Q1 2024 Whitecap Resources Inc Earnings Call

April 25, 2024

Operator: 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. If you would like to withdraw your question, simply press star then number two. I would now like to turn the call over to Whitecap's President and CEO, Mr. Grant Fagerheim. Please go ahead, sir.

Sylvie: Good morning. My name is Sylvia, and I will be your conference operator today. At this time, I would like to welcome everyone to the Whitecap Resources Q1 2024 Results Conference Call.

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 speakers' remarks, there will be a question and answer session. If you would like to ask a question.

Sylvie: 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 1 on your telephone keypad. And if you would like to withdraw your question, simply press star, then number 2. I would now like to turn the call over to Whitecap's President and CEO, Mr. Grant Fagerheim. Please go ahead, sir.

During this time simply press Star then the number one on your telephone keypad and if you would like to withdraw your question simply press Star then number two.

Speaker Change: I'd now like to turn the call over to white caps, President and CEO. Mr. Grants Vega Heim. Please go ahead Sir.

Grant Fagerheim: 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, Tuong Kang, our Senior Vice President of Production and Operations, Joel Armstrong, and our Senior Vice President of Business Development and Information Technology, Dave Mombourquette. We also have with us today Joey Wong, our Vice President of the West Division, and Chris Bullin, 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.

Speaker Change: Well good morning, and thanks, Shelley and 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 Don Kim.

Grant Bradley Fagerheim: Well, good morning and thanks, Sylvie. Good morning, everyone, and thank you for joining us.

Grant Bradley Fagerheim: Here with me are five members of our management team. Our Senior Vice President and CFO, Thanh Kang. Our Senior Vice President of Production and Operations, Joel Armstrong, and our Senior Vice President of Business Development and Information Technology, Damon Burkett. We also have with us today Joey Wong, our Vice President of the West Division, and Chris Bullin, 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 answer questions.

Speaker Change: Our senior Vice President of production and operations Joel Armstrong.

Speaker Change: And our senior Vice President business development information technology team on per caps.

Grant Bradley Fagerheim: We also have with us today enjoy Wong our vice President of the West Division and Chris Bohn, Our Vice President each division joining us.

Grant Bradley Fagerheim: 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.

Grant Fagerheim: 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. Q1 production averaged just under 170,000 BOE/d, which was also the highest quarterly production since the inception of Whitecap 15 years ago and was over 6,000 bbl/d above our interim forecast of approximately one hundred and sixty-three thousand five hundred BOE/d. Meanwhile, in the Q1, capital spending of CAD 393 million was below our interim forecast of CAD 425 million. Production outperformance has come from both our East and West divisions with Chris and Joey will talk to shortly.

Speaker Change: I'm happy to advise.

Grant Bradley Fagerheim: We are off to a great start in 2024 hours as a result of the collaborative efforts of our dedicated staff.

Grant Bradley Fagerheim: 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 putting 96 gross wells. First quarter production averaged just under 170,000 B.U.E. 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 B.U.E.

Experienced our most active quarter in our.

White cap history, running 15 rigs at our Pekin splitting 96 gross wells.

Grant Bradley Fagerheim: First quarter production averaged just under 170000 be re per day, which was also the highest quarterly production since the inception.

Grant Bradley Fagerheim: Of Whitecap 15 years ago, and was over 6000 barrels a day above our internal forecast of approximately 163500 meters per day.

Grant Bradley Fagerheim: per day. Meanwhile, in the first quarter, capital spending of $393 million was below our internal forecast of $425 million. Production and performance have come from both our East and West Divisions. With Chris and Joey, we'll talk to you shortly.

Grant Bradley Fagerheim: Meanwhile, in the first quarter capital spending of $393 million was below our internal forecast of 425 million.

Speaker Change: Production performance has come from both our east and West divisions with Kristian join will talk to shortly.

Grant Fagerheim: Of note, in the quarter, we completed and commissioned our 20,000 BOE per day battery at Musreau 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 budget AFE costs. This is an important milestone for us as we reach the development phase of this liquids-rich Montney asset.

Grant Bradley Fagerheim: Of note, in the quarter, we completed and commissioned our 20,000 BWE per day battery at Musro 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 the budgeted AFE costs. This is an important milestone for us as we reach the development phase of this liquid-rich martini acid.

Grant Bradley Fagerheim: Of note in the quarter, we completed and commissioned our 20000 be Reaper day battery Mezro in Northern Alberta. This was the largest facility in pipeline project Whitecap has undertaken to date.

Grant Bradley Fagerheim: Special Thanks to the team for their exceptional work from planning and design through execution.

Grant Bradley Fagerheim: The facility was completed approximately two weeks ahead of schedule and 10% below budget as ERP costs.

Grant Bradley Fagerheim: This is an important milestone for us as we reached the development phase of this liquids rich montney asset.

