Whitecap Resources Inc. · TSX:WCP
Whitecap Resources — Investor Day (June 2024)
66 slides from Whitecap Resources's investor day presentation, Jun 11, 2024
Slide 1: Investor Day: Building Momentum
INVESTOR DAY Building Momentum 11 June 2024
Slide 2: Agenda
2 1 Who We Are Creating Value Through Organic 2 Growth and Acquisitions Building for the Future 3 – 5 Year Plan AGENDA 4 Montney & Duvernay 5 Conventional 6 Financial Priorities & Marketing 7 Key Messages
Slide 3: Who We Are
3 WHO WE ARE
Slide 4: Corporate Overview
4 CORPORATE OVERVIEW ~$6.3 Billion $7.8 Billion Market Capitalization Enterprise Value Alberta Saskatchewan 169,500 boe/d $1.0 Billion 2024 Production Guidance 2024 Capital Investment $700 Million $0.0608 per Share 2024 Free Funds Flow Monthly Dividend ($0.73 annually) $1.5 Billion 0.7x Net Debt Deb
Slide 5: Focused on Per Share Results
5 FOCUSED ON PER SHARE RESULTS 13% CAGR per share 11% CAGR per share 13% CAGR per share Funds Flow Production TPP Reserves $2,500 $2,000 200,000 1,400,000 1,200,000 $1,500 150,000 1,000,000 Boe/d 800,000 Mboe $ million $1,000 100,000 600,000 $500 50,000 400,000 200,000 $0 - - 2024e 2010 2011 2012 20
Slide 6: Long Track Record of Returning Capital to Shareholders
6 LONG TRACK RECORD OF RETURNING CAPITAL TO SHAREHOLDERS Cumulative Dividends ($MM) 26% $0.0608 3,000 Cumulative NCIB ($MM) $7.00 Oct. 2023 dividend increase Current Monthly dividend $6.00 2,500 Cumulative Dividend & NCIB ($/sh) $5.00 2,000 $/share $ Millions $4.00 $612 million $1.9 billion 1,500 $3
Slide 7: Creating Value Through Organic Growth and Acquisitions
7 CREATING VALUE THROUGH ORGANIC GROWTH AND ACQUISITIONS
Slide 8: Weyburn (2017)
8 WEYBURN (2017) $2 BILLION VALUE Low base decline and long 1.0x reserve life equates to Payout significant free funds flow generation Successfully sequestered 40 million tonnes of CO2 to date Refer to Slide Notes and Advisories Payout = Net Operating Income (Operating Income – Development Capital)
Slide 9: NAL (2020)
9 NAL (2020) $1 BILLION VALUE 5.2x Initial Glauconite position Payout that has since progressed to a key focus area Consolidated Central Alberta infrastructure and increased Saskatchewan focus areas Refer to Slide Notes and Advisories Payout = Net Operating Income (Operating Income – Development Cap
Slide 10: TORC (2021)
10 TORC (2021) $1.5 BILLION VALUE 1.2x Payout Acquisition of high quality Frobisher assets in Southeast Saskatchewan Larger inventory of light oil growth opportunities Refer to Slide Notes and Advisories 10 Payout = Net Operating Income (Operating Income – Development Capital) / Purchase Price.
