Whitecap Resources Inc. announces 127% increase to 2012 year-end reserves and provides operational update

 

CALGARY, Jan. 30, 2013 /CNW/ - Whitecap Resources Inc. ("Whitecap" or the "Company") (TSX:WCP.TO - News) is pleased to announce the results from its 2012 year-end oil and gas reserves evaluation and provide shareholders with an operational update.

2012 YEAR-END RESERVES

Whitecap's year-end 2012 reserves were evaluated by independent reserves evaluator McDaniel & Associates Consultants Ltd. ("McDaniels"). The evaluation of all of Whitecap's oil and gas properties was done 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"). Additional reserve information as required under NI 51-101 will be included in the Company's Annual Information Form which will be filed on SEDAR by March 22, 2013.

Highlights of the 2012 reserve report include:

  • Achieved finding and development ("F&D") costs of $18.07 per proved plus probable boe, including changes in future development costs, which results in a recycle ratio of 2.5 times.
  • Achieved finding, development and acquisition ("FD&A") costs of $20.94 per proved plus probable boe, including changes in future development costs, which results in a recycle ratio of 2.2 times.
  • Increased proved plus probable reserves by 127% to 87.5 MMboe (69% oil and NGLs) and proved reserves by 138% to 60.9 MMboe (70% oil and NGLs).
  • On a per share, fully diluted basis, increased proved plus probable reserves by 30% and proved reserves by 36%.
  • Increased the proved developed producing component of total proved reserves from 59% to 61% year over year. Total proved reserves now represent 70% of total proved plus probable reserves compared to 66% in the prior year.
  • Proved plus probable reserve additions replaced 1,054% of production in the year and proved reserve additions replaced 788% of production.
  • The 2012 year-end reserves evaluation includes 289 undeveloped drilling locations of which 91% have proved reserves assigned.
  • Maintained a long reserve life index of 14.0 years for proved plus probable reserves and 9.8 years for proved reserves, based on fourth quarter 2012 average production of 17,000 boe/d.

Summary of Reserves
(Forecast Pricing)

As at December 31, 2012(1)        
  Gross company reserves(2)
Description Oil (Mbbl) Gas (MMcf) NGL (Mbbl) Total (Mboe)
Proved producing 21,954 72,265 3,182 37,181
Proved non-producing 290 4,278 15 1,017
Undeveloped 15,056 34,962 1,845 22,729
Total proved(3) 37,300 111,505 5,043 60,927
Probable 15,702 52,273 2,159 26,573
Total proved plus probable(3) 53,002 163,778 7,201 87,500
(1) Based on McDaniels' January 1, 2013 forecast prices.
(2) Gross Company reserves are the Company's total working interest share
before the deduction of any royalties and without including any royalty interest
of the Company.
(3) Numbers may not add due to rounding.

Summary of Before Tax Net Present Values
(Forecast Pricing)

As at December 31, 2012(1)  
  Before Tax Net Present Value ($MM)
  Discount Rate
Description 0% 5% 10% 15% 20%
Proved producing $ 1,408 $ 1,030 $ 817 $ 682 $ 590
Proved non-producing   17   13   11   9   8
Undeveloped   619   376   240   157   101
Total proved $ 2,043 $ 1,419 $ 1,068 $ 848 $ 700
Probable(2)   1,150   562   335   226   166
Total proved plus probable(2) $ 3,194 $ 1,980 $ 1,402 $ 1,074 $ 865
(1)   Based on McDaniels' January 1, 2013 forecast prices.
(2)   Numbers may not add due to rounding.

 

Capital Program Efficiency

Based on the evaluation of our petroleum and natural gas reserves prepared in accordance with NI 51-101 by our independent reserve evaluator, McDaniels, the historical efficiency of our capital programs is summarized as follows:

 

             
    2012   2011   Three Year
Weighted
Average
Excluding Future Development Costs            
Proved ($/boe)            
      F&D costs(1) $ 19.03 $ 14.59 $ 18.65
      FD&A costs(2) $ 22.04 $ 20.77 $ 21.70
Proved plus probable ($/boe)            
      F&D costs(1) $ 14.87 $ 10.74 $ 15.06
      FD&A costs(2) $ 16.49 $ 14.97 $ 15.87
Recycle ratio(3)            
      Proved plus probable    2.72   3.27   2.6
             
