An anonymous director reports

WHITECAP RESOURCES INC. ANNOUNCES RECEIPT OF PROPOSAL LETTER FROM THE CANADA REVENUE AGENCY TO REASSESS AND INTENTION TO DEFEND

Whitecap Resources Inc. has received a letter (the proposal letter) from the Canada Revenue Agency (the CRA) advising that, subject to submissions by Whitecap, the CRA is proposing to reassess a former subsidiary of Whitecap to deny non-capital loss deductions relevant to the calculation of income taxes for the years 2018 and 2019.

In 2014, Whitecap acquired a private entity that held an interest in certain oil and natural gas assets and which had accrued non-capital losses in its business. The proposed reassessment seeks to disallow the deduction of approximately $494-million of these non-capital losses under the Income Tax Act (Canada) for the years 2018 and 2019. If the non-capital losses that have been claimed for the years 2018 and 2019 were ultimately disallowed, it is expected to result in an estimated liability for the previous taxation years of approximately $133-million, excluding interest.

Whitecap will vigorously defend its tax filing position. Whitecap has received advice from its tax advisers that it should be entitled to deduct the non-capital losses and is of the opinion that its tax filings to date are correct. It is not expected that the proposal letter will impact years other than 2018 and 2019.

Whitecap is preparing a response to the proposal letter and, failing a resolution of the matter, the CRA may proceed to issue a notice of reassessment. If the CRA reassesses Whitecap as described in the proposal letter, Whitecap will have 90 days from the issuance of the notice of reassessment to prepare and file a notice of objection which would be reviewed by the CRA's appeals division. At that time, Whitecap would be required to pay 50 per cent of the assessed tax liability and interest. If the CRA is not in agreement with Whitecap's notice of objection, within a prescribed period, Whitecap would have a right to appeal to the Tax Court of Canada. If a notice of reassessment is received, Whitecap currently estimates that the ultimate resolution of the matter may take two to four years. If Whitecap is ultimately successful in defending its position, then any taxes, interest and penalties paid to the CRA would be refunded plus interest, and if the CRA is successful then any remaining taxes payable plus interest and any penalties would have to be remitted by Whitecap.

Whitecap confirms that the proposed reassessment, if issued, is not expected to affect Whitecap's long-term business strategy or its current monthly dividend, even if the CRA's position was ultimately upheld.

About Whitecap Resources Inc.

Whitecap Resources is an oil-weighted growth company that pays a monthly cash dividend to its shareholders. The company's business is focused on profitable production growth combined with sustainable dividends to shareholders. Its objective is to fully finance its capital expenditures and dividend payments within funds flow.

We seek Safe Harbor.