Slide 11: XTO (2022)
11 XTO (2022) $4 BILLION VALUE Acquired high quality Montney & Duvernay asset in August 2022 Significant inventory beyond booked reserves to enhance long-term profitability Refer to Slide Notes and Advisories 11
Slide 12: Building for the Future – 5 Year Plan
12 BUILDING FOR THE FUTURE – 5 YEAR PLAN
Slide 13: 5 Year Plan: Organic Production Growth
13 ORGANIC PRODUCTION GROWTH 5 YEAR PLAN 215,000 boe/d 5% Average Annual Growth Rate to 215,000 boe/d $10 Billion Funds Flow 2025 2026 2027 2028 2029 $6 Billion Capital Investment $4 Billion Free Funds Flow FREE FUNDS FLOW $4 Billion Free Funds Flow 2025 2026 2027 2028 2029 Funds Flow Capital Invest
Slide 14: 5 Year Free Funds Flow Profile
14 5 YEAR FREE FUNDS FLOW PROFILE $4 Billion of Free Funds Flow Dividends + Buybacks Balance Sheet $3 Billion of Returns to Shareholders $1 Billion of Debt Repayment 2025 2026 2027 2028 2029 Refer to Slide Notes and Advisories 14
Slide 15: Balanced Portfolio Maximizes Returns and Long-Term Sustainability
15 BALANCED PORTFOLIO MAXIMIZES RETURNS AND LONG-TERM SUSTAINABILITY Accelerated Growth Montney & Duvernay +20,000 boe/d 2025 - 2029 CAPITAL ALLOCATION Conventional 215,000 boe/d 169,500 boe/d 47% 53% Montney & Duvernay Conventional Q1/24 Q3/24 Q1/25 Q3/25 Q1/26 Q3/26 Q1/27 Q3/27 Q1/28 Q3/28 Q1/29 Q
Slide 16: Montney & Duvernay
16 MONTNEY & DUVERNAY
Slide 17: Montney & Duvernay Overview
17 OVERVIEW Montney/ Duvernay Land Unconventional Montney Conventional Montney Leveraging our deep Kaybob Duvernay ~700,000 acres technical expertise and of Montney and Duvernay rights historical success to drive improved economic returns 2,462 Montney and Duvernay locations in inventory 15% booked
Slide 18: Inventory
18 TIER 3 INVENTORY Future upside locations sensitive to natural gas prices Decades of Top Tier 1,249 Inventory 2,462 locations 5 Year Plan consumes <10% of Montney and Duvernay inventory TIER 2 AVERAGE Economic development with 565 optimization opportunities PAYOUT = 1.4 Years TIER 1 AVERAGE Primar
Slide 19: Significant Growth Potential
19 • Near term growth focus at Kaybob, SIGNIFICANT GROWTH Kakwa and Musreau • Medium term growth driven by Lator POTENTIAL • Option to accelerate growth in late 2026 boe/d Kaybob Other Montney Kakwa Musreau Lator Accelerated Growth 140,000 WELLS DRILLED 120,000 100,000 Kaybob Other Montney Kakwa Mus
Slide 20: Focus Areas
20 FOCUS AREAS Musreau T65 T64 Karr KAKWA MONTNEY T63 • Predictable asset base with Simonette existing infrastructure in place Kakwa T62 Kaybob T61 MUSREAU MONTNEY Lator • High liquids development with T60 recently-constructed facility on production T59 Resthaven Berland T58 LATOR MONTNEY • Prolific
Slide 21: A Repeatable, High-Quality Drilling Inventory with Upside Potential
21 A REPEATABLE, HIGH-QUALITY DRILLING INVENTORY WITH UPSIDE POTENTIAL 25,000 Payout KAKWA MUSREAU LATOR KAYBOB 0.6-0.9 years DCE&T Costs ($mm) $11.20 $11.20 $11.20 $12.30 20,000 Cum. Operating Income ($ 000's) 1,000 - 1,600 1,000 - 1,300 1,000 - 1,700 1,100 - 1,650 P+P Reserves (mboe) (25-45% liqui
Slide 22: Customized Pad Development
22 CUSTOMIZED PAD DEVELOPMENT ITERATIVE WORKFLOW FOR UNCONVENTIONAL DEVELOPMENT Subsurface Economic Execution Development Plan Evaluation Evaluation and Iteration • Localized reservoir and • Well design (spacing, benching) • Optimize economic returns • Optimize in real-time geological characteristic
