Whitecap Hikes 2015 Production Guidance Whitecap hikes 2015 production guidance to 40,800 boepd
Whitecap Resources Inc (C:WCP)
Shares Issued 298,868,211
Last Close 10/20/2015 $12.42
Wednesday October 21 2015 - News Release
Mr. Grant Fagerheim reports
WHITECAP RESOURCES INC. CONFIRMS CREDIT FACILITY AT $1.2 BILLION, PROVIDES OPERATIONAL UPDATE AND INCREASED PRODUCTION GUIDANCE
Whitecap Resources Inc. has confirmed its credit facility has been maintained at the current $1.2-billion and would like to provide shareholders with an update on its successful capital execution thus far in 2015. Our third quarter operational results have once again exceeded expectations with average production over 1,800 boe/d (5%) above our forecast of 40,000 boe/d. This provides us with an opportunity to increase our average 2015 production guidance to 40,800 boe/d from the previous 40,100 boe/d.
CREDIT FACILITIES
Based on our mid-year interim reserves review and strong operational results to date, our lenders have agreed to maintain our credit facility at the current $1.2 billion despite the challenging commodity price environment. Our objective continues to be funding the dividend and capital required to grow production through internally generated cash flows without the use of a dividend reinvestment program (DRIP). This allows us to keep our debt levels flat to slightly decreasing in a low commodity price environment. We anticipate exiting 2015 with net debt of approximately $850 million which provides us with ample liquidity ($350 million unutilized) as we move into 2016.
OPERATIONAL UPDATE
In Q3/2015 Whitecap drilled a total of 47 (42.1 net) wells while spending approximately $51.0 million in development capital. Year to date we have drilled a total of 85 (77.8 net) wells with a 100% success rate. We continue to see improving capital efficiencies, shallower base production declines in our core areas and, in combination with our commitment to maintaining a strong balance sheet, we are now projecting a total payout ratio of 92% and a net debt to cash flow ratio of 1.7 times in 2015.
In Q3/2015 we drilled 39 (37.3 net) Viking horizontal wells including 21 (21.0 net) wells in our most recently acquired Kerrobert property which closed in May 2015 bringing our total for the year to 59 (55.7 net) wells. In our Whiteside area our IP(30) rates on our third quarter program were 170 boe/d, a 31% improvement to our current type curve estimate of 130 boe/d. This combined with current drilling and completion costs of $625,000 per well has resulted in a 25% improvement to capital efficiencies for the area compared to our current type curve economics. Operational results in Kerrobert have shown significant improvements with IP(30) rates of 87 boe/d in Q3/2015, 38% higher than wells drilled in Q1/2015 by the previous operator. We have also initiated drilling in the waterflood area late in the third quarter and early results are exceeding expectations.
In West Pembina, we drilled 6 (2.8 net) horizontal Cardium wells in Q3/2015 of which 2 (2.0 net) wells were operated by Whitecap. On our operated program we continue to see capital efficiency improvements with IP(30) rates of 330 boe/d and average drilling and completion costs less than $2.2 million on the most recent 3 standard length horizontal wells drilled. We anticipate an additional 7-10% improvement in capital efficiency for our operated Q1/2016 capital program.
At Elnora, performance continues to exceed expectations with current production between 4,500 to 5,500 boe/d and operating costs at less than $3.00/boe. The Elnora pool is an excellent swing property for Whitecap allowing us the opportunity to curtail production in a low commodity price environment and potentially increase it as crude oil prices improve. Data from our reservoir monitoring program has indicated that the waterflood is performing more effectively than originally forecast.
In addition, based on lower cost of services and higher production rates than forecast, we have been able to reallocate over $10 million from our fourth quarter capital program towards strategic waterflood and inventory optimization projects which will help to further mitigate our base decline rate in 2016 and 2017.
In Q3/2015 we spent approximately $74.0 million (net) on business development initiatives which were focused on working interest consolidation and expansion of our existing core areas. At Boundary Lake we continued to consolidate our working interest in our low decline, light oil waterflood by acquiring 500 boe/d (83% oil and NGLs) in late August and increasing our average working interest from 54% to 75% including Boundary Lake South where we will have a 100% working interest. In addition, we expanded our Cardium resource play by acquiring a contiguous land base of 49 (23.0 net) sections including 400 boe/d (70% light oil and NGLs) of moderate decline light oil production in the Wapiti area of the Deep Basin. We have identified over 67 (47.2 net) low risk horizontal multi-frac drilling locations of which 50% are extended reach horizontals. The acquisition closed in late August and we anticipate initiating development of this area in 2016. The acquisitions positively impacted our Q3/2015 production by 400 boe/d, Q4/2015 production by 850 boe/d and on a full year basis by 300 boe/d.
INCREASED PRODUCTION GUIDANCE
Once again, our Whitecap team continues to deliver exceptional results allowing us to increase our full year production guidance by 700 boe/d to 40,800 boe/d from the previous 40,100 boe/d with no increase to our full year capital budget of $235 million. We anticipate Q4/2015 production of approximatey 41,600 boe/d compared to our previous forecast of 40,500 boe/d which takes into account the increase in working interest at Boundary Lake, the Wapiti Cardium acquisition and better well performance across our asset base.
2015, although challenging on many fronts, has provided Whitecap with an opportunity to further reduce our cost structure while stabilizing and increasing productivity. This has resulted in significant improvements to our capital efficiencies, many of which will be permanent despite the potential for escalating service costs as commodity prices improve. Operational results have exceeded our expectations to date and we anticipate carrying this momentum into 2016. On November 10, 2015 we look forward to reporting our third quarter results and operational and financial guidance for the upcoming 2016 year.
On behalf of our Management team and Board of Directors, we would like to thank our shareholders for their continuing support.
We seek Safe Harbor.
© 2015 Canjex Publishing Ltd.