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Press release from CNW Group

Whitecap Announces 2012 Second Quarter Results

Wednesday, August 08, 2012

Whitecap Announces 2012 Second Quarter Results18:44 EDT Wednesday, August 08, 2012CALGARY, Aug. 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 and six months ended June 30, 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 June 30, 2012 and the financial and operating results from the Midway Energy Ltd. ("Midway") acquisition are included from April 20, 2012 to June 30, 2012 below. FINANCIAL AND OPERATING HIGHLIGHTS      Three months ended June 30Six months ended June 30Financial ($000s except per share amounts)2012201120122011Total commodity revenues69,47834,271126,13050,516Funds from operations(1)40,13219,85873,40328,144 Basic ($/share)0.340.300.740.52 Diluted ($/share)0.330.290.720.51Net income (loss)26,53612,16934,21412,219 Basic ($/share) Diluted ($/share) capital expenditures39,66719,156103,41440,861Net property acquisitions3,0879,9478,92035,114Corporate acquisitions523,069219,692645,622219,692Bank debt and working capital(2)347,639111,888347,639111,888Operating    Production     Crude oil (bbls/d)8,0573,1557,1122,404 NGLs (bbls/d)1,073223765202 Natural gas (Mcf/d)26,57311,77022,7669,232 Total (boe/d)13,5595,33911,6724,145Average realized price     Crude oil ($/bbl)80.8898.5284.3593.95 NGLs ($/bbl)52.0769.0956.3668.40 Natural gas ($/Mcf) Total ($/boe)56.3170.5459.3867.34Netback     Revenue56.3170.5459.3867.34 Other income0.070.470.200.45 Royalties(6.72)(8.82)(7.18)(9.04) Operating expenses(11.94)(11.14)(11.80)(11.77) Transportation expenses(2.27)(2.22)(2.31)(2.09)Operating netback prior to hedging35.4548.8338.2944.89Realized hedging gain (loss)2.08(2.58)0.59(2.32)Operating netbacks(1)37.5346.2538.8842.57     Total wells drilled23. interest wells16.35.532.513.9Success rate100%100%100%100%Undeveloped land holdings (acres)     Gross283,153135,652283,153135,652 Net216,56191,016216,56191,016Common shares, end of period (000s)127,09172,162127,09172,162Weighted average shares (000s)118,73065,43498,85153,696Notes:(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 second quarter 2012 operational and financial results. In the second quarter our primary focus was to continue to efficiently execute on our capital program in each of our core growth areas as well as closing and integrating the Midway acquisition which was completed on April 20, 2012. Although the energy industry experienced lower commodity prices through the quarter with realized crude oil prices down 9%, liquids prices down 22%, and natural gas prices down 11% from first quarter prices, Whitecap was still able to realize a strong operating netback of $37.53/boe in the quarter. In addition, we were able to achieve slightly higher production levels than anticipated at 13,559 boe/d while spending less development capital than initially contemplated.During the quarter we were once again 100% successful with our drilling program, drilling 23 (16.3 net) oil wells in 4 of our core operating areas and spending $39.7 million. This was approximately $10 million less than originally budgeted, a result we achieved by actively limiting our capital in response to the lower commodity price environment.West Central Alberta - Garrington (Cardium Light Oil)The principle reason for acquiring Midway was to gain access to their large contiguous land and Cardium development drilling inventory. During the quarter after closing the acquisition on April 20, 2012, we drilled 5 (4.9 net) Cardium horizontal multi-fracture light oil wells at Garrington which has allowed us to bring our Garrington production on Midway acquired lands from 4,100 boe/d at closing to 5,100 boe/d currently. We have optimized the drilling and completion costs on the horizontal wells in this area which has resulted in a 15% cost reduction to $2.3 million from $2.7 million per well. We plan to drill an additional 16 wells at Garrington in the second half of 2012.West Central Alberta - Greater Pembina (Cardium Light Oil)In the greater Pembina area we drilled 6 (4.9 net) successful Cardium horizontal wells. We continue to experience drilling and completion cost improvements with total costs currently coming in at approximately $2 million. We expect to drill an additional 11 wells in this area in the second half of 2012.West Central Saskatchewan - Dodsland (Viking Light Oil)The Compass