Slide 23: Steady Progression of Drilling and Completions Performance at Kakwa
23 A STEADY PROGRESSION OF DRILLING AND COMPLETIONS PERFORMANCE AT KAKWA DRILLING EFFICIENCY COMPLETIONS EFFICIENCY Average Overall ROP (meters/day) Average Proppant Pumped (tonnes/day) 300 3,500 49% Improvement in Drilling 250 3,000 Efficiencies since 2021 (Average overall ROP) 2,500 200 2,000 66%
Slide 24: Reducing Our Water Usage and Securing Availability
24 REDUCING OUR WATER USAGE AND SECURING AVAILABILITY MONTNEY AND DUVERNAY WATER INTENSITY (m3/tonne) T65 T64 10 DUVERNAY T63 MONTNEY T62 8 -22% T61 Duvernay Water Usage T60 6 vs pre-2021 T59 T58 4 -42% Montney/Duvernay Land Existing Reservoir (1.3MM m 3 total) T57 Montney Water Usage Planned Reserv
Slide 25: Montney Geology
25 Kakwa Musreau Lator MONTNEY Top Upper Middle Montney GEOLOGY D3 Excellent reservoir quality Key Characteristics: D2 • Stacked porosity 200m • Predictable thickness Lower Mid Montney • Over-pressure LMM • Liquids richness Substantial opportunity to optimize already strong results LM Lower Belloy L
Slide 26: Kakwa
Kakwa 26 T64 Top KAKWA T63 Familiar lands providing D3 a wealth of information D2 200m T62 LMM Montney Land Montney 2024 Location T61 Montney 2023 Drill Area Montney Well R7 R6 R5 R4W6 LM 2021 28 Wells Well Design Whitecap first By YE2024, WCP will have Recent well and pad design Legend entered Kakw
Slide 27: Kakwa: Exceeding Expectations
EXCEEDING EXPECTATIONS 27 200 Condensate 150 Previous Wells Mbbl/ 3,000m 2023 Wells KAKWA 100 50 Marked improvement in 0 recent results following 0 2 4 6 8 10 12 Months technical review of localized 2,250 well design inputs Natural Gas +54% Improved performance of 2023 MMcf/ 3,000m 1,500 wells vs av
Slide 28: Musreau
Musreau 28 Top MUSREAU T65 Top-tier, well-defined WCP MWB D3 05-09 reservoir and a purpose- built facility D2 200m LMM T64 Montney Land Montney 2024 Location Montney 2023 Drill LM Area Montney Well R5 R4W6 Liquids Rich Well-defined Egress Legend Some of our highest Offset activity provides Control o
Slide 29: Musreau Battery Production
29 MUSREAU BATTERY PRODUCTION 18,000-20,000 boe/d MUSREAU 8 Additional wells to come on 5-9 Facility 14,000 boe/d production prior to year end Early time – deliberate limitation to Staged ramp to design ~10,000 boe/d capacity Third-party outage 2024-03-15 2024-04-15 2024-05-15 2H/24 9 wells 14,000 b
Slide 30: Lator
Lator 30 Top LATOR T63 Planned WCP MWB Decades of inventory, with T62 a view to material growth. D3 D2 200m Lator T61 LMM T60 Montney Land Montney 2024 Location Montney 2023 Drill Resthaven Area Montney Well T59 R5 R4 R3 R2 R1W6 R27W5 LM 300-450 Multi-bench Leverage locations potential experience to
Slide 31: Lator: Exceeding Expectations
EXCEEDING EXPECTATIONS 31 140 Condensate 120 Type Curve 100 13-02 LATOR 80 Mbbl 14-02 60 40 20 Strong results provide confidence in deliverability 0 +46% 0 50 100 150 200 250 BOE cumulative production Days of asset base 1,400 to date compared to External Type Curve Natural Gas 1,200 1,000 MMcf 800 1
Slide 32: Lator – An Organic Growth Story Coming in 2026
32 LATOR – AN ORGANIC GROWTH STORY COMING IN 2026 LATOR DEVELOPMENT PROFILE 300 - 450 Phase 2 Expansion Inventory locations to Total ~85,000 boe/d backstop growth profile >25 years Of stay-flat inventory at Phase 1 capacity Phase 1 30,000 - 40,000 boe/d 85,000 boe/d Facility onstream late Ability to
Slide 33: Resthaven Montney
