/d. These results will be monitored with the potential to
increase capital allocated to the area in 2013.
Whitecap Resources Inc. 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.
Note Regarding Forward-Looking Statements and Other Advisories
This press release contains forward-looking statements and forward-looking
information (collectively "forward-looking information") within the meaning of
applicable securities laws relating to the Company's plans and other aspects
of our anticipated future operations, management focus, strategies, financial,
operating and production results and business opportunities. Forward-looking
information typically uses words such as "anticipate", "believe", "project",
"expect", "goal", "plan", "intend" or similar words suggesting future
outcomes, statements that actions, events or conditions "may", "would",
"could" or "will" be taken or occur in the future, including statements about
our strategy, plans and focus, plans to complete a resource evaluation, timing
of filing the Company's annual information form, forecast annual per share
growth, dividend policy, planned capital expenditures, expected future
production and product mix, and drilling, development and completion plans.
The forward-looking information is based on certain key expectations and
assumptions made by our management, including expectations and assumptions
concerning prevailing commodity prices, exchange rates, interest rates,
applicable royalty rates and tax laws; future production rates and estimates
of operating costs; performance of existing and future wells; reserve and
resource volumes; anticipated timing and results of capital expenditures; the
success obtained in drilling new wells; the sufficiency of budgeted capital
expenditures in carrying out planned activities; the timing, location and
extent of future drilling operations; the state of the economy and the
exploration and production business; results of operations; performance;
business prospects and opportunities; the availability and cost of financing,
labour and services; the impact of increasing competition; ability to
efficiently integrate assets and employees acquired through acquisitions,
ability to market oil and natural gas successfully and our ability to access
Although we believe that the expectations and assumptions on which such
forward-looking information is based are reasonable, undue reliance should not
be placed on the forward-looking information because Whitecap can give no
assurance that they will prove to be correct. Since forward-looking
information addresses future events and conditions, by its very nature they
involve inherent risks and uncertainties. Our actual results, performance or
achievement could differ materially from those expressed in, or implied by,
the forward-looking information and, accordingly, no assurance can be given
that any of the events anticipated by the forward-looking information will
transpire or occur, or if any of them do so, what benefits that we will derive
therefrom. Management has included the above summary of assumptions and risks
related to forward-looking information provided in this press release in order
to provide securityholders with a more complete perspective on our future
operations and such information may not be appropriate for other purposes.
It should not be assumed that the present worth of estimated future cash flow
presented in the tables above represents the fair market value of the
reserves. There is no assurance that the forecast prices and costs assumptions
will be attained and variances could be material. The recovery and reserve
estimates of Whitecap's crude oil, natural gas liquids and natural gas
reserves provided herein are estimates only and there is no guarantee that the
estimated reserves will be recovered. Actual crude oil, natural gas and
natural gas liquids reserves may be greater than or less than the estimates
All future net revenues are stated prior to provision for interest, general
and administrative expenses and after deduction of royalties, operating costs
and estimated future capital expenditures. Future net revenues have been
presented on a before tax basis. Estimated values of future net revenue
disclosed herein do not represent fair market value.
Finding and development costs both including and excluding acquisitions and
dispositions have been presented above. While NI 51-101 requires that the
effects of acquisitions and dispositions be excluded, FD&A costs have been
presented because acquisitions and dispositions can have a significant impact
on the Company's ongoing reserve replacement costs and excluding these amounts
could result in an inaccurate portrayal of the Company's cost structure.
Readers are cautioned that the foregoing lists of factors are not exhaustive.
Additional information on these and other factors that could affect our
operations or financial results are included in reports on file with
applicable securities regulatory authorities and may be accessed through the
SEDAR website (www.sedar.com).
These forward-looking statements are made as of the date of this press release
and we disclaim any intent or obligation to update publicly any
forward-looking information, whether as a result of new information, future
events or results or otherwise, other than as required by applicable
This press release contains the term "operating netbacks" which does not have
a standardized meaning prescribed by GAAP and therefore may not be comparable
with the calculation of similar measures by other companies. Whitecap uses
operating netbacks to analyze financial and operating performance. Whitecap
believes these benchmarks are key measures of profitability and overall
sustainability for the Company. These terms are commonly used in the oil and
gas industry. Operating netbacks are not intended to represent operating
profits nor should they be viewed as an alternative to funds from operations
provided by operating activities, net earnings or other measures of financial
performance calculated in accordance with GAAP. Operating netbacks are
determined by deducting royalties, production expenses and transportation and
selling expenses from oil and gas revenue.
"Boe" means barrel of oil equivalent on the basis of 6 mcf of natural gas to 1
bbl of oil. Boe's may be misleading, particularly if used in isolation. A boe
conversion ratio of 6 mcf: 1 bbl is based on an energy equivalency conversion
method primarily applicable at the burner tip and does not represent a value
equivalency at the wellhead. In addition, given that the value ratio based on
the current price of crude oil as compared to natural gas is significantly
different from the energy equivalency of 6: 1, utilizing a conversion on a 6:1
basis may be misleading as an indication of value.
Grant Fagerheim, President & CEO or Thanh Kang, VP Finance & CFO
Whitecap Resources Inc. 500, 222 - 3 Avenue SW Calgary, AB T2P 0B4
Main Phone (403) 266-0767 Fax (403) 266-6975
SOURCE: Whitecap Resources Inc.
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