Including Future Development Costs            
Proved ($/boe)            
      F&D costs(1) $ 22.74 $ 24.13 $ 25.59
      FD&A costs(2) $ 27.78 $ 27.90 $ 28.27
Proved plus probable ($/boe)            
      F&D costs(1) $ 18.07 $ 17.83 $ 21.90
      FD&A costs(2) $ 20.94 $ 20.80 $ 21.36
Recycle ratio(3)            
      Proved plus probable   2.15   2.35   1.9
             
Q4 Operating netback per boe(3) $ 44.92 $ 48.93 $ 40.49
(1)   The aggregate of the exploration and development costs incurred in the
most recent financial year and change during that year in estimated future
development costs generally will not reflect total finding and development
costs related to reserve additions for that year.
(2)   The capital expenditures include the announced purchase price of
corporate acquisitions rather than the amounts allocated to property,
plant and equipment for accounting purposes. The capital expenditures
also exclude capitalized administration costs and transaction costs.
(3)   Recycle ratio is calculated as operating netback divided by FD&A costs
(proved plus probable). Operating netback is calculated as revenue
(including realized hedging gains and losses) minus royalties, production
and operating expenses and transportation expenses.

 

In addition to our 2012 year-end reserves evaluation noted above, McDaniels is also conducting an evaluation of our economic contingent resources, the results of which will be released later in the first quarter 2013.

OPERATIONAL UPDATE

In the fourth quarter of 2012, Whitecap achieved record production of approximately 17,000 boe/d, a 118% increase on an absolute basis and a 25% increase per share, fully diluted, over our fourth quarter 2011 average production of 7,806 boe/d. The production increase is 8% over our third quarter 2012 average production of 15,795 boe/d. Our 2012 average annual production is approximately 14,000 boe/d, a 148% increase on an absolute basis and a 40% increase per share, fully diluted, over our 2011 average annual production of 5,657 boe/d.

We drilled a total of 114 (91.0 net) wells all targeting oil with a 100% success rate in 2012 of which 30 (26.2 net) wells were drilled in the fourth quarter of 2012. Our extensive inventory of low risk development drilling opportunities, predictable and stable production base and associated hedging program will allow us to pay meaningful and consistent dividends as well as continue to focus on per share growth in production, reserves and cash flow.

In West Central Saskatchewan, we drilled 10 (10.0 net) wells in the fourth quarter of 2012 and have plans to drill an additional 19 (17.4 net) in the first quarter of 2013 all targeting Viking light oil. We continue to achieve production results that are at or above our type curves. Our drilling and completion costs continue to be optimized with our last six wells averaging $772,000 per well to drill and complete, approximately 6% lower than our type economic assumptions.

In the Garrington area of West Central Alberta, Whitecap drilled 5 (5.0 net) oil wells in the fourth quarter of 2012 and anticipates drilling an additional 10 (5.2 net) wells in the first quarter of 2013. As a result of optimizing our completion methods, we have recently experienced better than anticipated early production rates from our Cardium horizontal wells. Our last 7 wells have averaged 390 boe/d (92% oil and NGLs) over their first 30 days of production which is a 43% improvement on our current type curve.

Whitecap drilled 7 (4.9 net) Cardium oil wells in the greater Pembina area of West Central Alberta in the fourth quarter of 2012 and plans to drill an additional 6 (6.0 net) wells in the first quarter of 2013. We continue to optimize our drilling and completion methods and are achieving production results that are exceeding our current type curve. The last 10 wells have an average IP(30) rate of  301 boe/d (94% oil and NGLs) which is 39% higher than our current type curve.

Whitecap continues to advance and monitor the progress of the waterflood development in its Valhalla North Montney oil play in the Peace River Arch area of Alberta since increasing the water injection from 1,600 boe/d to 5,600 boe/d in the second quarter of 2012. Production increases as a result of increased water injection are expected to be realized in the next 6 - 24 months. In the fourth quarter of 2012, Whitecap drilled 1 (0.5 net) Montney oil well and 1 (1.0 net) horizontal Dunvegan oil well and anticipates drilling an additional 2 (1.0 net) wells in the first quarter of 2013. We plan to expand the Montney waterflood area to the west in the second and third quarters of 2013.

In the Fosterton area of southwest Saskatchewan, we drilled 5 (4.7 net) development oil wells and have increased our current production to approximately 700 boe/d (90% oil) from the third quarter average production volume of 300 boe/d. These results will be monitored with the potential to increase capital allocated to the area in 2013.