Whitecap Resources Inc. Announces 2013 First Quarter Results as a Dividend-Growth Company

CALGARY, May 6, 2013 /CNW/ - Whitecap Resources Inc. ("Whitecap", "we", "us", "our" or the "Company") (TSX: WCP) is pleased to announce that we have filed on SEDAR our unaudited interim financial statements and related Management's Discussion and Analysis ("MD&A") for the three months ended March 31, 2013. 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 March 31
Financial ($000s except per share amounts)     2013 2012
Petroleum and natural gas sales     100,240 56,982
Funds from operations(1)     64,153 33,271
  Basic ($/share)     0.49 0.42
  Diluted ($/share)     0.49 0.41
Net income (loss)     5,586 7,678
  Basic ($/share)     0.04 0.10
  Diluted ($/share)     0.04 0.09
Dividends paid or declared     19,510 -
  Per share     0.15 -
Payout ratio (%)(1)     30 -
Development capital expenditures     74,586 63,747
Property acquisitions (net)     2,139 5,833
Corporate acquisitions     - 122,553
Net debt outstanding(1)     360,753 156,411
Operating        
Average daily production        
  Crude oil (bbls/d)     11,085 6,168
  NGLs (bbls/d)     1,319 457
  Natural gas (mcf/d)     31,126 18,959
  Total (boe/d)     17,592 9,785
Average realized price        
  Crude oil ($/bbl)     84.77 88.88
  NGLs ($/bbl)     51.60 66.44
  Natural gas ($/mcf)     3.38 2.29
  Total ($/boe)     63.32 63.63
Netback ($/boe)        
  Petroleum and natural gas sales     63.32 64.00
  Realized hedging gain (loss)     1.21 (1.46)
  Royalties     (7.09) (7.81)
  Operating expenses     (10.78) (11.61)
  Transportation expenses     (2.18) (2.37)
Operating netbacks(1)     44.48 40.75
  General & administrative     (1.76) (1.76)
  Interest & financing     (2.20) (1.62)
Cash netbacks(1)     40.52 37.37
         
Share information (000's)        
Common shares outstanding, end of period     130,460 89,056
Weighted average basic shares outstanding     129,701 89,056
Weighted average diluted shares outstanding     131,695 78,971
Note:
(1) Funds from operations, payout ratio, net debt, operating netbacks and cash netbacks do not have a standardized meaning under GAAP. Refer to non-GAAP measures in this press release.

MESSAGE TO OUR SHAREHOLDERS
Whitecap is pleased to report our first quarter operational and financial results as a dividend-growth company which have exceeded our expectations. Our operational activities were focused on efficiently executing on a very active capital program in our core light oil areas along with delivering a disciplined approach to financial risk management. Once again, we realized a strong operating netback of $44.48 per boe in the quarter, demonstrating the high quality nature of our production and asset base.

During the quarter we were 100 percent successful with our drilling program, drilling 43 (32.2 net) successful oil wells and spending $74.6 million. Our drilling activity included 19 (17.4 net) Viking horizontal oil wells in the Lucky Hills area in western Saskatchewan, 13 (4.9 net) Cardium oil wells at Garrington in west central Alberta including five operated and eight non-operated low working interest wells, eight (7.4 net) Cardium horizontal oil wells in the greater Pembina area of west central Alberta, two (2.0 net) horizontal oil wells at Verlo in southwest Saskatchewan and one (0.5 net) Montney horizontal well at Valhalla North in the Peace River Arch area of Alberta.

We were once again able to deliver strong capital efficiencies on our first quarter capital program as a result of our significant in-house horizontal drilling and fracturing expertise as well as the repeatability and predictability of our assets. The cash flow netback that we achieved was better than projected due to our successful commodity risk management program and the Edmonton oil price differential being tighter than forecast, a trend we expect to see continue moving forward.

We highlight the following accomplishments in the first quarter of 2013:

  • Successfully transitioned Whitecap into a sustainable dividend-growth model, paying an initial monthly dividend of $0.05 per share, totaling $0.15 per share declared in the first quarter of 2013.

  • Grew our average first quarter 2013 production to a record 17,592 boe/d from 9,785 boe/d in the first quarter of 2012, an increase of 80 percent. On a fully diluted per share basis, this represents an increase of 9 percent.

