CALGARY, April 25 /CNW/ - Whitecap Resources Inc. ("Whitecap", "we", "us", "our" or the "Company") (TSX: WCP) is pleased to provide shareholders with an update on its successful first quarter drilling program.
Whitecap drilled eleven (8.4 net) oil wells in the first quarter of 2011; six (4.2 net) horizontal Cardium oil wells at Pembina in West Central Alberta, three (2.5 net) horizontal oil wells at Valhalla North in the Peace River Arch area of Alberta, and two (1.7 net) Roseray wells at Fosterton in Southwest Saskatchewan.
We are pleased to report that prior to spring break-up we were able to get seven of the eleven wells drilled and on production to achieve our target exit production rate of 3,800 boe/d including our first quarter capital program. The remaining four oil wells that were drilled in the first quarter will come on-stream as soon as conditions allow us back in the field, currently anticipated to be between May 15 and June 30, 2011.
West Central Alberta - Pembina (Cardium oil)
Since going public in June of 2010, Whitecap has successfully accumulated a significant drilling inventory and production base in the light oil Cardium resource play through a combination of acquisitions and drilling activity. Our first quarter capital program on our Cardium lands includes six (4.2 net) operated horizontal multi-stage fractured Cardium oil wells. Three wells are on production with average rates over the first 30 days in excess of 220 boe/d (greater than 85% oil), two wells tested in excess of 700 boe/d and are in the final stages of tie in, and one well which is awaiting completion following breakup. The results have exceeded our type curve expectations and further substantiate our ability to improve rates and recoveries as we progress to full development of our Cardium lands. We also continue to optimize our frac designs which include using water based frac fluid in place of an oil based fluid. In addition to reducing the capital costs for each well, the wells fractured with water have shown as good or better performance than the wells fractured with oil and allow for much faster on-stream times than oil based systems.
For the remainder of 2011, Whitecap has allocated $58 million to develop the Cardium oil play which includes the drilling of 26 (20.6 net) wells. By year end we anticipate having 76 producing Cardium horizontal wells and a current inventory of 124 (80 net) horizontal Cardium locations on which to apply, and further improve upon, the experience from our recent drilling success.
We will also be evaluating and possibly piloting reduced spacing and waterflood schemes for our Cardium lands in late 2011 or early 2012. Positive results from these pilots could have the potential to more than double Whitecap's current inventory of Cardium horizontal locations.
Peace River Arch - Valhalla (Montney Oil)
In the first quarter of 2010, Whitecap closed the acquisition of a partner interest in the Montney Sexsmith light oil pool. Whitecap has been very pleased with the results to date and our technical analysis confirms more upside than initially anticipated when the property was purchased in September 2009. The pool now has common ownership with one partner which sets the stage for the optimal and efficient development of the pool going forward.
Whitecap drilled a total of three (2.5 net) horizontal wells in the first quarter of 2011. The three horizontal wells included a Montney Sexsmith multi-fracture oil well, a Charlie Lake sweet oil well, and a shallow light sweet oil well. Two of the three wells drilled are on production with an average production rate of 350 boe/d net with an additional 480 mcf/d of combined gas awaiting tie-in and the remaining horizontal Montney Sexsmith well awaiting fracture stimulation.
Whitecap anticipates spending $32 million in Valhalla for the remainder of the year primarily to accelerate expansion of the Montney Sexsmith oil waterflood. This includes conversion of eight producing wells to water injection wells and drilling an additional seven multi-stage fractured horizontal oil wells. The impact of the conversions is approximately 200 boe/d of production deferred in the short term but allows for substantial production and value increase when the offsetting horizontal wells respond to the injection which is estimated to be in 6 to 12 months.
Whitecap's remaining capital budget for the year is anticipated to be $95 million (excluding acquisitions) which is exclusively focused towards oil projects and includes drilling 43 (30.9 net) oil wells, the conversion of eight wells to water injection and all associated facilities and pipelines to advance the waterflood in Valhalla including eight recompletion and optimization projects.
Including the recently completed Spry Energy Ltd. ("Spry") acquisition, we currently have a production base of approximately 6,300 to 6,500 boe/d (68% oil and NGLs). We anticipate our 2011 year end exit production rate to be approximately 7,800 to 8,000 boe/d (72% oil and NGLs). Our projected year end net debt of $117 to $120 million on our existing bank lines of $145 million results in a debt to forward year cash flow of less than 1 to 1.
Our current undrilled inventory of 330 (214 net) low risk development wells (89% oil) will drive our future expectations for per share growth in cash flow, production and reserves; our technical team will continue to evaluate and pursue additional growth opportunities.
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, including expected exit production, expected production rates and the timing for bringing new wells on production, our capital expenditure program, year end debt levels and cash flow, drilling and development plans and the timing thereof. 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.
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 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. The Company's 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 the Company will derive there from. 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.
Note: "Boe" means barrel of oil equivalent on the basis of 6 thousand cubic feet ("mcf") of natural gas to 1 bbl. 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.
SOURCE Whitecap Resources Inc.
For further information: Grant Fagerheim, President & CEO or Thanh Kang, VP Finance & CFO, Whitecap Resources Inc., 500, 222 - 3 Avenue SW, Calgary, AB, T2P 0B4, Main Phone (403) 266-0767, Fax (403) 266-6975