Brian Zinchuk is editor and owner of Pipeline Online
CALGARY – Whitecap Resources Inc. announced on Feb. 6 that it has closed all three previously announced dispositions of certain non-strategic assets for aggregate consideration of $419 million, including $394 million of cash, prior to closing adjustments, and producing assets that consolidate the working interest in one of its core assets.
On Dec. 19, Whitecap Resources announced three separate dispositions totalling 10,000 boepd. Without saying who the other party was, the first one was a match to a corresponding ROK Resources announcement, with a sale of 1,500 boepd and picking up 475 boepd. Call that Disposition A, and ROK announced their deal closed on Jan. 24, 2023.
Whitecap’s Disposition B was to a private company operating in Saskatchewan, and involved roughly 3,500 boepd of production, nearly all of which was in Saskatchewan, but a marginal amount of production in Manitoba was also included. Whitecap would not release where the production was, who the buyer was, or the dollar value.
Whitecap’s Disposition C was for 4,500 boepd production spread across Alberta to a private company operating in Alberta. Again, the price was not disclosed.
Whitecap said proceeds from the dispositions have been used to reduce net debt1 to $1.5 billion which accelerates achieving its net debt target of $1.3 billion to mid-2023, based on current strip prices. The company’s plan is to return 75 per cent of free funds flow to its shareholders, which includes its targeted $0.73 per share annual base dividend, once this $1.3 billion net debt milestone is achieved. The remaining 25 per cent of free funds flow will be used to continue to reduce debt and strengthen its balance sheet.
“We have successfully monetized these non-strategic assets at strong disposition metrics and look forward to demonstrating strong operational performance on our core assets in 2023. We expect to grow 2023 annual production to 160,000 – 162,000 boepd from our 2022 annual production of 144,000 boepd (13 per cent production per share growth) on capital expenditures4 of $900 – $950 million,” the company said in a release on Feb. 6.
Whitecap will be releasing its fourth quarter and year end 2022 results after market close on Wednesday, February 22, 2023.
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