Q4 2023 Whitecap Resources Inc Earnings Call
Operator: Good morning, my name is Sylvia, and I will be your conference operator today. At this time, I would like to welcome everyone to Whitecap Resources' 2023 Results and Reserves Conference. Note that all lines have been placed on mute to prevent 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 1 on your telephone keypad. And if you would like to withdraw from the question queue, simply press the star then number 2.
Good morning, My name is Sylvia and I will be your conference operator today at this time I would like to welcome everyone to Whitecap resources 2020 results and reserves conference call note that all lines have been placed on mute to prevent background noise. After the speakers' remarks, there will be a question and answer session.
If you would like to ask a question. During this time simply press Star then the number one on your telephone keypad and if you would like to withdraw from the question queue simply press Star then number two.
Grant Fagerheim: I would now like to turn over to Whitecap's President and CEO, Mr. Grant Fagerheim. Thanks, Sylvia, and good morning, everyone, and thank you for joining us this morning. Here on the call 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, Business Development and Information Technology, Dave-Moran Burkett. We also have Joy Wong, our Vice President of the West Division, and Chris Bolan, our Vice President of the East Division, joining us as well. 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 that was issued yesterday afternoon.
I would now like to turn over to Whitecap, President and CEO. Mr. Grants figure Heim. Please go ahead Sir.
Thanks, Sylvia and good morning, everyone and thank you for joining us.
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Here on the call with me are five members of our management team, our senior Vice President and CFO Tom <unk>.
Senior Vice President of production operations Joel Armstrong.
And our senior Vice President business development and information technology Dadeland. Okay. We also have Troy Wong, our Vice President West Division, and Chris Baldwin, Vice President institution, joining us as well.
Before we get started today I would like to remind everybody that all statements made by the company during this call.
Subject to the same forward looking disclaimer and advisory that we set forth in our news release that was issued yesterday afternoon.
Grant Fagerheim: We are very pleased to report strong operational and financial results for 2023. Our assets in each of our East and West divisions have performed exceptionally well, with average production for the year at 156,501 BOE per day, comprised of 66% oil and liquids and 34% natural gas, which equates to 11% growth on a per share basis over 2022. Of the 215 Wells Drills, 181 were in our 80% Oil and Liquids East Division and 30 injection wells in our West Division, which is 60% natural gas, 40% liquids, highlighted by our Montney and DuVernay assets. From a financial perspective, we reduced debt by over $500 million since the end of 2022 and upon reaching our second internally set net debt milestone in the second quarter. Please stand by Mr. Fagerheim, as I'm disconnected. It looks like we're having a bit of technical difficulties here, so I'll just continue on behalf of Grant. My name is Ton Kang here.
We're very pleased to report strong operational and financial results for 2023.
Our assets with each of our east and West divisions have performed exceptionally well with average production for the year at 156501 Boe per day.
Comprised of 66% oil and liquids, 34% natural gas, which equates to 11% growth on a per share basis over 2022.
Of the 215 wells drilled 181, where in our 80% oil and liquids East Division and 34 wells in our West Division, which is 50% natural gas, 40% liquids highlighted by our Montney and Duvernay assets.
From a financial perspective, we reduced debt by.
By over $500 million.
Since the end of 2022 and upon reaching our second lien traineeship net debt milestone in a second.
Please standby Mr. <unk> has disconnected.
Yeah, It looks like we're having a bit of technical difficulties here. So I'll just continue on on behalf of grant it's Tom King here, So from a financial perspective, we reduced debt by over 500 million since the end of 2022 and <unk>.
Ton Kang: So, from a financial perspective, we reduced debt by over $500 million since the end of 2022, and upon reaching our second internally set net debt milestone in the second half of 2023, we increased our dividend to $0.73 per share annually. We also returned $500 million to shareholders in 2023. Three quarters of which was returned through our base dividend, and the remainder, or $123 million, was returned through share repurchases.
Reaching our second internally set net that milestone in the second half of 2023, we increased our dividend to <unk> 73 per share annually.
We also returned $500 million to shareholders in 2023, three quarters was returned through our base dividend and the remainder or $123 million was returned through share repurchases.
Ton Kang: In addition to our focus on strong operational performance, our priorities include disciplined debt management. Our net debt is currently just below $1.4 billion, and we have over $1.7 billion of undrawn capacity on our credit facility. Our leverage is low at 0.7 times debt-to-EBITDA, and the available capacity of $1.7 billion provides us ample flexibility to manage through commodity price volatility and to capture strategic opportunities should they present themselves in the future. One of those strategic opportunities that we executed on in the fourth quarter was the acquisition of 4,000 barrels per day, high net back, 100% light oil Viking production in the El Rose area. This acquisition made a lot of sense for us as it consolidated an active area of development and was completed at very attractive acquisition metrics of 1.7 times cash flow, resulting in strong accretion to both funds flow and free funds flow, as well as a healthy drilling inventory that we plan to capitalize in 2024 and beyond. 2023 was a very important year for operational execution, and we are very proud of our results and the contributions made by our employees.
In addition to our focus on strong operational performance. Our priorities include disciplined debt management. Our net debt is currently just below $1 4 billion and we have over $1 7 billion of Undrawn capacity on our credit facilities.
Our leverage is low at <unk> seven times debt to EBITDA and the available capacity of $1 7 billion provides us ample flexibility to manage through commodity price volatility and to capture strategic opportunities should they present themselves in the future.
One of those strategic opportunities that we executed on in the fourth quarter was the acquisition of 4000 barrel per day high net back 100% light oil Viking production in the <unk> area. This acquisition made a lot of sense for us as a consolidated an active area of development and was completed at very attractive acquisition metrics of one.
Seven times cash flow, resulting in strong accretion to both funds flow in free funds flow as well as a healthy drilling inventory that we plan to capitalize in 2024 and beyond.
2023, it was a very important year for operational execution, and we're very proud of our results and the contributions made by our employees. We look forward to building off the success in 2024, as we continue to enhance our development strategy across our deep portfolio of opportunities.
Ton Kang: We look forward to building on this success in 2024 as we continue to enhance our development strategy across our deep portfolio of opportunities. The continued refinement and optimization of our drilling and completion designs are expected to ultimately result in improving sustainability and profitability of the business. This includes well spacing and development design, increasing both lateral lengths and the number of horizontal legs, and secondary and tertiary recovery pilot projects. Both Joey and Chris will further elaborate on the specific initiatives that their teams are undertaking.
The continued refinement and optimization of our drilling and completion designs are expected to ultimately result in improving sustainability and profitability of the business. This includes well spacing and development design, increasing both lateral length and the number of horizontal legs and secondary and tertiary recovery pilot projects both Joe.
And Chris will further elaborate on the specific initiatives that their teams are undertaking.
