Mr. Grant Fagerheim reports

WHITECAP RESOURCES INC. ACHIEVES RECORD PRODUCTION, INCREASES GUIDANCE AND ANNOUNCES INVESTOR DAY

Whitecap Resources Inc. has released its operating and unaudited financial results for the three months ended March 31, 2024.

Selected financial and operating information is outlined herein and should be read with Whitecap's unaudited interim consolidated financial statements and related management's discussion and analysis for the three months ended March 31, 2024, which are available at SEDAR+ and on the company's website.

Message to shareholders

Whitecap had an exceptional first quarter with average production of 169,660 boe/d (barrels of oil equivalent per day) (108,210 bbl/d (barrels per day) of light oil and liquids and 368,701 mcf/d (thousand cubic feet per day) of natural gas) compared with the company's forecast of approximately 163,500 boe/d (105,000 bbl/d of light oil and liquids and 351,000 mcf/d of natural gas), an increase of over 6,000 boe/d. This was achieved with lower than expected capital expenditures of $393-million compared with the company's forecast of approximately $430-million.

The first quarter represented the most active in our history. Drilling peaked at 15 rigs during the quarter to spud 96 (88.4 net) wells. The company also completed the commissioning and start-up of its owned and operated Musreau battery. First sales volumes were produced through the facility in mid-March, approximately two weeks ahead of schedule and the combined project (including the sales gas pipeline) came in approximately 10 per cent under the company's budget.

Production outperformance continues to exceed the company's expectations across its west and east divisions into the second quarter. To reflect this outperformance that the company has achieved year to date, Whitecap is increasing its annual production guidance by 2,000 boe/d to an updated guidance range of 167,000 to 172,000 boe/d, with no change to the company's capital budget of $900-million to $1.1-billion.

The company's balance sheet is in excellent condition with $1.5-billion of net debt (0.7 times debt to EBITDA (earnings before interest, taxes, depreciation and amortization) ratio) at quarter-end. Continued strengthening of the company's balance sheet through the second quarter remains a priority for both downside price protection and value enhancing opportunities in the future.

The company provides the following first quarter 2024 financial and operating highlights:

• Funds flow. First quarter funds flow of $384-million (64 cents per share) equated to a funds flow netback of $24.87 per boe. Strong WTI (West Texas Intermediate) crude oil prices and a weak Canadian dollar contributed to the company's strong netback while the wider differentials experienced on Canadian oil prices that persisted through the first quarter have substantially narrowed with the in service date of the Trans Mountain Expansion pipeline now expected in the second quarter.
• Drilling program. The company spudded 96 (88.4 net) wells and brought on production 85 (80.0 net) wells during the first quarter, including 11 (10.5 net) wells in its west division and 74 (69.5 net) wells in its east division. Initial results are very strong across both its west and east divisions, exceeding its internal forecasts on a total production basis and liquids content, particularly from its Glauconite and Montney assets.
• Return of capital. First quarter dividends declared of $109-million ($0.18 per share) increased by 24 per cent relative to the first quarter of 2023. The company's annual base dividend of 73 cents per share represents a stable return of capital to its shareholders and will be further enhanced through share repurchases using its normal course issuer bid (NCIB).
• Balance sheet strength. Quarter-end net debt of $1.5-billion equated to a debt to EBITDA ratio of 0.7 times and an EBITDA to interest expense ratio of 27.2 times, both well within the company's debt covenants of not greater than 4.0 times and not less than 3.5 times, respectively.

Operations update

West division

The progression of the company's Montney development took a significant step forward with the commissioning and start-up of the company's Musreau battery near the end of the first quarter. Initial sales volumes flowed through the facility approximately two weeks ahead of schedule and initial production rates from the company's first four-well (4.0 net) pad at Musreau are higher than anticipated. Tie-in of the company's second four-well pad at Musreau was completed in early April and each well on this pad has now been brought on production on a staged basis.

At Kakwa, the company's two recent three-well pads that were drilled to a wider six wells per section spacing compared with offset wells and previously eight wells per section spacing have continued to achieve strong results. The company's most recent three-well (3.0 net) pad, at 03-21B has produced at average IP(90) rates of 1,830 boe/d (34 per cent liquids) per well, which is 20 per cent above the company's expectations, matching the early-time outperformance of the company's adjacent 02-26B three-well (3.0 net) pad. Based on initial outperformance, the per-section economic return profiles of this asset are strengthened utilizing this updated spacing strategy and the company is currently evaluating the applicability to other areas of future Montney and Duvernay development.

The two-well (2.0 net) pad at Lator that was drilled in the back half of 2023 continues to outperform expectations with average IP(150) rates of 1,580 boe/d (42 per cent liquids) per well being 17 per cent above the company's expectations. The company's next two wells at Lator will be drilled in the third quarter this year, while continuing engineering and commercial work are being advanced to determine the optimal development and infrastructure strategy for the company's expansive land base at Lator.

