May 12, 2025
CALGARY, ALBERTA – Whitecap Resources Inc. (“Whitecap” or the “Company”) (TSX: WCP) is pleased to announce the successful closing of its strategic combination with Veren Inc. (“Veren”) (TSX: VRN) (NYSE: VRN), creating the seventh largest oil and natural gas producer and the fifth largest natural gas producer in Canada. Whitecap is now the largest Alberta Montney and Duvernay landholder and a prominent light oil producer in Saskatchewan with an enviable portfolio of premium drilling opportunities which provides for decades of sustainable production and funds flow growth. We plan to leverage the combined asset base and technical expertise to drive incremental improvements to profitability and increased returns to shareholders.
The combined company will be led by Whitecap’s management team along with an eleven-member Board of Directors including seven Whitecap directors: Ken Stickland (Chair), Grant Fagerheim (President & CEO), Vineeta Maguire, Glenn McNamara, Steve Nikiforuk, Brad Wall and Grant Zawalsky. The four new directors joining from the Veren Board of Directors are: Craig Bryksa, Jodi Jenson Labrie, Barbara Munroe and Myron Stadnyk. Stepping down from their roles as Whitecap directors are Mary-Jo Case and Chandra Henry. Whitecap would like to thank Ms. Case and Ms. Henry for their leadership, guidance and contributions as directors to the success of Whitecap.
NON-STRATEGIC ASSET DISPOSITIONS
Whitecap has entered into two agreements to dispose of certain non-strategic assets for aggregate consideration of $270 million, prior to any closing adjustments. The non-strategic assets include approximately 8,000 boe/d1 (90% liquids) of medium oil production in southwest Saskatchewan and an 8.333% working interest in a natural gas facility in the Kaybob region. The dispositions are expected to close on or before June 30, 2025, subject to customary closing conditions, with the proceeds directed toward our balance sheet.
2025 GUIDANCE
After accounting for the Veren combination and the non-strategic asset dispositions, we are increasing our average 2025 production forecast to 295,000 – 300,000 boe/d (63% liquids) on capital expenditures of approximately $2.0 billion for the year. For the second half of 2025, we expect production to average 363,000 – 368,000 boe/d (62% liquids) on capital expenditures of approximately $1.1 billion.
Unconventional
We plan to allocate approximately 75% of our second half capital budget to our Montney and Duvernay assets which includes drilling 67 (58.1 net) wells, of which 66 (63.5 net) wells are expected to come on stream in the second half of the year (including wells drilled in the first half of 2025). We are currently running 6 unconventional rigs focused in areas with established technical understanding and available infrastructure capacity.
Application of our unconventional development workflows on the acquired lands has already commenced and we will now proceed with the integration of the two technical teams and undertake detailed reviews of the respective assets. Through this process, we will investigate opportunities for overall enhancement of the asset base through variations on development, including well spacing, benching, completions technology, and drawdown strategies. As with our development to date, our priority remains on long-term value generation from these lands through deliberate progression of capital efficiency improvement initiatives.
Montney
At Musreau, we plan to drill a 6-well (6.0 net) pad late in the second quarter which will be completed in early 2026 as plant capacity becomes available. We are also investigating debottlenecking options at this facility in order to modestly enhance the pace of development of these lands, which could add 10% – 20% of incremental throughput.
In Kakwa, completions are scheduled to commence late in the second quarter on our latest 4-well (4.0 net) pad, with production onstream in the third quarter. This pad features inter-well spacing of 250 metres, consistent with our inter-well spacing pilots in Kakwa in 2023 which were successful in improving per-well recoveries. We are also anticipating the spud of an 8-well (1.6 net) non-op pad in the area, which will be drilled in later 2025 and on production in 2026.
In Lator, a planned 3-well (3.0 net) pad at 10-24-061-03W6 will continue to progress our technical delineation in this area. This pad is positioned to further confirm the productive capability of the core of our land base and quantify the impact of interaction between a variety of offset development conditions. Our 04-13 facility is expected to commence earthworks and civil construction in the second half of this year as we continue to progress towards a late 2026/early 2027 commissioning and startup. Costs of the facility are expected to remain within our original expectations of $250 – $300 million, funded through our strategic partnership with Pembina Gas Infrastructure.
In Gold Creek and Karr, we plan to drill 21 (21.0 net) wells in the second half of this year, building upon strong legacy results in this area. Our efforts will be focused on utilizing available infrastructure capacity that has been materially debottlenecked over the past twelve months. We plan to perform a detailed asset review through the third quarter, utilizing our unconventional workflow to assess the impact of well design changes, including plug-and-perf completions. We will assess the effectiveness of these changes while moderating risk exposure, consistent with our approach to drilling and completions optimization across our unconventional asset base over the years.
Duvernay
In the second half of the year, we plan to drill 35 (32.5 net) Duvernay wells with a focus on areas with good subsurface control and available infrastructure.