Ton Kang: We also had a very strong year from a reserves perspective, especially on an organic basis, which reflects strong operational execution and a high-quality drilling inventory. Prior to the impact of net dispositions completed in 2023, we had greater than 100% production replacement as well as strong reserves per share growth. On a debt-adjusted basis, we grew PDP reserves by 6%, total proven reserves by 10%, and 2P reserves by 7% per share. Our inventory life ranges from 6 years on a PDP basis up to 19 years on a 2P basis, and coupled with long-term recycle ratios averaging 2.6 to 3.3 times demonstrates our commitment to long-term growth that is both profitable and sustainable into the future. Our 2023 funds flow was approximately $1.8 billion or $2.94 per share, and after capital expenditures of $950 million, we generated $840 million of free funds flow.
We also had a very strong year from a reserves perspective, especially on organic basis, which reflects strong operational execution and our high quality drilling inventory.
Prior to the impact of net dispositions completed in 2023, we had greater than 100% production replacement as well as strong reserves per share growth.
On a debt adjusted basis, we grew PDP reserves by 6% total proven reserves by 10% and two P reserves by 7% per share.
Our inventory life ranges from six years on a PDP PDP basis up to 19 years on a two P basis, coupled with long term recycle ratios averaging two six to three three times demonstrates our commitment to long term growth that is both profitable and sustainable into the future.
Yeah.
Our 2023 funds flow was approximately $1 8 billion or $2 94 per share and after capital expenditures of $950 million, we generated $840 million of free funds flow.
Ton Kang: This, along with the net dispositions completed in the year, contributed to our ability to reduce debt by $500 million while also returning $500 million to shareholders over the course of 2023. For the fourth quarter, we achieved production just shy of 167,000 BOEs per day and a funds flow of $462 million, or $0.76 per diluted share. After capital expenditures of $200 million, we generated $262 million of free funds flow, returning 76% of this back to shareholders through our base dividend and buybacks during the quarter. We recorded current income tax expenses of $65 million in 2023, and we added $3.6 billion of tax pools at the end of the year to shelter future income.
This along with the net dispositions completed in the year attributed to our ability to reduce debt by 500 million. While also returning $500 million to shareholders over the course of 2023.
For the fourth quarter, we achieved production just shy of 167000 Boe's per day and funds flow of $462 million or <unk> 76 cents per diluted share.
After capital expenditures of 200 million, we generated $262 million of free funds flow returning 76% of this back to shareholders through our base dividend and buybacks during the quarter.
We recorded current income tax expense of $65 million in 2023, and we had $3 6 billion of tax pools at the end of the year to shelter future income.
Ton Kang: With the closing of the Viking acquisition late in the fourth quarter, we are adjusting our guidance for 2024. Our production guidance has been increased to 165,000 to 170,000 BUEs per day, while we reduced our capital expenditures by approximately $100 million to $900 to $1.1 billion to partially offset the cost of the acquisition. The capital reductions will primarily come from our second half program, and we're now forecasting $600 million of capital in the first half of the year and approximately $400 million in the second half. The midpoint of our updated guidance represents production per share growth of 8% year-over-year. However, the capital program remains flexible to changing market conditions.
With the closing of the Viking acquisition of the late late in the fourth quarter Readjusting, our guidance for 2024, our production guidance has been increased to 165 to 170000 Boe's per day, while we reduced our capital expenditures by approximately 100 million to 900 to $1 1 billion to partially offset the cost of the <unk>.
Acquisition.
The capital reductions will primarily come from our second half program and we're now forecasting $600 million of capital in the first half of the year at approximately $400 million in the second half.
The midpoint of our updated guidance represents production per share growth of 8% year over year. However, our capital program remains flexible to changing market conditions are.
Ton Kang: Our fund flow forecast at a price tag of $75 US WTI and $2 ECO per GJ gas is $1.6 billion, resulting in $600 million of free fund flow after $1 billion of capital investment. With currently weak natural gas prices, we have been focused on drilling oil-weighted locations in our East Division, and in our West Division, we're drilling liquids-rich portions of our acid base. So the liquids content is currently driving the economics of our 2024 program. For context, although natural gas represents 36% of our production, it only represents 9% of our revenues.
Our funds flow forecast at a price deck of $75 USW Ti and $2 <unk> per GJ gas is $1 6 billion, resulting in $600 million of free funds flow after $1 billion of capital investments.
Well, it's currently weak natural gas prices, we have been focused on drilling oil weighted locations in our East Division and our West Division, we're drilling liquids rich portions of our asset base. So the liquids content is currently driving the economics of our 2024 program.
For context, although natural gas represents 36% of our production it only represents 9% of our revenues.
Ton Kang: For 2024, our price sensitivities are as follows. For every $5 increase in WTI, our funds flow increases by $130 million. For every $0.50 increase in ACO, our funds flow increases by $40 million.
For 2024, our price sensitivities are as follows for every $5 increase in W. T. I a funds flow increases by $130 million for every 50 cent increase in April our funds flow increases by 40 billion and for every Penny decrease and the Canadian to U S. Dollar exchange rate our fund flow increases.
Joey Wong: And for every penny decrease in the Canadian to U.S. dollar exchange rate, our funds flow increases by $25 million. As we mentioned previously, our balance sheet is in excellent shape, with significant liquidity on our credit facility. While our variable cost of debt has increased commensurate with the broader interest rate environment, we have cushioned this impact through our private placement notes and interest rate swaps totaling $800 million with a weighted average interest rate of only 3.25%. I will now pass it off to Joey for remarks on our West Division results.
Why 25 billion.
As we mentioned previously our balance sheet is in excellent shape with significant liquidity on our credit facility, while our variable cost of debt has increase commensurate with the broader interest rate environment. We have cushion this impacts through our private placement notes and interest rate swaps totaling.
Totaling $800 million with a weighted average interest rate of only 3.25%.
I'll now pass it off to Joey for remarks on our West Division results.
Joey Wong: Thanks Don. On an asset level, our performance in the West Division in 2023 was very strong, with initial well results above our expectations across multiple areas of unconventional Montigny and Duvernay development. Our most recent results at CAQA are so far validating our updated development strategy for the area. The 2-26B 3-well pad achieved IP120 rates that were 26% above our expectations, while test results for our most recent 3-21B 3-well pad were also quite encouraging. That pad was tied in to permanent facilities earlier this month.
Thanks, Sean.
On an asset level our performance in the West Division in 2023 was very strong with initial well results above our expectations across multiple areas of unconventional montney and Duvernay development.
Our most recent results so far are validating our updated development strategy for the area. The 226 B three well pad has achieved <unk> hundred 20 rates there were 26% above our expectations well test results for our most recent three years 21, B pad three well pad were also quite encouraging.
Pad was tied into permanent facilities earlier this month.
Joey Wong: On these two paths, we have adjusted our interwell spacing to 250 metres from 200 metres following a detailed review of these lands from a reservoir, geological, operational, and economic perspective. Our asset base will continue to undergo continuous review with the goal of maximizing the economic return characteristics of this extensive inventory set. A significant amount of technical work has also gone into the development of our Muzro asset to the north of Kakwa. Design factors such as well spacing, benching, and completion design have all been informed by a similar rigorous technical process that incorporates these localized characteristics on a pad-by-pad basis.