  • Continued to focus our efforts on the highest rate of return projects resulting in an increase to our oil and NGL weighting from 69 percent in the prior period to 71 percent in the first quarter of 2013.

  • Funds from operations hit a record $64.2 million ($0.49 per fully diluted share) compared to $33.3 million ($0.41 per fully diluted share) in the first quarter of 2012, an increase of 93 percent. On a fully diluted per share basis, this represents an increase of 20 percent.

  • Strong operating netback of $44.48 per boe in the first quarter of 2013 due to a 7 percent reduction in operating costs to $10.78 per boe and the realization of a hedging gain of $1.9 million through our risk management program.

  • Invested $74.6 million in field expenditures, drilling 43 (32.2 net) wells with a 100 percent success rate.

Subsequent to the quarter end, we successfully closed the previously announced acquisition of Invicta Energy Corp. ("Invicta") for approximately $0.2 million in cash, the issuance of 4.8 million common shares and the assumption of Invicta's net debt. This complementary acquisition adds a significant amount of longer term, low risk, high netback upside potential in our ever expanding Viking light oil core area.

As well, on April 29, 2013 we were pleased to announce an additional Dodsland Viking light oil property acquisition and a concurrent equity financing along with increased 2013 guidance. This acquisition further strengthens the sustainability of our dividend-growth strategy by increasing our level of high netback, low decline assets that can provide consistent growth and substantial free cash flow. The acquisition and financing are expected to close before the end of May 2013.

To our shareholders who continue to support our Whitecap story, we thank you and look forward to reporting back to you as we move through the remainder of 2013 and beyond.

Note Regarding Forward-Looking Statements and Other Advisories
This 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, potential growth, the benefits to be obtained from the Invicta acquisition and the expected timing of closing the Dodsland acquisition and financing.

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; our ability to access capital and the satisfaction of closing conditions for the acquisition and the financing and on the expected timing.

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 (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.

Non-GAAP Measures
This press includes non-GAAP measures as further described herein. These non-GAAP measures do not have a standardized meaning prescribed by International Financial Reporting Standards ("IFRS or, alternatively, "GAAP") and therefore may not be comparable with the calculation of similar measures by other companies.

"Funds from operations" represents cash flow from operating activities adjusted for changes in non-cash working capital, transaction costs and asset retirement settlements. Management considers funds from operations and funds from operations per share to be key measures as they demonstrate Whitecap's ability to generate the cash necessary to pay dividends, repay debt, fund asset retirement obligations and make capital investments. Management believes that by excluding the temporary impact of changes in non-cash operating working capital, funds from operations provides a useful measure of Whitecap's ability to generate cash that is not subject to short-term movements in non-cash operating working capital.

The following table reconciles cash flow from operating activities (a GAAP measure) to funds from operations (a non-GAAP measure):

    Three months ended
March 31,
($000s)     2013 2012
Cash flow from operating activities     59,340 34,920
Changes in non-cash working capital     4,747 (2,679)
Transaction costs     - 564
Settlement of decommissioning liabilities     66 466
Funds from operations     64,153 33,271
Cash dividends declared     19,510 -
Payout ratio     30% -

"Operating netbacks" are determined by deducting royalties, production expenses and transportation and selling expenses from oil and gas revenue. Operating netbacks are per boe measures used in operational and capital allocation decisions.

"Cash netbacks" are determined by deducting cash general and administrative and interest expense from Operating netbacks.

"Cash dividends per share" represents cash dividends declared per share by Whitecap.

"Payout ratio" is calculated as cash dividends declared divided by funds from operations.

"Net debt" is calculated as bank debt plus working capital deficiency adjusted for risk management contracts. Net debt is used by management to analyze the financial position and leverage of Whitecap.

The following table reconciles bank debt (a GAAP measure) to net debt (a non-GAAP measure):

($000s) March 31,
2013
December 31,
2012
Bank debt       335,895       310,700
Current liabilities       105,560       104,903
Current assets       (76,770)       (82,272)
Risk management contracts       (3,932)       10,663
Net Debt       360,753       343,994

"Boe" means barrel of oil equivalent on the basis of 6 mcf of natural gas to 1 bbl of oil. 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. 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.



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