33 RESTHAVEN MONTNEY ~1,000 Locations T63 Identified across >300,000 acres of prolific, T62 high-deliverability gas-weighted lands Kakwa T61 Lator >1.2 billion BOE of recoverable volumes T60 Equivalent to 2023 Year-End Corporate T59 TPP Reserves Resthaven T58 Technical and economic Montney Land T57
Slide 34: Kaybob Duvernay
Kaybob 34 T62 KAYBOB DUVERNAY T61 Positioned within the liquids-rich gas window of the Kaybob trend, with Duvernay 60-70m some of the most WCP GP T60 15-07 favourable reservoir conditions. Duvernay Land Duvernay 2024 Location Duvernay 2023 Drill T59 Area Duvernay Well Kaybob Liquids-Rich Trend R21 R
Slide 35: Kaybob: Exceeding Expectations
EXCEEDING EXPECTATIONS 35 80 70 Condensate 60 Type Curve 50 KAYBOB 2023 Wells Mbbl 40 30 20 Production results validate 10 significant technical work 0 0 50 100 150 200 250 completed prior to our first Days 1,600 Duvernay wells Natural Gas 1,400 1,200 +27% 1,000 BOE cumulative production to date com
Slide 36: Strategic Infrastructure
36 STRATEGIC FACILITY CAPACITY COST TIMING INFRASTRUCTURE Third-party partnerships to 36,500 boe/d Kaybob 15-07 In service fund future strategic (32% liquids) projects Whitecap operated to 20,000 boe/d Musreau 05-09 In service control cost and operations (65% liquids) 30,000 – 40,000 boe/d Late 2026
Slide 37: Conventional
37 CONVENTIONAL
Slide 38: Conventional Overview
38 OVERVIEW Alberta Saskatchewan Low Decline & High Foundation that supports Netback Light Oil long term sustainability Assets CAB CAB WEYBURN Significant FreeWEYBURN Cash WSK ESK WSK ESK Flow Generation Conventional Land History of Strong Execution and Optimization of Acquired Assets ALBERTA ~55,00
Slide 39: Conventional Inventory
39 TIER 3 Future upside locations INVENTORY 1,509 3,980 Well defined and derisked locations inventory with optimization upside TIER 2 AVERAGE PAYOUT 5 Year Plan consumes 586 Economic development with = 1.4 Years < 33% of Inventory optimization opportunities TIER 1 AVERAGE PAYOUT Primary development
Slide 40: Frobisher: Continuous Improvements
40 CONTINUOUS IMPROVEMENTS FROBISHER 70,000 2021 Type Curve Current Type Curve T7 2023 Wells 60,000 2024 Wells 50,000 Type Curve Payout T6 Browning Bbl 40,000 30,000 20,000 T5 Weir Hill 10,000 Willmar 0 0 6 12 18 24 30 36 Months T4 Steelman FROBISHER Conventional Land T3 Costs DCE&T ($ MM) $1.60 R7
Slide 41: Frobisher: Best in Class, Future Opportunities
41 FROBISHER BEST IN CLASS FUTURE OPPORTUNITIES CUMULATIVE PRODUCTION VS TIME 50 Lateral Leg Additions Peer 1 (38 wells) Peer 2 (16 wells) Saskatchewan Government royalty Peer 3 (16 wells) incentive to improve economics 40 Peer 4 (71 wells) Peer 5 (24 wells) Peer 6 (35 wells) Whitecap (106 wells) Mb
Slide 42: Viking: Continuous Improvements
42 CONTINUOUS IMPROVEMENTS VIKING 50,000 2015 Type Curve Current Type Curve T35 2023 Wells 40,000 Kerrobert T34 2024 Wells Type Curve Payout T33 Dodsland 30,000 Bbl T32 T31 20,000 T30 10,000 Kindersley T29 T28 0 0 6 12 18 24 30 36 Elrose Months Plato T26 T25 T24 VIKING Conventional Land T23 Costs DC
Slide 43: Viking: Best in Class, Future Opportunities
43 VIKING BEST IN CLASS FUTURE OPPORTUNITIES CUMULATIVE PRODUCTION VS TIME 30 Extended Reach Horizontals Peer 1 (1,186 wells) Further enhance efficiencies and Peer 2 (256 wells) Peer 3 (160 wells) reduce full cycle development capital 24 Peer 4 (732 wells) Peer 5 (2,246 wells) Whitecap (1,481 wells)
Slide 44: Glauconite: Continuous Improvements