These two pads, we have adjusted our integral spacing to 250 meters from 200 meters. Following a detailed review of these lands from a reservoir geological operational and economic perspective.
Our asset base will continue to undergo continuous review with the goal of maximizing economic return characteristics of this extensive inventory set.
A significant amount of technical work has also gone into the development of our mazo asset to the north to the north of Cockler.
Design factors, such as well spacing benching and completion design have all been informed biosimilar rigorous technical process that incorporates these localized characteristics on a pad by pad basis.
Joey Wong: Given its higher liquids content, we expect Musro to generate strong economics in the current environment. We spud our first two four-well pads for eight net wells at Musro in the fourth quarter, while a third pad was spud in January of this year. We plan to complete a total of four four-well pads for a total of 16 net wells in Musro in 2024. These pads will flow through our 20,000 BuA day battery, which is expected to come online in the second quarter.
Given its higher liquids content, we expect mezro to generate strong economics in the current environment.
We spud our first two four well pads for eight net wells at <unk> in the fourth quarter, while the third pad was spud in January of this year.
We plan to complete a total of four four well pads for a total of 16 net wells and <unk> in 2024.
These pads will flow through our 20000, <unk> battery, which is expected to come online in the second quarter.
Moving down to the northwest portion of our rest Haven land block. We are seeing strong initial results at the tour, which is encouraging for future Montney development in the latter half of this decade.
Joey Wong: Moving down to the northwest portion of our Rest Haven land block, we are seeing strong initial results at Latour, which is encouraging for future Montney development in the latter half of this decade. The initial production results of our two well pad are approximately 15% above our expectations after 60 days on production, and these results, along with the offset results, are giving us more confidence in the liquids profile and the potential deliverability of this asset. We plan to drill an additional two wells at Latour in 2024. These initial well results, along with the success that we've been seeing throughout the refinement of our development strategy, are key to ensuring efficiency and the maximization of profitability across a full field development on this asset. Initial engineering and commercial work for an infrastructure solution at Latour has commenced, and we're looking forward to the completion of the design work on this next stage of development.
The initial production results of our two well pad is approximately 15% above our expectations. After 60 days on production and these results along with offset results.
Are giving us more confidence in the liquids profile and the potential deliverability of this asset.
We plan to drill an additional two wells at mature in 2024.
These initial well results along with the success that we've been seeing throughout the refinement of our development strategy is key to ensuring efficiency and the maximization of profitability across the full field development on this asset initially.
Initial engineering and commercial work for an infrastructure solution at the tour has commenced and we're looking forward to the completion of the design work on this next stage of development.
Joey Wong: We plan to grow this asset to approximately 30,000 BUEs a day by the end of 2028, drilling an initial 50 to 60 high-quality Montigny wells with a huge land base to grow further and or faster as warranted. Moving on to the DuVernay at Kaibab, our first seven wells that we drilled into the DuVernay are continuing to outperform expectations. The seven wells now all have IP90 rates with results coming in 24% above our expectations at 1,600 BOEs per day per well, of which 36% is liquid. We plan to drill a 3-well pad and a 5-well pad in the Duvernay in the first half of 2024. The first three wells will be drilled to a 4,200-meter lateral length, which is over 20% longer than our first seven Duvernay wells.
We plan to grow this asset to approximately 30000 Boe's a day by the end of 2028 drilling an initial 50 to 60 high quality Montney wells with a huge land base to grow further <unk> faster as warranted.
Moving on to the Duvernay and gave up our first seven wells that we drilled into the duvernay are continuing to outperform expectations. The seven wells now all have IP 90 rates with results coming in 24% above our expectations at 1600 Boe's per day per well.
Of which 30% 36% is liquids.
We plan to drill a three well pad and a five well pad in the duvernay in the first half of 2020 for the first three wells will be drilled to a 4200 meter lateral length, which is over 20% longer than our first seven duvernay wells.
Joey Wong: Optimization of our development plan in the Duvernay is ongoing, and increasing lateral length is expected to improve capital efficiency while not sacrificing the total resource recovered over the life of the well. We currently have approximately 200 locations in inventory and plan to spud 13 Duvernay wells in 2024. Lastly, I wanted to touch on our water management strategy for 2024 and beyond, given the recent headlines from the Alberta government on the topic. We have been developing a water management strategy as an ongoing initiative in preparation for this year's activity for some time, which includes engagement with both industry and regulatory stakeholders. At this time, we feel comfortable, given our existing licenses and established water infrastructure in the area, both owned and third-party, that we can effectively mitigate the impact of marginal limitations not only for this year, but by having a long-term strategy in place, we will be able to minimize disruptions to our operations on a go-forward basis. We'll now pass this on to Chris for his comments on the East Division.
Optimization of our development plan in the Duvernay is ongoing and increasing lateral length is expected to improve capital efficiency, while not sacrificing the total resource covered over the life of the well.
We currently have approximately 200 locations in inventory and plan to spud 13, Duvernay wells in 2024.
Lastly, I did want to touch on our water management strategy for 2024 and beyond given the recent headlines from the Alberta government on the topic.
We have been developing a water management strategy is an ongoing initiative in preparation for this year's activity for some time, which included engagement with both industry and regulatory stakeholders.
At this time, we feel comfortable given our existing licenses and established water infrastructure in the area, both owned and third party.
Can effectively mitigate the impact of marginal limitations not only for this year, but by having a long term strategy in place, we will be able to minimize disruptions to our operations on a go forward basis.
I will now pass it onto Christopher just comments on the East Division.
Thanks Julien.
Chris Bolan: These divisions had a very successful 2023, and we are looking to follow that up with a strong 2024. Our division is comprised of assets that produce over 80% of crude oil and NGLs, and combined with a low decline rate of less than 20%, this division drives a significant portion of free cash flow for the company. Our technical teams have done a fantastic job in 2023, not only from a well-results perspective but also by continuing to push our ceiling higher through extensive work on technical initiatives and deepening our understanding of our assets. We highlighted in yesterday's release a significant portion of East Division well results that exceeded our expectations, with over 80% of well results in 2023 being focused on high net back, short cycle, and quick payout light oil assets, and Allocating Capital to Decline Mitigation and Inventory Enhancement Initiatives will continue in 2024, with several recent initiatives being implemented upon success. Increasing reservoir contact through longer laterals, as well as increasing the number of horizontal legs, has been ongoing for the last few years.
These division had a very successful 2023, and we're looking to follow that up with a strong 2000 twenty's for.
Our division is comprised of assets that produce over 80% crude oil and Ngls and combined with a low decline rate of less than 20%. This division drives a significant portion of free funds flow for the company.
Our technical teams have done a fantastic job in 2023, not only from our well results perspective, but also by continuing to push our ceiling higher through extensive work on tactical initiatives and deepening our understanding of our assets.
We highlighted in yesterday's release, the significant portion of use division well results that exceeded our expectations with over 80% of well results in 2023 being focused on high netback short cycle and quick payout light oil assets and with oil at approximately $100 per barrel on a Canadian dollar basis means that the profitability of our East Division drilling.