Grant Fagerheim: 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 BOE per day, which is up 2,000 BOE per day from our previous guidance, with no change to our capital budget of approximately CAD 1 billion. Also of note, as provided in our press release, Whitecap is hosting our inaugural Investor Day on 11 June 2024 from 8:30AM 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.

Grant Bradley Fagerheim: We're very pleased to advise that with the continued outperformance in our eastern West divisions. This has given us the confidence to increase our 2024 annual production guidance to 167 to 172000 BOE per day, which was up 2000 Boe per day from our previous guidance with no change to our capital budget of approximately.

Grant Bradley Fagerheim: 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 B.E. per day, which is up 2,000 B.E. 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.

Grant Bradley Fagerheim: $1 billion.

Grant Bradley Fagerheim: Also of note is provided in our press release Whitecap is hosting our inaugural inaugural.

Grant Bradley Fagerheim: Investor Day on June 11th from 830, a M Mountain time.

Grant Bradley Fagerheim: Virtually because we have now on the X two 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 eastern West divisions, and the long term sustainability and profitability of our business I'll now pass the mic onto Tom King to discuss our financial.

Grant Bradley Fagerheim: 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 Thanh Kang to discuss our financial results.

Grant Fagerheim: I'll now pass the mic on to Thanh Kang to discuss our financial results.

Grant Bradley Fagerheim: Results.

Thanh Kang: Thanks, Grant. We generated CAD 384 million of funds flow or CAD 0.64 per share in Q1, which was used to fund the Q1 capital program of approximately CAD 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 Q2 as our capital spend in the quarter is expected to be only CAD 200 to 250 million.

Thanh C. Kang: Thanks, Grant. We generated $384 million of funds 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 quarter, with the highest level of capital spending in the year. With spring breakup underway in western Canada, we will be generating significant free cash flow in the second quarter, as our capital expenditure in the quarter is expected to be only $200 to $250 million.

Thanh C. Kang: Thanks, Grant, we generated $384 million of funds flow or 64 cents 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.

Thanh C. Kang: 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 million to $250 million.

Thanh Kang: Although WTI prices in Q1 were flat to Q4, Canadian light oil differentials were relatively wide at over $8.50 per barrel, resulting in a 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 continued to be challenged, and the outlook does not materially improve until LNG Canada phase 1 is commissioned. We anticipate Western Canadian and specifically AECO prices to improve upon startup of the facility, diverting significant volumes to Coastal GasLink, 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.

Thanh C. Kang: 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 a 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.

Thanh C. Kang: O W. T I 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 a 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.

Thanh C. Kang: Natural gas prices continue to be challenged in the outlook does not materially improve until LNG, Canada phase one is commissioned.

Thanh C. Kang: We anticipate Western Canadian and specifically ACO prices to improve upon start-up of the facility, diverting significant volumes to the 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.

Thanh C. Kang: We anticipate western Canadian and specifically equal prices to improve upon startup of the facility diverting significant volumes to coastal gas link which should alleviate.

Thanh C. Kang: Alleviate pressure on existing pipeline systems to better absorb downtime for other restrictive events.

Thanh C. Kang: 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 produced approximately 370 million cubic feet per day of natural gas.

Thanh Kang: 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 Q1 results are generally aligned with our expectations. Operating costs per BOE were slightly higher at CAD 14.27 per BOE, compared to Q4 of last year at CAD 13.41 per BOE due to the extreme cold weather in January impacting operations. The royalty rate in Q1 was 16.8%, compared to 17.9% in Q4 of 2023, primarily due to lower realized oil and NGL prices. Cash tax expense of CAD 2.51 per BOE was significantly higher than CAD 0.24 per BOE in Q4 of 2023.

Thanh C. Kang: 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 BOE compared to the fourth quarter of last year at $13.41 per BOE due to the extreme cold weather in January impacting operations.

Thanh C. Kang: From a cash cost perspective, our first quarter results are generally in line with our expectations operating cost per BOE were slightly higher at $14 27 per Boe compared to the fourth quarter of last year at $13 41 per Boe due to the extreme cold weather in January impacting operations.

Thanh C. Kang: 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 Boe.

Thanh C. Kang: 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 BOE was significantly higher than $0.24 per BOE 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.

Thanh C. Kang: It was significantly higher than 24 per Boe in the fourth quarter of 2023.

Thanh Kang: 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. There will be some volatility in this estimate as we move through the year. We paid CAD 109 million of dividends during the quarter, or just over CAD 0.18 per share, and feel very comfortable with the sustainability of the dividend longer term. As we generate free funds flow in Q2, we will look to focus on share buybacks to enhance shareholder returns. Our balance sheet is in excellent shape with debt to EBITDA of 0.7x.

Thanh C. Kang: Cash taxes are calculated based on forward strip prices at the time of calculation and our chewed up or down based on actual prices for the year. So there'll be some volatility this estimate as we move through the year.

Thanh C. Kang: We paid $109 million in dividends during the quarter, or just over $0.18 per share, and feel very comfortable with the sustainability of the dividend over the longer term. As we generate free fund 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 in May of this year, and given our significant liquidity, we anticipate we will be paying this off with a bank revolver, which will result in a total credit capacity of $2.9 billion. I will now pass it off to Joey for more remarks on our West Division results.