44 GLAUCONITE CONTINUOUS IMPROVEMENTS 2021 Type Curve 400,000 T40 Current Type Curve 2023 Wells 300,000 2024 Wells T39 Type Curve Payout Boe T38 200,000 Strachan T37 Caroline 100,000 T36 T35 0 0 6 12 18 24 30 36 T34 T33 Months Westward Ho T32 T31 GLAUCONITE Glauc Land T30 Costs DCE&T ($ MM) $7.20 R1
Slide 45: Glauconite: Best in Class, Future Opportunities
45 GLAUCONITE BEST IN CLASS FUTURE OPPORTUNITIES CUMULATIVE PRODUCTION VS TIME 250 Peer 1 (4 wells) Extended Reach Horizontals Peer 2 (12 wells) Further enhance efficiencies and reduce full cycle Peer 3 (15 wells) development capital 200 Whitecap (37 wells) Upside Inventory Validation 150 >200 Creta
Slide 46: Weyburn
46 WEYBURN World’s Largest T7 T7 Anthropogenic CO2 Storage 40 Million Tonnes Project CO2 sequestered life-to-date 1.5 – 2.0 MT of CO2 2% T6 sequestered annually T6 Annual decline rate CO2 Capacity of ~115 MT Conventional Land T5 2000 Existing CO2-EOR Phases Existing CO Development Future CO2-EOR Rol
Slide 47: World Class CO2 Project
47 WORLD CLASS CO2 PROJECT FUTURE OPPORTUNITIES WEYBURN UNIT PRODUCTION 50,000 1.5 Billion Barrels OOIP 45,000 >500 million barrels recovered to date 40,000 44% Recovery Oil Production (bbl/d) (Gross) 35,000 2024 30,000 Factor + Upside Current recovery factor of 37% since first 25,000 developed in m
Slide 48: Financial Priorities
48 FINANCIAL PRIORITIES
Slide 49: Financial Priorities
49 FINANCIAL PRIORITIES BALANCE SHEET 01 • Maintain Debt/EBITDA ratio below 1.0x • Significant liquidity provides financial flexibility Free Funds Flow Driving Strong Returns BASE DIVIDEND $ MM Base Dividend Share Repurchases Balance Sheet $6,000 02 • $0.73/share annually $5,000 • Totaling $2.2 Bill
Slide 50: Balance Sheet Strength
50 BALANCE SHEET STRENGTH Target long term debt of $1.3 Billion (Debt/EBITDA <1.0x @ $50/bbl WTI) $1.5 Billion UNALLOCATED CAPITAL $1.1 Billion $1.2 Billion $1.1 Billion of unallocated capital to improve returns and per share metrics Share Buybacks MINIMAL DEBT Consolidate Core Areas $200 million Re
Slide 51: Upside Potential to the 5 Year Plan
51 CAPITAL EFFICIENCY OPERATING COST IMPROVEMENTS REDUCTIONS UPSIDE • Well Design (spacing, • Utilizing technological POTENTIAL TO benching, lateral lengths, etc.) advancements • • THE 5 YEAR • Development Optimization Focus on cost control & Focus on cost control and take advantage of scale PLAN ef
Slide 52: Crude Oil Marketing
52 CRUDE OIL MARKETING CRUDE OIL FINANCIAL EXPOSURE HIGH NETBACK 12% 10% Majority light oil pricing drives strong operating netbacks of $40/boe 16% 28% PIPELINE ACCESS Our advantaged locations and firm service agreements ensure reliable pipeline egress for our entire Edmonton production portfolio 72
Slide 53: Natural Gas and NGL Marketing
53 NATURAL GAS AND NGL NATURAL GAS MARKETING FINANCIAL EXPOSURE 5% 5% 9% 7% 20% MARKET ACCESS Rockies LNG Established term transportation 10% agreements and leveraged dual- connected facilities 58% AECO 70% 40% DIVERSIFICATION Future focus on price diversification across North America and globally t
Slide 54: Key Messages
54 KEY MESSAGES
Slide 55: Key Messages
55 PROFITABILITY 01 Successful history of acquire and optimize to scale up cash flow and cash flow per share generation SUSTAINABILITY Positioned in the best plays in North KEY MESSAGES 02 America with a long runway of drilling inventory for sustained growth well into the future OPTIONALITY Balance
Slide 56: Questions?