Graham is extremely robust.
Allocating capital to decline mitigation and inventory enhancement initiatives will continue in 2024 are several recent initiatives being implemented upon success increase.
Increasing reservoir contact through longer laterals as well as increasing the number of horizontal legs has been ongoing for the last few years.
Chris Bolan: Synergistic asset consolidations across our land base over the last few years have also provided the opportunity to drill longer laterals and multiple horizons across a greater portion of our assets, leading to improved capital efficiency. As an example of strategic capital to enhance our low-decline profile, we are very encouraged by the initial response of our CO2 pilot project targeting the Frobisher Formation, which lies beneath the existing Wavern CO2 project targeting the Midale Formation. We drilled two producer wells early in 2023. After drilling three injection wells, we initiated CO2 injection in late 2023.
Synergistic asset consolidations across our land base over the last few years has also provided the opportunity to drill longer laterals and multiple horizons across a greater portion of our assets leading to improved capital efficiencies.
As an example of strategic capital to enhance our low decline profile. We are very encouraged by the initial response of our C. O. Two pilot project targeting the Frobisher formation, which lies beneath the existing waiver in C. O two project targeting the Mitel formation.
We drilled two producer wells early in 2023 after drilling three injection wells, we initiated C O two injection in late 2023.
Chris Bolan: Production response was exceptional, with an uplift of over four times the initial oil production rate peaking at 500 barrels per day between the two producers before being facility restricted. Although in its infancy, this resource has the potential to be meaningful with 20-40 million barrels of incremental volumes based on our Preliminary Internal Success Case Assessment. This is a good example of allocating strategic capital to further enhance low decline initiatives that will likely lead to broader implementation in the future upon success. Out of the $110 million of investments in secondary and tertiary recovery initiatives in 2023, it's worth noting that nearly 60% of this is for drilling producers in waterflood areas such as West Pamlicardium or Corroborate and Dodgeland Viking, along with producer optimizations. These projects are highly competitive and would be top quartile from a pale perspective while also having the added advantage of reduced declines and enhanced recoveries when compared to our primary drills due to historical and or ongoing pressure.
Production response was exceptional with an uplift of over four times. The initial oil production rate, peaking at 500 barrels per day between the two producers before being facility restricted.
Although in its infancy. This resource has the potential to be meaningful with 20 to 40 million barrels of incremental volumes based on our preliminary internal success case assessments.
This is a good example of allocating strategic capital to further enhance low decline initiatives that will likely lead to broader implementation in the future upon success.
Out of the $110 million of investments in secondary and tertiary recovery initiatives in 2023, it's worth noting that nearly 60% of this is for drilling producers and waterflood areas, such as west Pamela Cardium, where carrabba's and Dodge land biking, along with producer optimizations. These projects are highly competitive and would be top quartile from a payout perspective, while all.
So having the added advantage of reduced declines and enhance recoveries when compared to our primary drills due to historical and our ongoing pressure support.
Chris Bolan: The remaining 40% involves spending on injector drills and conversions, base maintenance, facilities, as well as CO2 and polymer procurement for tertiary assets such as Waburn and Southwest Saskatchewan. Our 2024 East Division drilling program is well underway, and we are currently running 11 rigs to drill 95 gross, 87 net wells in the first quarter. With that, I will turn it back over to Grant for his closing remarks. Thanks very much, Chris. And I am back. I apologize.
The remaining 40% involve spending on injector drills and conversions base maintenance facilities as well as Q2 and polymer procurement for tertiary assets such as wavering in southwest Saskatchewan.
Our 2024 East Division drilling program is well underway and we are currently running 11 rigs to drill 95 gross 87 net wells in the first quarter with that I'll turn it back over to grant for his closing remarks.
Thanks, very much Chris and I am back.
I apologize.
Grant Fagerheim: Hopefully, I won't drop off again. But anyway, thanks very much, Chris. As discussed, our recent well results are performing better than expectations, while technical initiatives undertaken within our respective divisions are exploring ways to further improve sustainability and profitability going forward. As we look out over the next five years, we are targeting organic growth of in excess of 210,000 BW per day by the end of 2028. Growth in our West Division, primarily from our unconventional Montney and Dover A development, will be at an annual rate of 12-15%, increasing production from approximately 70,000 BW per day currently to over 110,000 BW per day. In our East Division, which is light oil focused and generates significant free cash flow, we plan to increase production organically from 95,000 BW per day currently to approximately 100,000 BW per day over the next five years.
Don't drop off again, but anyway. Thanks, very much Chris has discussed our recent well results are performing better than expectations, while technical initiatives undertaken within our respective divisions are exploring ways to further improve sustainability and profitability going forward.
We look out over the next five years.
Getting organic growth to in excess of 210000 barrels per day by the end of 2028.
In our West Division, primarily from our unconventional Montney Duvernay development will be at an annual rate of 12% to 15%.
Leasing production from approximately 70000 barrels per day currently to over 110000 Boe per day.
Each division, which is later also pissed and generates significant free cash flow, we plan to increase production organically from 95000 per day currently to approximately 100000 per day over the next five years.
We operate our business in a proactive way to effectively develop our assets for increasing profitability.
And believes that at a measured pace of growth is sustainable and appropriate and manages risk over the longer term.
Grant Fagerheim: We operate our business in a proactive way to effectively develop our assets for increasing profitability and believe that a measured pace of growth is sustainable and appropriately manages risk over the longer term. At the same time, we also maintain the flexibility to be reactive to unexpected market events and will continue to allocate capital to the assets and projects that provide the highest returns. Our current corporate production split of 64% oil and liquids and 36% natural gas will increase towards 40% natural gas weighting at the end of the five years. At that time, we forecast to be producing approximately 500 million cubic feet of daily of natural gas with joining the Rockies LNG Partners Group. We aim to have approximately 20% of our natural gas production exposed to non-North American natural gas prices once the Salisms LNG project off the west coast of British Columbia is operational near the turn of the decade. Our inventory set is very robust, with over 6400 locations in inventory at year-end 2023.
Sometimes we also maintain the flexibility to be reactive to unexpected market events, and we will continue to allocate capital to the assets and projects that provide the highest returns.
Our corporate production split of 64% oil and liquids and 30%, 36% natural gas will increase towards 40% natural gas waiting at the end of the five years at that time, we forecast to be producing approximately 500 million cubic feet a day of natural gas.
Joining the Rockies LNG partners group.
We aim to be to have approximately 20% of our natural gas production exposed to non north American natural gas prices once.
Yes.
LNG project off the West Coast of British Columbia is operational.
Of the decade.
Our inventory is very robust with over 6400 locations in inventory at year end 2023.