Included in those activities are 11 (11.0 net) wells in the volatile oil window of Kaybob North, and 24 (21.5 net) wells in the liquids-rich gas window of Kaybob South. We expect that this will result in our 15-07 gas processing facility operating at capacity of approximately 36,500 boe/d in the third quarter of 2025. Concurrently, a recently constructed connection to a nearby third-party processing facility will be commissioned which will allow for incremental productive capacity of approximately 7,000 boe/d.
We expect significant infrastructure synergies to come from the Kaybob area where we plan to reduce capital expenditure duplication on trunk lines, compression, and associated development infrastructure.
Conventional
We plan to invest approximately 25% of our second half capital budget on our conventional assets which includes drilling 91 (74.8 net) wells in Saskatchewan and 10 (5.2 net) wells in Alberta. Our conventional assets in both Saskatchewan and Alberta provide Whitecap with strong free funds flow generation to support our return of capital strategy to shareholders.
Saskatchewan
In eastern Saskatchewan, our second half of the year Frobisher program will be the most active with 25 (22.8 net) wells planned with two rigs. The majority of this activity commences in late September and will continue to focus on triple leg lateral wells to maximize royalty incentives and well economics. This program will continue to build off the momentum of our first quarter program which outperformed IP90 expectations by approximately 25%.
In western Saskatchewan, we plan to drill 18 (18.0 net) Viking wells in our legacy Kerrobert and Dodsland properties and in southwest Saskatchewan we plan to drill 17 (13.8 net) wells focused on the Shaunavon and Success formations. These areas are further supported by a low decline enhanced oil recovery (“EOR”) base which provides for strong free funds flow generation.
At Viewfield, we plan to drill 17 (11.1 net) Bakken wells including 9 open hole multi-lateral wells ranging from 1.0 to 2.0 miles in length with approximately 8 legs per well. The remaining development will target historical horizontal multi-stage fracturing designs.
At Weyburn, where we own and operate a world class carbon capture, utilization and storage project, we plan to drill 14 (9.1 net) wells to continue to support the low 3% – 5% base decline rate in this area.
Alberta
Our conventional assets in Alberta will continue to focus on Cardium and Glauconite development with the drilling of 6 (3.6 net) Cardium wells in West Pembina and 3 (1.2 net) wells in the Glauconite. Both assets have continued to exceed our expectations with strong results and well design enhancements further improving the economics in these plays.
STRONG CREDIT PROFILE
Whitecap has also entered into a new $3 billion unsecured 4-year credit facility (the “New Facility”) with our syndicate of banks which replaces Whitecap’s existing credit facility. The New Facility, combined with our existing $1.4 billion investment grade senior notes and $223 million private placement notes, results in total credit capacity of $4.6 billion. At US$60/bbl WTI and $2.50/GJ AECO, net debt2 is expected to be approximately $3.4 billion by year end2, which represents a net debt to annualized funds flow ratio of approximately 1.0 times3 and leaves the Company with $1.2 billion of unutilized capacity.
Whitecap’s materially improved business risk profile, low leverage and ample liquidity positions us well to navigate through the current market volatility and to execute on our long-term strategic priorities.
STRATEGIC PRIORITIES
We continue to prioritize balance sheet strength by ensuring capital expenditures and dividends are covered by our funds flow. Our capital investments are focused on capital efficiencies and free funds flow generation with a long-term organic production growth target of 3% – 5% per share4 enhanced by share repurchases. The dividend provides stable and reliable cash returns to shareholders during periods of commodity price volatility and is well supported by a best-in-class portfolio with decades of free funds flow generation and an excellent balance sheet with low leverage and ample liquidity.
The integration of Veren’s assets is well underway and expected to be seamless given the significant operational overlap, our technical expertise in each of the areas and our proven ability to effectively acquire, integrate and optimize historical acquisitions. We will use our technical, operating and financial expertise to realize the previously identified $200 million of initial synergies over the next 6 – 12 months with the potential to further reduce our controllable costs and improve our capital efficiencies over the long term. We are very excited about the future potential of our consolidated portfolio and look forward to reporting back to shareholders on our progress.
For further information:
Grant Fagerheim, President & CEO
or
Thanh Kang, Senior Vice President & CFO
Whitecap Resources Inc.
3800, 525 – 8th Avenue SW
Calgary, AB T2P 1G1
(403) 266-0767
www.wcap.ca
[email protected]
NOTES
1 Disclosure of production on a per boe basis in this press release consists of the constituent product types and their respective quantities disclosed herein. Refer to Barrel of Oil Equivalency and Production & Product Type Information in this press release for additional disclosure.
2 Based on the following commodity pricing and exchange rate assumptions for the remainder of 2025: US$60/bbl WTI, $2.50/GJ AECO and USD/CAD of $1.39.
3 Funds flow and net debt are capital management measures. Annualized funds flow and net debt to annualized funds flow ratio are supplementary financial measures. Refer to the Specified Financial Measures section in this press release for additional disclosure and assumptions.
4 Production per share is the Company’s total crude oil, NGL and natural gas production volumes for the applicable period divided by the weighted average number of diluted shares outstanding for the applicable period. Production per share growth is determined in comparison to the applicable comparative period.