The Calgary oil and gas producer’s production gains helped it post a net profit of $652 million in the first quarter
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Oil and gas producer Whitecap Resources posted record profits and production in the first three months of the year, boosted by the company’s recent acquisitions and high commodity prices.
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The Calgary-based company’s production gains helped it post a net profit of $652 million in the first quarter, up from $19.6 million in the same period last year.
The company reported record average production of 132,691 barrels of oil equivalent per day (boe/d) in the first quarter, and overall production increased 38% from the first quarter of 2021. CEO Grant Fagerheim said that acquisitions over the past 18 months – including rivals Kicking Horse Oil & Gas, NAL Resources and TORC Oil & Gas – have helped Whitecap capture the rise in commodities.
Fagerheim told the Financial Post he expects Whitecap to ramp up drilling in the second half of the year, despite rising costs and supply chain issues that have plagued producers. .
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He said the company is trying to plan carefully to ensure it has enough rigs under contract for the upcoming winter drilling season.
“We just want to make sure everything is in place,” Fagerheim said on April 28. “Because of the difficulties in accessing materials, marketing your products, is there enough infrastructure? Pipelines? Because everything has become tighter.
It took an invasion for the feds to want us to increase production
Grant Fagerheim
Oil and gas prices have soared amid tight supplies and Russia’s invasion of Ukraine that has countries scrambling to find alternative sources of Russian fuel. Whitecap’s hopes of drilling for more gas come as gas prices in Alberta soared to more than US$6 per million British thermal units, the highest since 2014.
Fagerheim was asked during a conference call with investors on April 28 if the company was able to help replace Russian oil and gas. He said western Canadian producers are constrained by infrastructure that only moves product south and west, rather than east.
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“The industry has been urged to do whatever we can to increase production at this time,” Fagerheim said. “It seems kind of funny that it took an invasion for the feds to want us to increase production, but that’s where we are.
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“It’s difficult in Canada. We still have areas in Canada that don’t want pipelines — and if we don’t want pipelines, it’s hard to get production (east) to Europe.
In its first quarter results, Whitecap offered no formal changes to its 2022 capital spending plans, but acknowledged that cost inflation, labor shortages and supply constraints weighed on operations.
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Fagerheim said the company was considering accelerating the winter drilling program, but said inflationary pressures were adding a 10-15% premium to costs. A final investment decision on capital spending for the rest of 2022 could come in June, he said.
Whitecap previously announced it would increase its base dividend by 33% to $0.03 per share, an annual increase of $56 million for shareholders.
The company also repurchased 10 million shares in April under its share buyback program.
With additional reports from Bloomberg
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