CALGARY, May 31, 2017 /CNW/ - Whitecap Resources Inc.
("Whitecap" or the "Company") (TSX: WCP) is pleased to announce that it has closed an issuance of Cdn$200
million senior secured notes which have an annual coupon rate of 3.54% and mature in 7 years on May
31, 2024. The notes were issued by way of a private placement, pursuant to a note purchase agreement and rank equally with
Whitecap's obligations under its bank facilities. Proceeds from the notes will be used to repay a portion of Whitecap's
outstanding bank debt.
Whitecap has now secured $400 million of term debt at very attractive long-term fixed interest
rates that mature in five and seven years. These notes, combined with the bank credit facility of $900
million, provide Whitecap with $1.3 billion of total borrowing capacity. Whitecap continues
to maintain a strong balance sheet with an estimated 2017 net debt to funds flow ratio of under 1.5 times based on current strip
pricing.
The senior secured notes may not be offered or sold in the United States absent registration
under the U.S. Securities Act of 1933, as amended, or an exemption from such registration. Whitecap has not registered and will
not register the senior secured notes under the U.S. Securities Act of 1933, as amended. This press release shall not constitute
an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the senior secured notes in any state in
which such offer, solicitation or sale would be unlawful.
Operational Update
On April 28, 2017, the non-operated Coleville gas plant in west
central Saskatchewan was unexpectedly shut-in due to operational safety issues, negatively
impacting our production volumes, primarily at Lucky Hills and Whiteside, by 1,700 boe/d (8.4
MMcf/d and 300 bbls/d of associated natural gas liquids). The shut-in is ongoing with anticipated production volumes to be fully
restored by the end of June 2017. The impact to our funds flow is minimal as there is no impact to
our crude oil volumes. We have also been impacted in Q2/17 by unexpected third party facility downtime in the Deep Basin and at
Boundary Lake.
As a follow up to our very active Q1/17 capital program after a prolonged period of wet conditions in some of our operated
areas, our Q2/17 capital program is now underway with four drilling rigs operational; one in West Pembina, two in west central
Saskatchewan and one in southwest Saskatchewan. We anticipate
adding one additional drilling rig in the Deep Basin once surface access is available in order to complete the remainder of our
Q2/17 program. We have also commenced completion of the 11 drilled but uncompleted wells from Q1/17.
As a result of the uncontrollable downtime and slower than anticipated start to our Q2/17 capital program, we are now
forecasting our Q2/17 production to average between 56,000 – 57,000 boe/d, however, our average production guidance for 2017
remains unchanged at 57,000 boe/d.
Whitecap remains well positioned to deliver strong shareholder returns with production per share growth of 14% in 2017, a
sustainable dividend paid from funds flow and a total payout ratio of approximately 75%. We will look to effectively redeploy our
free funds flow to enhance our dividend and also our per share growth as we move through the balance of 2017.
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, objectives, strategies, financial, operating and production results and business
opportunities. Forward-looking information typically uses words such as "anticipate", "continue", "resume", "project", "believe",
"expect", "forecast", "guidance", "planned", "target" or similar words suggesting future outcomes, statements that actions,
events or conditions "may", "would", "could" or "will" be taken or occur in the future. In addition, and without limiting the
generality of the foregoing, this press release contains forward-looking information regarding the benefits associated with the
issuance of the senior secured notes, our net debt to funds flow ratio, our ability to maintain a strong balance sheet, timing of
restoring production volumes at the Coleville gas plant, Q2/17 production and average 2017
production forecast, drilling plans, ability to deliver strong shareholder returns, 2017 production per share growth, our ability
to effectively redeploy our free funds flow, our dividend policy and the sources of funding of our dividend, and our 2017 payout
ratio.
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 and transportation costs; performance of existing and future wells;
reserve and resource volumes; anticipated timing and results of development capital expenditures; the success obtained in
drilling new wells; the sufficiency of budgeted development capital expenditures in carrying out planned activities; the state of
the economy and the exploration and production business; 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; our ability to access capital; and obtaining the necessary regulatory approvals.
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. These include, but are not limited to: the risks associated with the oil and gas industry in
general such as operational risks in development, exploration and production; delays or changes in plans with respect to
exploration or development projects or capital expenditures; the uncertainty of estimates and projections relating to reserves,
production, costs and expenses; health, safety and environmental risks; commodity price and exchange rate fluctuations; interest
rate fluctuations; marketing and transportation; loss of markets; environmental risks; competition; incorrect assessment of the
value of acquisitions; failure to complete or realize the anticipated benefits of acquisitions or dispositions; ability to access
sufficient capital from internal and external sources; failure to obtain required regulatory and other approvals; reliance on
third parties and pipeline systems; and changes in legislation, including but not limited to tax laws, royalties and
environmental regulations. Management has included the above summary of assumptions and risks related to forward-looking
information provided in this press release in order to provide security holders with a more complete perspective on our future
operations and such information may not be appropriate for other purposes. With respect to dividends, the payment of dividends in
the future is not assured or guaranteed. The dividend policy will be periodically review by Whitecap's Board of Directors and no
assurance or guarantee can be given that Whitecap will maintain the dividend policy in its current form.
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 securities laws.
This press release contains future-oriented financial information and financial outlook information (collectively, "FOFI")
about Whitecap's future net debt to funds flow ratio which are subject to the same assumptions, risk factors, limitations and
qualifications as set forth in the above paragraphs and the assumption outlined in the Non-GAAP measures section below. FOFI
contained in this press release was made as of the date of this press release and was provided for the purpose of providing
further information about Whitecap's anticipated future business operations. Whitecap disclaims any intention or obligation to
update or revise any FOFI contained in this press release, whether as a result of new information, future events or otherwise,
unless required pursuant to applicable law. Readers are cautioned that the FOFI contained in this press release should not be
used for purposes other than for which it is disclosed herein.
Non-GAAP Measures
This press release includes non-GAAP measures as further described herein. These non-GAAP measures do not have a standardized
meaning prescribed by International Financial Reporting Standards ("IFRS" or, alternatively, "GAAP") and therefore may not be
comparable with the calculation of similar measures by other companies.
"Funds flow" represents cash flow from operating activities adjusted for changes in non-cash working capital and
transaction costs. Management considers funds flow to be a key measure as it demonstrates Whitecap's ability to generate the cash
necessary to pay dividends, repay debt, fund settlement of decommissioning liabilities and make capital investments. Management
believes that by excluding the temporary impact of changes in non-cash operating working capital, funds flow provides a useful
measure of Whitecap's ability to generate cash that is not subject to short-term movements in non-cash operating working
capital.
"Development capital" represents expenditures on property, plant and equipment ("PP&E") excluding corporate and
other assets.
"Net debt" is calculated as bank debt plus working capital deficiency adjusted for risk management contracts. Net debt
is used by management to analyze the financial position and leverage of Whitecap.
"Boe" means barrel of oil equivalent on the basis of 6 Mcf of natural gas to 1 bbl of oil. Boes 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.
SOURCE Whitecap Resources Inc.
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