Whitecap Resources Inc.

Good morning. My name is Sylvie, and I will be your conference operator today. At this time, I would like to welcome everyone to Whitecap Resources Q1 2024 results conference call. Please note that all lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star then number one on your telephone keypad. And if you would like to withdraw your question, simply press star then number two. I would now like to turn the call over to Whitecaps President and CEO, Mr. Grant Fagerheim. Please go ahead, sir.

Well, good morning, and thanks, Sylvie. Good morning, everyone, and thank you for joining us. Here with me are five members of our management team, our Senior Vice President and CFO, Ton Kang, our Senior Vice President of Production and Operations, Joel Armstrong, and our Senior Vice President of Business Development and Information Technology, Dave Momber-Kett. We also... have with us today, Julie Wong, our Vice President of the West Division, and Chris Pullen, our Vice President of the East Division, joining us. Before we get started today, I would like to remind everybody that all statements made by the company during this call are subject to the same forward-looking disclaimer and advisory that we set forth in our news release issued yesterday afternoon. I'm happy to advise that we are off to a great start in 2024 as a result of the collaborative efforts of our dedicated staff. We've experienced our most active quarter in our Whitecap history, running 15 rigs at our peak and spotting 96 gross wells. First quarter production averaged just under 170,000 BUE per day, which was also the highest quarterly production since the inception of Whitecap 15 years ago, and was over 6,000 barrels a day above our internal forecast of approximately 163,500 BUE per day. Meanwhile, in the first quarter, capital spending of $393 million was below our internal forecast of $425 million. Production and outperformance has come from both our east and west divisions, with Chris and Joey we'll talk to shortly. Of note, in the quarter, we completed and commissioned our 20,000 BW per day battery at Masrow in northern Alberta. This was the largest facility and pipeline project Whitecap has undertaken to date. Special thanks to the team for their exceptional work from planning and design through execution. The facility was completed approximately two weeks ahead of schedule and 10% below budgeted AFE costs. This is an important milestone for us as we reach the development phase of this liquids-rich Montney asset. We're very pleased to advise that with the continued outperformance in our east and west divisions, this has given us the confidence to increase our 2024 annual production guidance to 167,000 to 172,000 which is up 2,000 DUI per day from our previous guidance, with no change to our capital budget of approximately $1 billion. Also of note, as provided in our press release, Whitecap is hosting our inaugural Investor Day on June 11th from 8.30 a.m. Mountain Time virtually. As we have now owned the XTO assets for just over 1.5 years, we are looking forward to showcasing the technical depth of our team along with the strength of our inventory both in the east and west divisions and the long-term sustainability and profitability of our business. I'll now pass the mic on to Ton Kang to discuss our financial results.

Thanks Grant. We generated $384 million of fund flow or $0.64 per share in the first quarter which was used to fund the first quarter capital program of approximately $393 million. Q1 is our most active with the highest level of capital spending in the year. With spring breakup underway in Western Canada, we will be generating significant free funds flow in the second quarter as our capital spend in the quarter is expected to be only $200 to $250 million. Although WTI prices in the first quarter were flat to the fourth quarter, Canadian light oil differentials were relatively wide at over $8.50 per barrel, resulting in short-term funds flow impact that has since normalized with strip prices implying tighter differentials once the Trans Mountain Expansion Pipeline comes online in the first week of May. Natural gas prices continue to be challenged, and the outlook does not materially improve until LNG Canada Phase 1 is commissioned. We anticipate Western Canadian, and specifically ACO prices, to improve upon startup of the facility, diverting significant volumes to coastal gas link, which should alleviate pressure on existing pipeline systems to better absorb downtime or other restrictive events. Liquids pricing drives the economics of both our conventional crude oil assets as well as our unconventional development given the high condensate yields. However, improved natural gas prices would be material to our free cash flow generation as we produce approximately 370 million cubic feet per day of natural gas. From a cash cost perspective, our first quarter results are generally in line with our expectations. Operating costs per BOE were slightly higher at $14.27 per BUE compared to the fourth quarter of last year at $13.41 per BUE due to the extreme cold weather in January impacting operations. The royalty rate in the first quarter was 16.8% compared to 17.9% in the fourth quarter of 2023 primarily due to lower realized oil and NGL prices. Cash tax expense of $2.51 per BUE was significantly higher than $0.24 per BUE in the fourth quarter of 2023. Cash taxes are calculated based on forward strip prices at the time of calculation and are trued up or down based on actual prices for the year. So there will be some volatility in this estimate as we move through the year. We paid $109 million of dividends during the quarter, or just over $0.18 per share, and feel very comfortable with the sustainability of the dividend longer term. As we generate free funds flow in the second quarter, we will look to focus on share buybacks to enhance shareholder returns. Our balance sheet is in excellent shape, with debt to EBITDA of 0.7 times. We have $200 million of private placement notes maturing May of this year, and given our significant liquidity, we anticipate we will be paying this off with a bank revolver, which results in total credit capacity of $2.9 billion. I will now pass it off to Joey for more remarks on our West Division results.