acquisition was our initial entrance into the ever-growing Viking horizontal multi-fracture light oil play. During the second quarter we were somewhat restricted operationally due to wet ground conditions, however we were able to drill 8 (3.8 net) successful Viking horizontal wells and we are now producing in excess of 1,900 boe/d, up from the 1,400 boe/d that we initially acquired. We have reduced our drilling and completion costs from $1.1 million previously to $900,000 currently, a 22% improvement. In the second half of 2012, we are planning to drill an additional 27 wells on the acquired assets.Peace River Arch - Valhalla NorthOur capital program in the second quarter was comprised of 4 (2.8 net) successful horizontal oil wells including 2 (1.0 net) Montney Sexsmith wells and 2 (1.8 net) shallow horizontal wells. The latest 2 (1.0 net) Montney Sexsmith wells have encouraging oil production test rates and are just being brought on production. As well, during the quarter our first Middle Montney well was brought on production at an IP30 rate of 405 boe/d, much higher than our contemplated type curve. We will be monitoring this well over the next few months before potentially increasing our capital program on this zone.We are pleased to report that both of the corporate acquisitions that we completed earlier this year, Compass on February 10, 2012 and Midway on April 20, 2012, have been integrated smoothly and the operational results achieved are stronger than anticipated with better than projected capital efficiencies. The activity on these assets has provided us with validation of our expanded inventory of light oil resource plays that will allow us flexibility to accelerate our drilling program in a more stable realized oil price environment.Our accomplishments in the second quarter of 2012 include:HighlightsAverage production volumes increased 154% to 13,559 boe/d compared to 5,339 boe/d in the prior year. On a fully diluted per share basis, this represents an increase of 41%.Increased our oil and NGL weighting to 67% in the second quarter of 2012 compared to 63% in the second quarter of 2011.Funds from operations grew 102% to $40.1 million in the second quarter of 2012 compared to $19.9 million 2011. On a fully diluted per share basis, this represents an increase of 14% despite lower commodity prices.Realized hedging gains of $2.6 million in the second quarter of 2012.Hedged approximately 50% of forecast production for the remainder of year at an average floor price of $99.06/bbl for crude oil and $2.60/GJ for natural gas.Executed a successful $39.7 million development capital program drilling 23 (16.3 net) wells with a 100% success rate.Successfully closed the Midway acquisition which increases our Cardium resource opportunity base.We continue to build a high quality light oil asset base while maintaining a responsible level of debt that provides us with financial flexibility and focusing on per share growth in production, reserves, cash flow and net asset value. We anticipate having an exit production rate between 17,000 boe/d to 17,500 boe/d and debt to fourth quarter annualized cash flow of 1.6 times based on US$85.00/bbl WTI, AECO C$2.50/GJ and a C$/US$ 0.97 exchange rate. Although our industry has been experiencing volatile commodity price fluctuations, the oil price environment remains in a band that can provide very strong economic returns on capital projects and allows us to continue advancing to a sustainable dividend-paying growth strategy at the appropriate time.Board AppointmentWe are pleased to announce that Murray Mullen has joined the Board of Directors of Whitecap. Murray is currently the Chairman and CEO of Mullen Group Ltd. and brings with him over 35 years of valuable oil and gas experience. Welcome aboard, Murray!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, exit production rate, anticipated fourth quarter annualized debt to 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. Three months ended June 30Six months ended June 30($000s)2012201120122011Cash flow from operating activities10,82817,29445,74826,586Changes in non-cash working capital26,5881,29123,908285Transaction costs2,6501,2733,2141,273Settlement of decommissioning liabilities66-533-Funds from operations40,13219,85873,40328,144"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. SOURCE: Whitecap Resources Inc.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