February 14, 2022
WHITECAP RESOURCES INC. ANNOUNCES SIGNIFICANT 2021 RESERVE ADDITIONS AND INCREASED SUSTAINABILITY DRIVEN BY ITS STRATEGIC ACQUISITIONS
CALGARY, ALBERTA – Whitecap Resources Inc. ("Whitecap" or the "Company") (TSX: WCP) is pleased to present the results of our 2021 year end reserves evaluation as prepared by McDaniel & Associates Consultants Ltd. (“McDaniel”).
Our 2021 year end reserves were exceptional and are a direct result of the successful execution and development of our strategic acquisitions and the continued outperformance of our base assets. Whitecap’s high quality drilling inventory provides years of highly profitable sustainable growth and free funds flow with our reserve life index of 17.6 years representing only 51% of our total internally estimated reserves potential.
We highlight the following 2021 year end reserve report results:
· Acquisitions Drove Significant Reserve Additions. Proved developed producing (“PDP”) reserves increased 53% to 320.3 million boe, total proved (“TP”) reserves increased 50% to 545.9 million boe and total proved plus probable (“TPP”) reserves increased 51%, compared to the prior year. Our successful acquisition strategy resulted in production replacement of 372% on a PDP basis, 545% on a TP basis and over 700% on a TPP basis at very attractive finding, development and acquisition (“FD&A”) costs, increasing the profitability of our business.
· Strong FD&A Metrics. Our strategic acquisitions, together with the efficient execution of our development capital program, resulted in strong low FD&A costs. Relative to 2020, PDP FD&A costs decreased 22% to $14.95 per boe, TP FD&A costs decreased 7% to $13.67 per boe and TPP FD&A costs decreased 10% to $11.22 per boe, generating recycle ratios of 2.0x, 2.2x and 2.7x, respectively. Whitecap’s FD&A recycle ratio (TPP) increased 59% to 2.7x and our finding and development (“F&D”) recycle ratio (TPP) has increased greater than 400% to 6.4x, meaningfully increasing the long-term sustainability of our business.
· Growth in Net Present Value per Share. PDP net present value (“NPV”), using a 10% discount rate, increased by 56% to $7.51 per share, TP NPV increased by 70% to $10.80 per share and TPP NPV increased by 134% to $15.28 per share, as compared to the prior year. The NPV calculations performed by McDaniel used an average 2022-2026 WTI price of US$69.18/bbl (three consultants average) which is lower than current strip prices.
· Long Reserve Life and Low Decline Rate Reinforce Sustainability. PDP, TP and TPP reserve life index of 7.3 years, 12.5 years and 17.6 years, respectively, combined with our low base decline rate of approximately 21% and our extensive unbooked drilling inventory, underpins our ability to sustainably grow production per share and generate significant free funds flow for our shareholders.
2021 RESERVES REVIEW
Our 2021 year end reserves were evaluated by independent reserves evaluator McDaniel & Associates Consultants Ltd. (“McDaniel”) in accordance with the definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook (“COGE Handbook”) and National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities (“NI 51-101”) as of December 31, 2021. The reserves evaluation was based on the average forecast pricing of McDaniel, GLJ Ltd. and Sproule Associates Limited and foreign exchange rates at January 1, 2022 which is available on McDaniel’s website at www.mcdan.com.
Reserves included are Company share reserves which are the Company’s total working interest reserves before the deduction of any royalties and including any royalty interests payable to the Company. Reserves related to the Central Alberta acquisition that closed subsequent to year end on January 10, 2022 are not included. Additional reserve information as required under NI 51-101 will be included in our Annual Information Form which will be filed on SEDAR on or before March 30, 2022. The numbers in the tables below may not add due to rounding.
Summary of Reserves
Reserves as at December 31, 2021
|
|
Company Share Reserves |
||
|
Description |
Light & Medium Oil (Mbbl) |
Tight Crude Oil (Mbbl) |
Conventional |
|
Proved developed producing |
222,980 |
294 |
344,425 |
|
Proved developed non-producing |
3,676 |
- |
4,194 |
|
Proved undeveloped |
115,735 |
10,197 |
148,408 |
|
Total proved |
342,392 |
10,490 |
497,027 |
|
Probable |
124,403 |
8,796 |
204,802 |
|
Total proved plus probable |
466,796 |
19,286 |
701,829 |
|
Description |
Shale Gas (MMcf) |
Natural Gas Liquids (Mbbl) |
Total (Mboe) |
|
Proved developed producing |
60,039 |
29,607 |
320,291 |
|
Proved developed non-producing |
18,377 |
2,022 |
9,460 |
|
Proved undeveloped |
218,424 |
29,107 |
216,178 |
|
Total proved |
296,840 |
60,736 |
545,930 |
|
Probable |
159,771 |
29,219 |
223,180 |
|
Total proved plus probable |
456,611 |
89,955 |
769,110 |
Net Present Values of Future Net Revenue
Summary of Before Tax Net Present Values of Future Net Revenue (Forecast Pricing)
As at December 31, 2021
|
|
Before Tax Net Present Value ($MM) (1) |
|||||||||
|
|
Discount Rate |
|||||||||
|
Description |
0% |
5% |
10% |
15% |
20% |
|||||
|
Proved developed producing |
|
6,506 |
|
5,639 |
|
4,686 |
|
4,011 |
|
3,532 |
|
Proved developed non-producing |
|
269 |
|
212 |
|
176 |
|
151 |
|
132 |
|
Proved undeveloped |
|
4,436 |
|
2,804 |
|
1,877 |
|
1,308 |
|
937 |
|
Total proved |
|
11,210 |
|
8,655 |
|
6,738 |
|
5,469 |
|
4,601 |
|
Probable |
|
7,850 |
|
4,291 |
|
2,796 |
|
2,011 |
|
1,540 |
|
Total proved plus probable |
|
19,061 |
|
12,946 |
|
9,534 |
|
7,481 |
|
6,141 |
(1) Includes abandonment and reclamation costs as defined in NI 51-101 for all of our facilities, pipelines and wells including those without reserves assigned.