Grant Fagerheim: This inventory has been modified for some of our updated spacing assumptions, along with further technical analysis across our assets. While we expect our full location count to always be evolving, we do believe that the recoverable resource at our asset base can support 5% annualized organic growth for at least the next 25-year period of time. As a Canadian energy producer, we are nearing an inflection point with the Trans Mountain Expansion Pipeline nearing completion and reports that the LNG Canada facility will begin commissioning prior to the end of 2024. Both export facilities off Canada's west coast will open new markets for responsibly produced Canadian oil and natural gas, and we are excited to see these projects come to fruition. With that, I will now turn the call over to our operator, Sylvie, for any questions. Thank you, sir. Ladies and gentlemen, if you would like to ask a question, please press star followed by 1, on. You will then hear a three-tone prompt acknowledging your request. If you would like to withdraw from the question, please press star followed by 1.
This inventory is.
Modified for some of our updated spacing assumptions along with further technical analysis across our asset base.
While we expect our total location count to always be evolving would you believe that a couple of resources at our asset base can support 5% annualized organic growth or eastern X 25 year period of time.
As a Canadian energy producers.
Flexion point with the Trans mountain expansion pipeline nearing completion and reports the LNG, Canada facility will begin commissioning prior to the end of 2024.
With export facilities off Canada's West Coast will open new markets for us, possibly produce Canadian oil and natural gas.
To see these projects come to fruition.
With that I will now turn the call over to our operator for any questions.
Thank you Sir.
Ladies and gentlemen, if you would like to ask a question. Please press star followed by one IHS Touchtone phone.
We'll then hear AIDS prompt acknowledging your request and if you would like to withdraw from the question queue. Please press star followed by two.
Operator: If you're using a speakerphone, we ask that you please lift your hands up before pressing any. Please go ahead and press star 1 now. If you do have any questions... And your first question will be from Dennis Fong at CIBC World Markets. Please go ahead. Hi, good morning, and thanks for taking my questions. The first one is, just in the press release, and I appreciate the commentary that you've highlighted during the conference call, there's been a lot of focus on applying new technologies and techniques to improve operations, costs, and even low productivity. Can you discuss a little bit more about what we'll call the stage of deployment across your entire asset base, as well as how quickly you think some of the kind of latest developments can be applied, whether it be the longer horizontal Yeah, Dennis. It's Joey Wong here.
Thank you speaker phone, we ask that you. Please lift the handset before pressing any keys. Please go ahead Brett.
If you do have any questions.
And your first question will be from Dennis Fong at CIBC World markets. Please go ahead.
Hi, good morning, and thanks for taking my questions.
The first one is just in the press release and I appreciate the commentary that you've highlighted through the conference call. There's been a lot of focus on applying new technologies and techniques to improve operations cost and well productivity.
Can you discuss a little bit more about what caused the stage of deployment across our entire asset base as well as how quickly you think some of the kind of latest developments can be applied on whether it be the longer horizontals more use of multi lateral legs on any of the kind of changing up our tweaking completion design can drive it.
You mentioned capital efficiency, and maybe the upper bound of five year CAGR growth.
Okay.
Yes, Dennis it's Joey long here I can take that one so I mean, our approach to these assets going back to the acquisition has been to ensure we're maximizing overall economic returns.
Joey Wong: I can take that one. So, I mean, our approach to these assets, going back to the acquisition, has been to ensure that we're maximizing overall economic returns. So we do that, as we kind of discussed, using a case-by-case design that includes all of the models that we had kind of talked about, whether we're talking about, you know, geological models, reservoir models, observation of offset results, and, of course, economic considerations. And of course, the one example is the one that we highlighted in the call, where the two recent three-well paths in Kakwa, those six wells previously would have had eight wells assigned.
So we do that as we kind of discussed using a case by case design that includes all of the models that we had kind of talked about whether were talking to.
Geological models reservoir models.
The observation of offset.
Results and of course, the economic considerations and of course. The one example is the one that we highlighted in the call.
Where the two recent three well pads and catalog.
Hum.
Those six wells previously would have had eight wells assigned.
Joey Wong: And it's our belief that through those six wells, we'll recover the same overall resource that we would have with the initial eight wells. So, you know, that's an example of what we're looking to do with respect to opportunities where we think we can influence that frac geometry to kind of work with the rock, work with the fluids to the point where we're not unduly giving up any overall reserves and pushing that overall economic return profile upwards. So, you know, to go a little bit further in saying that where it has worked in one place, we'll look to see where similar things can work in other places.
And we it's our belief that through those six wells will recover the same overall resource that we would've with with the initial eight wells. So that's an example of what we're looking to do with respect to opportunities, where we think we can influence that frac geometry to kind of work with Iraq work with the fluids to the point, where we're not unduly, giving up any overall reserves and <unk>.
Overall.
Economic return profile upwards. So you know that to go a little bit further and in saying that.
Where it has worked in one place, we'll we'll look to see where similar things can work in other places, but again, we have to recognize that with such a wide asset base, it's going to be something that we're going to have to consider.
Joey Wong: But again, we have to recognize that with such a wide asset base, it's going to be something that we're going to have to consider in each area as the rock and the fluids interact. And from a CAGR perspective, over the next five-year period of time here, we're targeting 3% to 8% production per share growth, using the mid-case right now, 5% growth to get us to that 210,000 VOEs per day, and that's premised on a $75 WTI environment there. So we certainly have the ability to flex our growth rate depending on what the economic returns look like on the capital that we're deploying. You know, in a low commodity and price environment, $50 WTI, we wouldn't be growing at all.
Each area as the rock and the fluids.
Interact.
And from a CAGR perspective over the next five year period of time here, we're targeting 3% to 8% production per share growth.
Using the mid case right now a 5% growth to get us to that 210000 Boes per day and that is premised on a $75 <unk> environment. There. So we certainly have the ability to flex our growth rate depending on what the economic returns look like on the capital that we're deploying.
Low commodity and price environment, a 50 dollar W. Ti we wouldn't be growing at all.
Joey Wong: You know, we would just be maintaining our production, and if oil is in excess of $75, then we could potentially be growing at the higher end of that 3% to 8% per share growth that we're targeting. Great, I appreciate that color.
Just be maintaining our production and if oil is in excess of $75. Then we could potentially be growing at the higher end of that 3% to 8% per share growth that we're targeting.
Okay.
Great I appreciate that color my second question here.
Ton Kang: My second question here is just on net debt. You've continued to make progress on lowering outstanding leverage, as you highlighted on the call, achieving $1.3 billion kind of halfway through the year. Understandably, your end net debt increased modestly on the back of the Viking acquisition. My question relates to, in Q3, you highlighted the potential to reduce outstanding leverage towards $1 billion in 2024. Obviously, there are a few moving parts here. I was just curious as to how you fundamentally think about aggregate leverage for the company. Where is kind of a good level, or is lower just always better?
Is just on net debt you've continued to make progress on lowering outstanding leverage.
As you highlighted on the call is being $1 3 billion kind of partway through the year understandably yearend net debt increased modestly in the back of the Viking acquisition.
My question relates towards.
Q3, you highlighted the potential to reduce outstanding leverage towards the $1 billion in 2024, obviously, there's a few moving parts here.
