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Whitecap board approves 2019 capex budget of as much as C$475M


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Whitecap board approves 2019 capex budget of as much as C$475M

Calgary-based Whitecap Resources Inc. announced Dec. 18 its board of directors has approved capital expenditures totaling C$425 million to C$475 million in 2019, with first half 2019 spending focused on setting the stage for drilling waterflood-supported horizontal wells in the second half of the year.

The spending includes the drilling of 220 horizontal wells for production and investment in enhanced oil recovery projects for long-term value creation, including the drilling of nine horizontal injection wells. Around C$80 million, or 18%, of the total 2019 budget will be spent on carbon dioxide and polymer purchases, injection wells and waterflood expansions or pilots.

Regionally, in northwest Alberta and British Columbia, the company will spend C$112 million on the drilling of 22 new wells, while in west central Alberta, it will spend C$81 million for the drilling of 26 wells.

Whitecap Resources has earmarked C$112 million for the drilling of 11 wells in West central Saskatchewan and C$94 million for the drilling of 62 new wells in southwest Saskatchewan. Another C$32 million will be spent on a waterflood expansion and optimization efforts to increase reserve recovery.

It has alloted C$45 million for the drilling of five new wells and around C$27 million for carbon dioxide purchases and optimization initiatives in southeast Saskatchewan.

For 2019, the company expects average production at about 70,000 barrels of oil equivalent per day to 72,000 boe/d. That figure could climb to 77,000 boe/d to 79,000 boe/d.

Spending in the second half of 2019 is expected to deliver yearly production per share growth of 6%, setting up for a strong 2020 and targeted growth of 88,000 boe/d to 90,000 boe/d by the end of 2021.

Overall, the expected capital efficiency for the 2019 capital program is C$23,775 per boe/d, reflecting 2018 estimates at C$23,380 per boe/d and the 2016-2018 average of C$20,114 per boe/d. The hike is due to an increase in the allocation of longer-term projects for enhanced oil recovery and base production decline mitigation.

Whitecap estimates its petroleum and gas revenues at C$51.25 boe/d. The company expects investment in the decline rate mitigation projects will provide a predictable and stable corporate base decline rate of 18%-19%, while growing the production base, and expects a compounded annual growth rate on organic production in the next three years of 6%.

The company said it will pay an annual dividend of 32 Canadian cents per share that will be funded internally.