Future Development Costs (“FDC”)
FDC reflects the best estimate of the capital cost to develop and produce reserves. FDC associated with our TPP reserves at year end 2021 is $5.2 billion undiscounted ($3.5 billion discounted at 10%).
Also included in FDC are 1,638 (1,333.2 net) proved booked drilling locations and 286 (226.7 net) probable booked drilling locations.
|
($000s) |
Total Proved |
Total Proved plus Probable |
|
2022 |
518,189 |
544,431 |
|
2023 |
741,541 |
816,133 |
|
2024 |
776,803 |
888,002 |
|
2025 |
723,784 |
842,550 |
|
2026 |
628,885 |
787,562 |
|
Remainder |
931,497 |
1,286,778 |
|
Total FDC, Undiscounted |
4,320,698 |
5,165,458 |
|
Total FDC, Discounted at 10% |
2,973,759 |
3,522,275 |
Performance Measures (Including FDC)
The following table highlights F&D and FD&A costs and associated recycle ratios, including FDC, based on the evaluation of our petroleum and natural gas reserves prepared by McDaniel:
|
|
2021 |
2020 |
2019 |
Three Year |
|
Proved Developed Producing |
|
|
|
|
|
F&D costs (1) |
$16.28 |
$21.87 |
$14.33 |
$17.31 |
|
F&D recycle ratio (2) |
1.8x |
0.9x |
2.1x |
1.6x |
|
FD&A costs (3) |
$14.95 |
$19.25 |
$14.45 |
$16.03 |
|
FD&A recycle ratio (2) |
2.0x |
1.1x |
2.1x |
1.8x |
|
Total Proved |
|
|
|
|
|
F&D costs (1) |
$5.05 |
$3.61 |
$17.87 |
$8.29 |
|
F&D recycle ratio (2) |
5.9x |
5.7x |
1.7x |
4.6x |
|
FD&A costs (3) |
$13.67 |
$14.74 |
$17.95 |
$15.19 |
|
FD&A recycle ratio (2) |
2.2x |
1.4x |
1.7x |
1.8x |
|
Total Proved Plus Probable |
|
|
|
|
|
F&D costs (1) |
$4.63 |
$19.16 |
$21.00 |
$13.42 |
|
F&D recycle ratio (2) |
6.4x |
1.1x |
1.4x |
3.5x |
|
FD&A costs (3) |
$11.22 |
$12.51 |
$21.06 |
$14.39 |
|
FD&A recycle ratio (2) |
2.7x |
1.7x |
1.4x |
2.0x |
(1) F&D costs are calculated as the sum of development capital of $413.8 million (excluding corporate and capitalized G&A) plus the change in FDC for the period of -$58.7 million (PDP), -$298.3 million (TP) and -$317.1 million (TPP), divided by the change in reserves volumes that are characterized as development for the period.
(2) Recycle ratio is calculated as operating netback divided by F&D or FD&A costs. Our estimated operating netback1 in 2021 is $29.80/boe.
(3) FD&A costs are calculated as the sum of development capital of $413.8 million (excluding corporate and capitalized G&A) plus acquisition capital of $1,888 million plus the change in FDC for the period of -$19.2 million (PDP), $756.2 million (TP) and $1,095.6 million (TPP), divided by the change in total reserves volumes, other than from production, for the period.
Production Replacement Ratio and Reserve Life Index
The following table highlights our production replacement ratio and reserve life index (“RLI”) based on the evaluation of our petroleum and natural gas reserves prepared by McDaniel:
|
|
2021 |
2020 |
2019 |
Three Year |
|
Proved Developed Producing |
|
|
|
|
|
Production replacement (1) |
372% |
34% |
100% |
199% |
|
RLI (years) (2) |
7.3 |
9.0 |
8.3 |
8.1 |
|
Total Proved |
|
|
|
|
|
Production replacement (1) |
545% |
101% |
133% |
302% |
|
RLI (years) (2) |
12.5 |
15.6 |
13.3 |
13.6 |
|
Total Proved Plus Probable |
|
|
|
|
|
Production replacement (1) |
737% |
100% |
169% |
394% |
|
RLI (years) (2) |
17.6 |
21.8 |
18.6 |
19.1 |
(1) Production replacement ratio is calculated as total reserve additions (including acquisitions net of dispositions) divided by annual production. Whitecap’s production averaged 112,222 boe/d in 2021.
(2) RLI is calculated as total Company share reserves divided by the annualized fourth quarter actual production of 120,020 boe/d.
1 Non-GAAP financial measure. See “Specified Financial Measures”.
For further information:
Grant Fagerheim, President & CEO
or
Thanh Kang, Senior Vice President & CFO
Whitecap Resources Inc.
3800, 525 – 8th Avenue SW
Calgary, AB T2P 1G1
(403) 266-0767
www.wcap.ca
InvestorRelations@wcap.ca
Refer to full press release for forward-looking statements and advisories.