I was just curious as to how you're fundamentally thinking about aggregate leverage for the company.
Where is kind of a good level or has lowered its always better.
Ton Kang: And how does that potentially change how you envision returning pre-cash to shareholders? Thanks. Yeah, thanks for that, Dennis.
How does that potentially change how you envision returning free cash to shareholders.
Yes, thanks for that Dennis I think our balance sheet as I mentioned is in excellent shape right now with <unk> seven times debt to EBITDA $1 7 billion of liquidity that's available to US I think as we think about the business going forward here.
Ton Kang: I think our balance sheet, as I mentioned, is in excellent shape right now, with 0.7 times debt-to-EBITDA and $1.7 billion of liquidity that's available to us. I think as we think about the business going forward, you know, commodity prices remain volatile. There are going to be opportunities for us to be able to use our balance sheet to create value on behalf of our shareholders over the next three- to five-year period of time. And so I think as we continue to allocate 75% back to shareholders, 25% on the balance sheet, we'll continue to build that dry powder. And if there are no opportunities that present themselves, then ultimately, we'll have a better balance sheet to be able to run our business here. As we think about 2024, you know, our leverage will be below $1.3 billion. As you mentioned, we took that up a little bit with the acquisition of Elrose Viking.
Prices remain volatile theres going to be opportunities for us to be able to use our balance sheet to create value for on behalf of our shareholders over the next three to five year period of time, and so I think as we continue to allocate 75% back to shareholders, 25% on the balance sheet will continue to build that dry powder.
And if theres no opportunities that present themselves and ultimately we'll have a better balance sheet to be able to run our business here as we think about 2024.
Our leverage will be below $1 3 billion. As you mentioned, we took that up a little bit with the the acquisition with the Elrose Viking acquisition, they're consolidating a core area for us, but those are the types of opportunities with a very strong balance sheet that we can capitalize on very quickly where we're buying assets at one seven.
Ton Kang: They're consolidating a core area for us, but those are the type of opportunities with a very strong balance sheet that we can capitalize on very quickly, where we're buying assets at 1.7 times cash flow, right within our core areas, whether it's synergistic with our lands, and we're the operator. So that's what we're focused on from a balance sheet perspective. Great, thank you. I'll turn it back; I appreciate the call.
<unk> cash flow right within our core areas, whether it's synergistic with our lands and where the operator.
So that's that's what we're focused on from a balance sheet perspective.
Great. Thank you.
Turn it back.
Appreciate the color.
Hey, Thanks, guys.
Next question will be from Patrick O'brien.
Grant Fagerheim: Thank you. The next question will be from Patrick O'Rourke at ATB Capital Markets. Hey guys, good morning, and thank you for taking my question here. Just with respect to the ability to flex capital here, I'm just wondering if you can walk us through some of the levers. I think in the past, maybe there's been a bit of shift between east and west, and with the east being oily, is there any ability still within the 2024 framework or calendar year to shift some capital between those two units, or even if there would be a desire to do that?
Capital markets. Please go ahead.
Hey, guys. Good morning, and thank you for taking my question here Jeff.
Just with respect to the ability to flex capital here I'm. Just wondering if you can walk us through some of the levers I think in the past, maybe there's been a bit of a shift between east and west and with the east being lately is there any ability still within the 2024 framework or calendar year to shift some capital between those two units.
Even if there would be a desire to do that and I just wonder because you did make comment earlier with respect to sort of 60% of the capital budget being in the first half of the year and I would assume given breakup.
Grant Fagerheim: And I just wondered because you did make a comment earlier with respect to sort of 60% of the capital budget being in the first half of the year, and I would assume, given breakup-type conditions and planning, that that's predominantly in the first quarter here. Yeah, Patrick, thanks for your question on that. I mean, one of the areas that the strength of Wakecap is the ability to swing capital between natural gas and oil. Because we are oil and liquids, the 54% that we talk about, what we wanted to do, we positioned the company for the first half of the year, and we will make evaluations in the back half of the year if there is a need to shift any other capital in any way, shape, or form. We see that we've got depressed natural gas prices here trading at about $1.65 or $1.60 at this particular time and could end up even lower than that through the summer. But the majority of our revenue, 91-92%, is still driven by oil and liquids. So it has a small impact on us.
Type conditions and planning that that's predominantly in the first quarter here.
Yeah, Patrick Thanks.
For your question on that.
One of the areas.
One of the strengths of Whitecap actually has the ability to be able to swing capital between natural gas and.
And because we're.
Oil and liquids.
64%, we talk about.
What we wanted to do we position the company.
For the first half of the year and will make these devaluations in the back half of the year, if there's a need to shift any other capital.
And any way she perform maybe we see that as if we've got depressed natural gas prices here are trading about $1 $65 60 at this particular time and could end up even more than that through the summer.
The majority of our revenue a 91% 92% is still driven.
Oil and liquids so.
It has a small impact on us we talk about the sensitivities.
Grant Fagerheim: We talk about the sensitivities in our presentation, but the biggest areas that are going to drive revenue for our company going forward are oil and liquids. So we'll continue to monitor this as we move through the year, but we do think that there could be quite a significant delta change in natural gas prices as we move forward from this $1.60 level currently to potentially north of $3.00 where it's trading at today in 2025. So you don't want to switch this off really quickly.
In our presentation.
But the biggest areas.
It's going to drive revenue for our company going forward is on illiquid. So we'll we'll continue to monitor edition as we move through the year, but.
But we do think that there could be.
Quite a significant delta change in natural gas prices as we move towards the mix dollars 60 level currently.
Two.
Potentially being north of $3 in 2000, and where its trading at today in 2025 so.
You don't Wanna switches really quickly you want to monitor it and see them.
Grant Fagerheim: You want to monitor it and see what we're doing. But in the meantime, we're focused on our long-term assets in the Mountaineer and Duvernay that have a high component of liquids. We'll continue on with those programs. Great, thank you.
What we're doing but in the.
In time.
We're focused on our long term assets in the Montney and Duvernay I don't have a high component of liquids will continue on with those programs.
Yes.
Great. Thank you and maybe just to build on the comment that you made there with respect to recovery in natural gas prices, there's a pretty steep contango.
Ton Kang: Maybe just to build on the comment that you made there with respect to recovery and natural gas prices, there's pretty steep contango in the price curve here. From your risk management perspective, what is your appetite right now for hedging into that forward contango, or do you see further upsides? It's Ton here, Patrick.
In the price curve here from your risk management perspective, what is sort of your appetite right now for hedging into that for contango or do you see further upside there.
Yeah, It's Tom here Patrick Thanks for that question I think from a risk management perspective, what we're really looking to do is protect our shareholders from a downside perspective, so making sure that we have the cash flows both on the oil and the gas to be able to fund our <unk>.
Ton Kang: Thanks for that question. I think from a risk management perspective, what we're really looking to do is protect our shareholders from the downside. So making sure that we have the cash flows, both from the oil and the gas, to be able to fund our maintenance capital as well as our dividend down to $50 WTI. For 2024, here, we're fully funded at that level, even with 18% of our oil hedged and roughly 17% of our gas hedged there. We started to layer on incremental positions. As you've mentioned, it is tangled right now, especially on the gas side. I just recently entered into some positions.
