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Press release from CNW Group

Whitecap Resources Inc. announces Second Quarter 2011 Results

Thursday, August 11, 2011

Whitecap Resources Inc. announces Second Quarter 2011 Results07:00 EDT Thursday, August 11, 2011CALGARY, Aug. 11, 2011 /CNW/ - Whitecap Resources Inc. ("Whitecap", "we", "us", "our" or the "Company") (TSX: WCP) is pleased to announce it has filed on SEDAR its unaudited financial statements and related Management's Discussion and Analysis ("MD&A") for the three and six months ended June 30, 2011. Selected financial and operational information is outlined below and should be read in conjunction with Whitecap's unaudited interim financial statements and related MD&A which are available for review at www.sedar.com and on our website at www.wcap.ca.FINANCIAL AND OPERATING HIGHLIGHTS              Three months ended June 30,   Six months ended June 30,Financial ($000s except per share amounts)   20112010   20112010Petroleum and natural gas revenues   34,2713,999   50,5168,467Funds from operations(1)   19,8561,840   28,1443,838 Per share basic   0.300.12   0.520.25      Per share diluted   0.290.09   0.510.20Net Income (loss)   12,169(1,199)   12,219(667) Per share basic   0.19(0.08)   0.23(0.04) Per share diluted   0.18(0.08)   0.22(0.04)Development capital expenditures   19,1567,124   40,86110,876Net property acquisitions   9,947303   35,1141,851Corporate acquisitions (cash-based)   171,6647,900   171,6647,900Bank debt and working capital deficit(2)   111,88829,545   111,88829,545Operating          Production           Crude oil (bbls/d)   3,155343   2,404340 NGLs (bbls/d)   22389   20292 Natural gas (mcf/d)   11,7703,192   9,2323,162 Total (boe/d)   5,339964   4,145959Average realized prices           Crude oil ($/bbl)   98.5273.31   93.9576.08 NGLs ($/bbl)   69.0955.13   68.4059.97 Natural gas ($/mcf)   4.214.35   4.214.87 Total ($/boe)   70.5445.58   67.3448.80Operating netbacks prior to hedges ($/boe)(1)   48.8326.96   44.8928.61Operating netbacks after hedges ($/boe)(1)   46.2529.41   42.5730.45Total wells drilled           Gross   6.04.0   17.08.0 Net   5.52.5   13.94.1Success rate   100%100%   100%100%Undeveloped land holdings (acres)           Gross   135,65250,100   135,65250,100 Net   91,01630,308   91,01630,308Common shares, end of period (000s)   72,16222,258   72,16222,258Weighted average common shares (000s)                Basic   65,43415,799   53,69615,566      Diluted   67,44020,105   55,69219,420(1) Funds from operations and operating netbacks are non-GAAP measures (see "Non-GAAP measures").(2) Excludes risk management contracts.MESSAGE TO SHAREHOLDERSWhitecap is pleased to report on our second quarter 2011 operational and financial results that have exceeded our forecast.  We closed the acquisition of Spry Energy Ltd. ("Spry") on April 20, 2011 and were able to drill six (5.5 net) wells during the quarter despite the effects of spring break-up, the unusually wet spring weather and the planned Sexsmith plant turnaround.  We drilled one (0.5 net) Montney Sexsmith well in our Valhalla North field and five (5.0 net) Cardium horizontal wells in the East Pembina area of Alberta, with all wells being successful.At Valhalla we successfully completed and brought on production our sixth horizontal Montney Sexsmith well that was drilled late in the first quarter.  The well continues to produce in excess of our type curve at a rate greater than 700 boe/d gross (350 boe/d net) after producing for 57 days.  The Montney Sexsmith well that was drilled during the second quarter has now been successfully fracture stimulated and is being tied-in at this time.  We also expect this well to achieve better than initially forecasted production rates based on the results of the completion.  During the quarter we also were able to undertake a full maintenance turnaround on our wells and facilities within the Valhalla North field in conjunction with the planned turnaround of the Sexsmith facility from May 24 to June 14.In west central Alberta we were successful in completing and bringing on production the two (1.0 net) Cardium horizontal wells from our first quarter drilling program.  As well, we were able to mitigate the effects of the wet spring weather by having a large inventory of drilling opportunities that allowed us the flexibility to adapt to localized surface conditions where necessary.  We were able to drill five (5.0 net) successful Cardium horizontal wells, all of which have now been fracture stimulated and brought on stream.  All but one of the Cardium horizontal wells drilled and completed in 2011 have attained initial production rates greater than the type curve we have been using.Our accomplishments in the second quarter of 2011 included:Successfully closed the Spry acquisition which significantly increases our presence in the Pembina Cardium light oil resource play.Executed a successful $19.2 million capital program, including $13.5 million on drilling and completing 6.0 (5.5 net) oil wells with a 100% success rate and $4.7 million on recompletions and facilities.Increased average production volumes by 82% to 5,339 boe/d (63% oil and NGLs) from 2,937 boe/d (62% oil and NGLs) in the first quarter of 2011.  Our base production is approximately 6,800 boe/d to 6,900 boe/d (65% oil and NGLs).Generated cash flow from operations of $19.9 million in the quarter, a more than two fold increase compared to $8.3 million in the first quarter of 2011.  