56 QUESTIONS?
Slide 57: TSX: WCP, www.wcap.ca
TSX: WCP www.wcap.ca InvestorRelations@wcap.ca June 11, 2024
Slide 58: Slide Notes
58 SLIDE NOTES Slide 4 1. Current shares outstanding as at March 31, 2024, and 5.4 million share awards outstanding. Slide 13 2. Enterprise value is a supplementary financial measure. See Specified Financial Measures in the Advisories. 1. Funds flow is based on US$75/bbl WTI and $3.00/GJ AECO. 3. En
Slide 59: Slide Notes
59 SLIDE NOTES Slide 22 1. Images based on internal interpretations utilizing third-party technology and/or software. Slide 35 1. See Oil and Gas Advisory in the Advisories for additional information on payout and production. Slide 23 1. ROP or "rate of penetration" is defined as the total metres dr
Slide 60: Slide Notes
60 SLIDE NOTES Slide 45 1. Production data source: McDaniel, EVA. Slide 53 2. Peer group reports oil volumes and consists of: Pine Cliff, TAQA and Tourmaline. 1. Natural gas financial exposure based on forecasted volumes. Slide 46 1. CO2 storage is based on gross operated numbers. Whitecap has a 65.
Slide 61: Advisories
61 ADVISORIES Special Note Regarding Forward-Looking Statements and Forward-Looking Information This presentation contains forward-looking statements and forward-looking information within the meaning of applicable securities Statements relating to "reserves" are also deemed to be forward-looking st
Slide 62: Advisories
62 ADVISORIES Special Note Regarding Forward-Looking Statements and Forward-Looking Information Although we believe that the expectations and assumptions on which such forward-looking information is based are reasonable, Readers are cautioned that the foregoing lists of factors are not exhaustive. A
Slide 63: Advisories
63 ADVISORIES The assumptions used for the 2024 forecast funds flow netbacks ($/boe) used on slides 4 & 5 and for the 2025-2029 forecast Oil and Gas Advisory funds flow netbacks ($/boe) on slides 13, 14 and 51 of this presentation are as follows (based on the mid-point where Reserves and Net Present
Slide 64: Advisories
64 ADVISORIES Oil and Gas Metrics (cont’d) Production & Product Type Information References to petroleum, crude oil , natural gas liquids (“NGLs”), natural gas and average daily production in this Drilling Locations presentation refer to the light and medium crude oil, tight crude oil, conventional
Slide 65: Advisories: Specified Financial Measures
65 ADVISORIES Specified Financial Measures This presentation includes various specified financial measures, including non-GAAP financial measures, non-GAAP ratios, “Market capitalization” is a supplementary financial measure and is calculated as period end share price multiplied by the capital manag
Slide 66: Research Coverage
66 RESEARCH COVERAGE • ATB Capital Markets • Jefferies • BMO Capital Markets • National Bank Financial • Canaccord Genuity • Peters & Co. • CIBC World Markets • RBC Capital Markets • Cormark Securities • Scotiabank Global • Desjardins Capital Markets • STIFEL • Haywood Securities • TD Securities