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Press release from CNW Group

Whitecap announces 2012 first quarter results and re-affirms guidance for 2012

Tuesday, May 08, 2012

Whitecap announces 2012 first quarter results and re-affirms guidance for 201217:57 EDT Tuesday, May 08, 2012CALGARY, May 8, 2012 /CNW/ - Whitecap Resources Inc. ("Whitecap", "we", "us", "our" or the "Company") (TSX: WCP) is pleased to announce we have filed on SEDAR our unaudited financial statements and related Management's Discussion and Analysis ("MD&A") for the three months ended March 31, 2012. 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 and on our website at financial and operating results from the Compass Petroleum Ltd. ("Compass") acquisition are included from February 10, 2012 to March 31, 2012 below. The financial and operating results below do not include the recent acquisition of Midway Energy Ltd. ("Midway").FINANCIAL AND OPERATING HIGHLIGHTS    Three months endedMarch 31,Financial ($000s except per share amounts)20122011Total commodity revenues56,65216,245Funds from operations(1)33,2718,286 Basic ($/share)0.420.20 Diluted ($/share)0.410.19Net Income (loss)7,67850 Basic ($/share)0.100.00 Diluted ($/share)0.090.00Development capital expenditures63,74721,695Property acquisitions5,83325,178Corporate acquisitions122,553-Bank debt and working capital(2)156,41171,680    Operating  Production   Crude oil (bbls/d)6,1681,645 NGLs (bbls/d)457181 Natural gas (Mcf/d)18,9596,666 Total (boe/d)9,7852,937Average realized price   Crude oil ($/bbl)88.8885.08 NGLs ($/bbl)66.4467.54 Natural gas ($/Mcf)2.294.20 Total ($/boe)63.6361.46Netback   Revenue64.0061.89 Royalties(7.81)(9.44) Operating expenses(11.61)(12.93) Transportation expenses(2.37)(1.85)Operating Netback prior to hedging42.2137.67 Realized hedging loss(1.46)(1.85)Operating Netbacks(1)40.7535.82   Total wells drilled20.011.0Working interest wells16.28.4Success rate100%100%Undeveloped land holdings (acres)   Gross173,37567,325 Net132,30447,146Common shares, end of period (000s)89,05641,828Weighted average shares (000s)78,97141,827Notes:(1) Refer to Non-GAAP measures in this press release.(2) Excludes risk management contracts.MESSAGE TO OUR SHAREHOLDERSWhitecap is pleased to report on our first quarter 2012 operational and financial results which have exceeded our forecast despite widening oil price differentials and weak natural gas prices.  In the first quarter our activities included efficiently executing on our capital program in our core growth areas, closing the Compass acquisition on February 10, 2012 and finalizing the technical analysis and negotiation of the Midway Energy Ltd. acquisition that was announced on February 28, 2012 and closed on April 20, 2012.  These activities have not only provided our company with a large component of discovered oil under management but also a significantly expanded oil drilling inventory for future development growth and unrealized upside value.On the operational front, during the quarter we were 100% successful with our drilling program, drilling 20 (16.2 net) horizontal wells with multi-stage fracs. Although we had originally forecast development capital spending of $72.5 million in the quarter, our actual spending on development initiatives was $63.7 million as we delayed a portion of our capital to later in the year. Despite $8.8 million of capital deferred, we were able to exceed our first quarter forecasted production.In west central Alberta we continued to develop the Cardium oil resource play by drilling 12 (9.5 net) wells of which all but one are now on production.  In western Saskatchwan on our newly acquired Dodsland Lucky Hills asset which closed on February 10, we successfully drilled 6 (5.2 net) horizontal Viking oil wells and were able to have them all on production by the end of the first quarter.  At our Valhalla North property we drilled 2 (1.5 net) horizontal multi-frac wells including our first horizontal middle Montney well that tested at rates higher than forecasted.  Both this well and the other, a Montney Sexsmith well, are currently awaiting tie-in once spring break-up conditions allow us access.  We were also actively increasing the waterflood injection in the Montney Sexsmith pool by converting existing producing wells to water injection, bringing our total number of injectors to 17 at the end of the quarter. We are currently injecting upwards of 8,000 barrels of water per day into the Montney Sexsmith pool.We expect to experience continued volatility in both the commodity and equity markets over the near term and although volatile we expect crude oil pricing to remain strong throughout the year. We re-affirm our previously presented capital program for the year at $260 to $265 million and our 2012 exit production rate of 18,000 to 19,000 boe/d (70% oil + NGL).  We will continue to monitor commodity prices to retain the flexibility to adjust our capital program as necessary to ensure we maintain a responsible level of debt.The integration of the two recent corporate acquisitions has gone very smoothly as the assets acquired were very similar from both an operational and technical perspective to our existing core assets. We are currently preparing to re-start our drilling activity as we approach the end of the spring break-up period.  We are confident that Whitecap will continue to provide strong per share growth results in production and cash flow in 2012 from our sizeable oil drilling prospect inventory.Our accomplishments in the first quarter of 2012 include:HighlightsAverage production volumes increased 233% to 9,785 boe/d compared to 2,937 boe/d in the prior year.Spent $8.8 million less development capital in the quarter than originally planned for with results better than anticipated.Increased our oil and NGL weighting to 68% in the first quarter of 2012 compared to 62% in the first quarter of 2011.Funds from operations grew more than four times to $33.3 million in the first quarter of 2012 compared to $8.3 million in 2011. On a fully diluted per share basis, funds from operations increased 116% to $0.41 per share.Continued to layer on incremental hedge positions at greater than C$100/bbl WTI in 2012 and 2013.Achieved an operating netback (before hedges) of $42.21 per boe in the first quarter of 2012 compared to $37.67 per boe in the first quarter of 2011, a 12% increase.Executed a successful $63.7 million development capital program drilling 20 (16.2 net) wells with a 100% success rate.Successfully closed the Compass Petroleum Ltd. acquisition which provides an initial entry into the light oil Viking resource play and adds 389 gross de-risked drilling locations to our inventory of opportunities.Subsequent to the quarter end we successfully closed the previously announced Midway Energy Ltd. acquisition for approximately $111.4 million in cash, issuance of 32.1 million common shares, and the assumption of Midway's debt.Concurrent with the closing of the Midway acquisition our syndicated credit facility was increased to $400 million from $250 million. The increase to our facility will provide us greater financial flexibility to further execute our business plan and deliver an objective of per share growth in cash flow, production and reserves.Our Whitecap team would again like to thank you for your continued support and interest in our company and we look forward to reporting back to you as we move through the remainder of 2012.Note 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, 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. In particular, this press release contains forward-looking information relating to our ongoing business plan, strategy and targets, industry conditions, commodity prices, capital spending, production and cash flow, drilling inventory or development and drilling plans and potential growth.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 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. 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.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 ( 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.Non-GAAP MeasuresThis press release 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.($000s)  Q1 2012Q1 2011Cash flow from operating activities  34,9209,293Changes in non-cash working capital  (2,679)(1,007)Transaction costs  564-Settlement of decommissioning liabilities  466-Funds from operations  33,2718,286"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.For further information: Grant Fagerheim, President and CEO orThanh Kang, VP Finance and CFO Whitecap Resources Inc. 500, 222 - 3 Avenue SW Calgary, AB, T2P 0B4 Main Phone (403) 266-0767 Fax (403) 266-6975