Maintenance capital as well as your dividend down to $50 W. T I for 2024 here.
We're fully funded at that level, even with 18% of our oil hedged and roughly 17% of our gas hedged. There we started to layer on incremental positions as you've mentioned it as contango right now, especially on the gas side I'm. Just recently entered into some dispositions, we're actually now about 14% in 2000.
Ton Kang: We're actually now about 14% hedged in 2025 on natural gas, and we're about 9% hedged on crude oil there. Our objective is to hedge about 20% of our production, again, to make sure that we can fully fund both our maintenance capital as well as our dividends there. So we're not really taking a speculative view on whether we think commodity prices are too high or too low.
25 on the natural gas and were about 9% hedged on crude oil there. Our objective is to hedge about 20% of our production again to make sure that we can fully fund both our maintenance capital as well as our dividends. There. So we're not really taking a speculative view on whether we think commodity prices are too high or too low.
Ton Kang: It's a very systematic program that allows us to protect our cash flows from a downside perspective. Okay, thank you very much. Yeah.
A very systematic program that allows us to protect our cash flows from an outside perspective.
Okay. Thank you very much.
Ton Kang: Thanks, Patrick. The next question will be from Cody Kwon at Stiefel. Please go ahead.
Thanks, Patrick.
Next question will be from Cody Kwong at Stifel. Please go ahead.
Hi, guys. Thanks for taking my call here I got a question for you on the five year plan I see that you've updated the production numbers have how did the capital numbers behind that look with this update here kind of in terms of quantum and maybe shape of the <unk> of the capital.
Ton Kang: Hi guys, thanks for taking my call here. I got a question for you on the 5-year plan. I see that you've updated the production numbers. How did the capital numbers behind that look with this update here, in terms of the quantum and maybe shape of the capital investment profile over the 5-year plan? Yeah, thanks for that question there, Cody.
<unk> profile over the five years.
Yes. Thanks for that question there Cody I think as we think about investments in the east and the West Division there as Greg had mentioned.
Ton Kang: I think as we think about investments in the east and the west division there, as Grant had mentioned, the growth area will certainly come from our west side, taking our production from 70,000 BOEs per day to in excess of 110,000 BOEs per day. And in order to do that, we're spending about 55% of our capital program over the next five-year period of time. When we look at the east division there, we'll be growing that from 95,000 BOEs per day to in excess of 100,000 BOEs per day, and we're spending about 45% of our capital over the next five-year period of time here. What's important to note as we continue to invest in our EOR projects, as Chris has mentioned there, our decline rate being currently at that 24% there, it really doesn't go higher than 24% So the maintenance capital requirements are very low.
The growth area will certainly come from our west side, taking our production from 70000 Boe's per day in excess of 110000 Boe's per day and in order to do that we're spending about 55% of our capital program over the next five year period of time, when we look at the East Division there will be growing that from nine.
5000 Boe's per day.
In excess of 100000 Boe's per day and were spending about 45% of our capital over the next five year period of time here, what's important to note as we continue to invest in our EUR projects as Chris has mentioned there are decline rate being currently in that 24% there it really doesn't.
Go higher than 24% to 26% over the next five year period of time, so the maintenance capital requirements is very low our capital efficiencies that we're running at or somewhere in that 'twenty, one to 'twenty 2000, Boe's per day over the next few years here.
Ton Kang: Our capital efficiencies that we're running at are somewhere in that 21,000 to 22,000 BOEs per day over the next few years. I think another important aspect of our five-year plan is infrastructure requirements, specifically in the west division. We're looking at completing the Musro battery in the second quarter here, or late Q1, commensurate with the production coming online in Musro here. So we're going to be focusing from a drilling perspective in the Montigny area and in the Musro and our Latour areas there.
Another important aspect of our five year plan.
As infrastructure requirements, specifically in the West Division there we.
We're looking at completing the Marlboro battery.
In the second quarter here or late Q1.
Commensurate with the production coming online and Boswell here and so we're gonna be focusing from a drilling perspective in the montney there and in the months ROE in our Latour areas there.
Ton Kang: From an infrastructure point of view, this year we're spending about $130 million. I would expect, on an annual basis, net to us from a white cap expenditure, somewhere in that $100 million to $150 million on an annual basis over the next five-year period of time. Okay, so is it safe to assume here that the capital kind of ranges that we would expect over the next five years would still be kind of in that same $900-$1.1 billion range for the next five years? There's no one year that's super lumpy with extra infrastructure in it?
And infrastructure. This year, we're spending about $130 million I would expect on an annual basis, a net to us from a white cap ex.
Expenditure somewhere in that $100 million to $150 million on an annual basis over the next five year period of time.
Okay. So is it is it safe to assume here that the capital kind of ranges that we would expect over the next five years would still be kind of in that same same 902.
$1 $1 billion range for the next five years. There is no one year, that's super lumpy with extra infrastructure or anything like that.
Ton Kang: That's correct, somewhere in that, I would say $900 to $1.2 billion on an annual basis is what we're expecting for CapEx. Okay. Awesome. Thank you very much. Thanks, Cody.
Yeah, that's correct, yes somewhere in that I would say 900 to $1 2 billion on an annual basis is what we're expecting capex to be.
Okay.
Thank you very much.
Thanks Cody.
Grant Fagerheim: The next question will be from Jackson Austin at Jack A Capital. Please go ahead. Hey guys, the first question kind of answered my question there, but I was just, I'll ask anyways. So I can see that your assumptions at $75, you got $150 million in the balance sheet and only $50 million in share repurchases, with the high case for $250 for the balance sheet and then $315 for share repurchases. And I feel it's really unlikely that we'll hit 90 or 100 unless we get some geopolitical events, and you do $123 million in buybacks in 2023. So, I'm just curious, is there a possibility to do any accelerated buybacks at all? Like, we're at even a $10 share price for about a 7.2% dividend, right?
Next question will be from Jackson Austin at Jack a capital. Please go ahead.
Hey, guys first question kind of answered my question, there, but I.
I will ask anyway. So I can say about your assumptions at $75, you got $150 million of balance sheet, and only $50 million to share repurchases. If the high case for $2 50 per the balance sheet, and then $3 15 per share repurchase.
It's really unlikely that we had 90 or 100, unless we get some geopolitical events.
And you did $123 million in.
Buybacks in 2023, so I'm just curious is there possibilities do any accelerated buybacks at all like rats.
At $10, a share price or about seven 2% dividend right.
Grant Fagerheim: So, I was just curious if there was any, you know, we could even go to 100%, but you kind of said no already, given that you just want to build up some dry powder there. Thank you. Yeah.
Just curious if there was any area you could even go to a 100% ever but you kind of said no already given that you just want to build up some dry powder. There. So thank you.
Yes share buybacks.