In the Duvernay at Kaybob the company has just completed drilling its third pad, a three-well (3.0 net) pad which is expected to be brought on production near the end of the second quarter. The three wells on this pad have been drilled with 4,200-metre lateral lengths, the company's longest Duvernay laterals to date. The company's first seven (7.0 net) wells (four-well and three-well pads) are 22 per cent above its expectations with average IP(150) rates of 1,498 boe/d (35 per cent liquids) per well. The company plans to bring eight (8.0 net) Duvernay wells on production in 2024.

East division

The company's east division had a very active first quarter, running 11 rigs on average and the company brought 74 (69.5 net) wells on production, with an additional 11 (8.3 net) wells from the company's first quarter program planned to be brought on production by mid-May. Production outperformance across multiple areas allowed the company to offset the negative impacts that adverse weather conditions had on its drilling program and production in the quarter.

Strong results from the company's first quarter drilling program include four (3.9 net) Glauconite wells, a three-well (2.9 net) pad and a single (1.0 net) infill well. All four wells are producing significantly above initial expectations and have been aided by increased infrastructure access in the area. The company is in the process of drilling five (4.8 net) Glauconite wells through breakup with two (2.0 net) wells to be brought on by the end of the second quarter.

In East Saskatchewan, the company drilled 17 (15.7 net) wells in the first quarter, including 11 (10.3 net) triple leg horizontal wells targeting the Frobisher formation. Early time results on its Frobisher program are tracking above the company's type curve for the area. Efficiency improvements by drilling dual and triple-leg wells are notable and the significant majority of the company's 2024 program will utilize multilaterals in the Frobisher.

Outlook

Two thousand twenty-four is off to a great start with March production volumes averaging over 175,000 boe/d as a result of the company's Musreau battery coming on line as well as from high flush volumes from the company's first quarter drilling program in both the west and east divisions. The company is particularly excited about its first four-well (4.0 net) Musreau pad, with initial results exceeding the company's expectations for the area. Musreau was identified as key acreage in the company's 2022 XTO acquisition and upcoming development is expected to generate top tier economics.

The company will continue to optimize its expansive portfolio of 6,442 (5,619 net) high-quality drilling locations by reducing drilling days, refining completions parameters on a pad-by-pad basis (such as proppant intensity, cluster spacing and fluid optimization) and expect the company's operating costs per boe to continue to improve as its move through the remainder of the year.

As mentioned earlier, the company is increasing its production guidance by 2,000 boe/d to an updated guidance range of 167,000 to 172,000 boe/d, with no change to the company's $900-million to $1.1-billion capital budget.

The company is comfortable with the sustainability of its current monthly dividend of 6.08 cents per share that has been stress tested down to $50 (U.S.)/bbl WTI and $2.00/GJ (gigajoule) AECO and is further supported by a fortified balance sheet. The company's focus is now on share repurchases through its NCIB to continue to enhance its per share-metrics.

At current strip prices, the company is forecasting 2024 funds flow of approximately $1.7-billion which results in free funds flow of $700-million after capital investments.

The company sees continued tailwinds for Canadian crude oil producers with the TMX pipeline expansion expected to begin commercial operations on May 1, 2024, resulting in tighter differentials for both heavy and light oil over the next several years. As Whitecap is predominately a light oil producer, the company is seeing the benefits of the Edmonton Par differential narrow from over $8.50 (U.S.)/bbl in the first quarter of 2024 and is expected to average less than $3.00 (U.S.)/bbl over the remainder of the year.

Natural gas production in Western Canada remains near all-time highs, resulting in depressed AECO prices that are expected to remain challenged in the near to medium term. However, AECO prices are expected to improve with the start-up of LNG Canada phase 1 commissioning and the associated ramp-up in the latter part of this year. Although Whitecap's production mix is 65 per cent oil and liquids which represents 90 per cent of our revenues, this will have a positive impact to the company's cash flows as it currently produces approximately 370,000 mcf/d of natural gas.

With the tailwinds for Canadian Energy, Whitecap's deep inventory set, strong operational execution and a clean balance sheet to execute on share buybacks and/or disciplined acquisitions, the company is well positioned to deliver exceptional returns for shareholders in 2024 and beyond.

On behalf of the company's employees, management team and board of directors, the company would like to thank its shareholders for their continued support.

Investor day

The company is also pleased to announce a virtual investor day to be held on Tuesday, June 11, 2024, from 8:30 a.m. to 10 a.m. MT (10:30 a.m. to 12 p.m. ET). Members of management will present with a Q&A period to follow.

Conference call and webcast

Whitecap has scheduled a conference call and webcast to begin promptly at 9 a.m. MT (11 a.m. ET) on Thursday, April 25, 2024. The conference call dial-in number is: 1-888-390-0605 or 587-880-2175 or 416-764-8609

A live webcast of the conference call will be accessible on Whitecap's website by selecting investors, then presentations and events. Shortly after the live webcast, an archived version will be available for approximately 14 days.

We seek Safe Harbor.