On a basic cash flow per share basis, generated $0.30 per share versus $0.20 per share in the first quarter, a 50% increase.Improved our operating netback (after hedges) to $46.25/boe from $35.82/boe in the first quarter of 2011, a 29% increase as a result of higher crude oil prices and a reduction in operating costs on a unit basis.Decreased our operating costs to $11.14/boe from $12.93/boe in the first quarter of 2011.Looking ForwardWe expect that both the equity and commodity markets will continue to experience significant volatility in the near term until the recent economic data can be digested.  We believe that oil remains the commodity of choice at this time and, as previously suggested, that it should range between $80 to $100 WTI on a longer term basis.  We will continue to monitor commodity prices and have the flexibility to adjust our capital program as necessary to ensure we maintain a responsible level of debt.We remain in a good position to post leading per share growth numbers from our sizeable inventory of oil drilling prospects, stable production base, and high netback production.  We have increased our 2011 exit production rate estimate to between 8,200 boe/d - 8,300 boe/d (70% oil & NGL's) from our previous forecasted rate of 8,000 boe/d.  As well, we anticipate having very manageable debt to annualized fourth quarter 2011 production of less than 1.2 times which sets us up well for the 2012 year upcoming.On behalf of our Whitecap Board of Directors and our team I would like to thank you for your interest and support of Whitecap.  We expect to be able to provide you with additional positive information as we move through the remainder of 2011.Important InformationWhitecap reports in Canadian dollars unless otherwise noted. As of January 1, 2011, Whitecap prepares its interim financial statements and comparative information in accordance with International Financial Reporting Standards (IFRS) 1, "First-time Adoption of International Financial Reporting Standards", and with International Accounting Standard 34, "Interim Financial Reporting," as issued by the International Accounting Standards Board. Previously, Whitecap's financial statements were prepared in accordance with Canadian generally accepted accounting principles (previous GAAP). Reconciliations between Canadian GAAP and IFRS financial information can be found in the first quarter interim financial statements available at www.sedar.com and on the Company's website at www.wcap.ca.Non-GAAP measuresThis MD&A contains the terms "funds from operations" and "operating netbacks", which do 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 funds from operations and operating netbacks to analyze financial and operating performance.  Whitecap believes these benchmarks are key measures of profitability and overall sustainability for the Company. Both of these terms are commonly used in the oil and gas industry. Funds from operations and operating netbacks are not intended to represent operating profits nor should they be viewed as an alternative to cash flow provided by operating activities, net earnings or other measures of financial performance calculated in accordance with GAAP. Funds from operations are calculated as cash flows from operating activities excluding transaction costs less changes in non-cash working capital. Operating netbacks are determined by deducting royalties, production expenses and transportation and selling expenses from oil and gas revenue. The Company calculates funds from operations per share using the same method and shares outstanding that are used in the determination of earnings per share.                          Six months ended June 30($000s)                            2011     2010Cash flow from operating activities                            26,586     (2,125)Changes in non-cash working capital                            285     4,880Transaction costs                            1,273     1,083Funds from operations                            28,144     3,838Note Regarding Forward-Looking Statements and Other AdvisoriesThis 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, business development plans, performance and opportunities, plans to bring wells on-stream and the timing thereof, financial, operating and production results and business opportunities, including expected future operating costs and G&A expenses, our capital expenditure program, drilling and development plans and the timing thereof and results therefrom including our plans to deliver per share growth in cash flow, production and reserves. 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.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 market oil and natural gas successfully and our ability to access capital.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. The Company's 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 the Company 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.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.Note: "Boe" means barrel of oil equivalent on the basis of 6 thousand cubic feet ("mcf") of natural gas to 1 bbl. 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.  For further information: Grant Fagerheim, President & CEO orThanh 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