Grant Fagerheim: Share buybacks. I mean, you know, that is a way for us to add value as well, but, you know, we want to make sure, as we've talked about here numerous times, the balance sheet is the priority one. So from our perspective, when we talk about our returns, 75%, 20%, 25%, 25% of our funds flow back to our balance sheet on a continual basis, and we'll look to be opportunistic with our share buybacks as we advance forward. If that is the best way to do it versus growing our business, if that's the best method that's available to us versus growing our business, we're paying down So we'll look at that, and you have to look at it relative to the value of our company, Toronto. But on a before tax basis, you know, our total pool value is approximately $12 a share.
That is a way for us to two.
To add value as well, but you know what we want to make sure as we've talked about numerous times is.
Balance sheet is the priority one so from our perspective, when we talk about it right.
Returns 70, 520, 25% 25% of our.
Going back to our balance sheet on a continual basis, and we'll look to be opportunistic with our share buybacks.
As we advance forward.
If that is the best way.
Wait to do repurchases, calling her business that's the best method.
What's available to us versus growing our business.
Paying down debt Oh.
We want to make sure.
It's an order that leverage first of all consistent growing dividend as we grow our business going forward into the future and then share buybacks. So we will look at that and you have to look at it relative to the value of our company on a before tax basis.
Total book value is.
Approximately $12 a share so on a before tax basis. So we have room.
Grant Fagerheim: So on a before-tax basis, we have room to buy back shares. But at this particular time, our focus is on continuing to reduce our leverage to prepare our balance sheet for other opportunities as we move forward. Okay, awesome. Thank you. And you read even at like 0.7 times, that's pretty low.
To buyback our shares but at this particular time, our focus is on continuing to reduce our leverage to prepare to prepare our balance sheet further opportunities as you're going forward.
Okay Awesome, Thank you and you're right even at like 0.7 times, that's pretty low. So I was wondering like and you mentioned that you were looking to keep some dry powder I was wondering I know you can't say directly but are you looking to do like a big M&A deal or just keeps doing tuck ins.
Grant Fagerheim: So I was wondering, like, and you mentioned that you were looking to keep some dry powders. I was wondering, I know you can't say directly, but are you looking to do like a big M&A deal or just keep doing cushions, like the light and water classes? We're not looking at big transactions. What we're doing is, you know, if there are working interest uptakes or consolidation opportunities in and around the assets that we currently have, like we did, as we referenced in the LRO Saskatchewan acquisition we did and closed in December. Those are the style of acquisitions that we would look at, again, focused on the longer term sustainability and profitability of our. Hey, awesome. Thank you so much. Once again, ladies and gentlemen, if you do have any questions at this time, please press star followed by one on your touchtone phone. And your next question will be from Joseph Schachter at Schachter Energy Research. Thank you very much. Good morning, and thanks for taking my question.
Yes.
Yes.
Yeah, we're not looking at big transactions, we're doing is.
If theres working interest uptake, so or consolidation opportunities in and around the assets that we currently have like we did in <unk>.
References to the yellow Saskatchewan acquisition, we did in closed in December.
The style of acquisitions that we would look at again focused on longer term sustainability of profitability of our asset base.
Okay awesome. Thank you so much.
Once again, ladies and gentlemen, if you do have any questions. At this time. Please press star followed by one on your Touchtone phone and your next.
<unk> will be from Josef Schachter at Schachter Energy Research. Please go ahead.
Thank you very much good morning, and thanks for taking my question.
Joel Armstrong: On the amount of reliability, just trying to get my head around what you had, I'm comparing the 2022 AIF and the 2022-2023 AIF, and it looks like you knocked off 417 gross oil wells and 142 gross natural gas wells, a total of 559. Are you looking to do similar kinds of numbers each year and effectively have a 10-year game plan to knock that down, or what is a reasonable assumption on how many wells will be reclaimed each year and how much CapEx would you consider spending in 2024 and going forward? Thanks very much. Hey Joseph, it's Joel Armstrong.
The abandonment liability just trying to get my I might have around.
I'm comparing the 'twenty, two Aif and the 'twenty to 'twenty two 'twenty three.
And it looks like you've knocked off 417.
Most oil wells and 142.
Gross natural gas for a total of 559 are you looking to do similar kinds of numbers each year and effectively have a 10 year game plan to.
Knocked that down or what is a reasonable assumption on how many wells will be reclaimed each year and how much capex would you consider spending in 'twenty or.
Going forward, thanks very much.
Hey, Joseph as Joel Armstrong.
Joel Armstrong: Probably better to answer in terms of amount spent. We're looking at spending $40 million in a combination of reclamation, facility decommissioning, and well abatements. In terms of absolute well counts, it would be somewhere in the $200 million. A lot of the early government-funded programs, we look at the low-hanging fruit, if you want to call it, and bang off as many wells as we possibly can.
Probably better to answer in terms of kind of a.
Mt Spin, we're looking at spending $40 million in a combination of reclamation facility decommissioning and well abandonment.
In terms of absolute well count it would be somewhere in the 200.
A lot of the early government funded programs.
We look at are the low hanging fruit, if you want to call it and backing off as many wells as we possibly can but you know as time goes on and we'll continue to deploy in and around $40 million to help retire those assets.
Joel Armstrong: But as time goes on, we'll continue to deploy in and around $40 million to help retire those assets, and uh... are there any government requirements that have changed uh... requiring you to change uh... in terms of where you abandon, how many wells you abandon, or is this all within your own control? There are requirements, and we intend to meet all those requirements, correct? That's it for me. Thank you, you and at this time, Mr. Finkelheim, we have no further questions registered, please. Okay, thanks very much, Sylvia. And once again, I would like to thank everyone on the call for taking the time and interest to listen to this call today. 2024 is off to a great start, and we look forward to updating you on our progress for the first quarter results at the end of April and throughout the balance of the 2024 year.
And is there any government requirements that have changed requiring.
Requiring you to.
In terms of where you abandon how many wells you abandon or whereas this all within your own control.
There are requirements and we intend to meet all those requirements correct.
That's it for me thank you very much.
Thank you and at this time Mr figures, we have no further questions registered please proceed.
Okay. Thanks, very much and once again I'd like to thank everyone.
On the call for taking the time and interest and listen to this call. Today 2024 is off to a great start and we look forward to updating you on our progress with our first quarter results at the end of April and through the balance of 2024 years and all the best take good care.
Joel Armstrong: All the best. Take good care. Bye for now. Thank you for your attention, and at this time we do ask that you please disconnect. He has something?? He can see the large number of donations He is a small region of India? It is estimated that 90 corporations have donated 13 times It is estimated that 90 corporations have donated 13 times Japan's population travels from 3,700 to 1,100 Japan's population travels from 3,500 to 1,100 It is estimated that Japan's population travels from 3,500 to 1,100 Japan's population travels from 3,500 to 1,100 China accompanies the donation China accompanies the donation Crowd funding has been done
Yes.
Thank you, Sir ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending and at this time, we do ask that you. Please disconnect your lines.
Yeah.
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