Thanh C. Kang: We paid $109 million of dividends during the quarter were just over 18 per share and feel very comfortable with the sustainability of the dividend longer term.

Joey: As we generate free funds flow in the second quarter, we will look to focus on share buybacks to enhance shareholder returns.

Joey: Our balance sheet is in excellent shape with debt to EBITDA of 0.7 times, we have $200 million of private placement notes mature in may of this year and given our significant liquidity. We anticipate we will be paying this off with a bank revolver, which result in total credit capacity of $2 9 billion.

Thanh Kang: We have CAD 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 our bank revolver, which result in total credit capacity of CAD 2.9 billion. I will now pass it off to Joey for more remarks on our West Division results.

Joey: We will now I will now pass it off to Joy for more remarks on our West Division results.

Joey Wong: Thanks, Thanh. Our West Division had a very solid quarter, with production performance being complemented by the commissioning and start-up of a Masro battery. As Grant mentioned, this was done both ahead of schedule and under budget. This is the largest facility build that we have done as a company, and while we are still making our way through the early stages of volume throughput, we are very pleased with the uptime and capabilities that this facility provides for us.

Joey Wong: Thanks, Ton. Our West Division had a very solid quarter, with production outperformance being complemented by the commissioning and startup of our Musreau battery. As Grant mentioned, this was done both ahead of schedule and under budget. This is the largest facility build that we have done as a company, and while we are still making our way through the early stages of volume throughput, we are very pleased with the uptime and capabilities that this facility provides for us. We have completed and tied in our first 8 wells at Musreau and are bringing them on stream to our new battery in a staged approach, with initial production results exceeding our expectations. We plan to bring on a total of 16 wells at Musreau in 2024.

Joey: Thanks, Sean.

Joey Wong: West Division had a very solid quarter with production performance is being complemented by the commissioning and startup of the mazo battery.

Joey Wong: Grant mentioned this is done both ahead of schedule and under budget.

Joey Wong: This is the largest facility builds that we have done as a company and while we are still making our way through the early stages of volume throughput there.

Joey Wong: We were very pleased with the uptime and capabilities at this facility provides for us.

Joey Wong: We've completed and tied in our first eight well the mazo and are bringing them on stream to our new batteries in a staged approach with initial initial production results exceeding our expectations.

Joey Wong: We've completed and tied in our first eight welds at Musro and are bringing them on stream to our new battery in a staged approach with initial production results exceeding our expectations. We plan to bring on a total of 16 wells at Musro in 2024. As mentioned, development of Muzro was high on the priority list after the XTO acquisition was completed, and early results are supporting our view.

Joey Wong: We plan to bring on a total of 16 wells at most ROE in 2024.

Joey Wong: As mentioned, development of Musreau was high on the priority list after the XTO acquisition was completed, and early time results are supporting our view. At Kakwa, our 3-21-B 3-well pad is performing in line with the adjacent 2-26-B 3-well pad after 90 days on production, which is 20% above our initial expectations for development, utilizing 6-well per section spacing. Based on the production results and the technical data obtained from these two pads, we believe that the economic return profiles of this area are improved using this updated spacing strategy. We are evaluating the application of the spacing strategy across our other unconventional Montney and Duvernay assets.

Joey Wong: As mentioned development development of Mazo was high on the priority list. After the <unk> acquisition was completed in early time results are supporting our view.

Joey Wong: Ah Cockler or 321, B three well pad is performing in line with the adjacent to 'twenty six b three well pad.

Joey Wong: At CAQA, our 3A21B three-well pad is performing in line with the adjacent 2A26B three-well pad after 90 days on production, which is 20% above our initial expectations for development, utilizing six wells per section spaces. Based on the production results and the technical data obtained from these two pads, we believe that the economic return profiles of this area are improved using this updated spacing strategy. We are evaluating the application of this spacing strategy across our other unconventional Montigny and DuVernay assets, and while the technical analysis may conclude that this specific strategy may be limited in its application, the success of individual well-designed modifications is increasing our confidence in our approach to longer-term development.

Joey Wong: After 90 days on production, which is 20% above our initial expectations for development utilizing six well per section spacing.

Joey Wong: Based on the production results and the technical data obtained from these two pads, we believe that the economic return profiles of this area are improved using this updated spacing strategy.

Joey Wong: We are evaluating the application of the spacing strategy across our other unconventional montney and duvernay assets and while the technical analysis May conclude that this specific strategy may be limited in its application. The success of individual well design modifications is increasing our confidence in our approach to longer term development planning.

Joey Wong: While the technical analysis may conclude that this specific strategy may be limited in its application, the success of individual well design modifications is increasing our confidence in our approach to longer-term development planning. That approach is to tailor individual well design inputs based on our assessment of localized geological and reservoir parameters and how our completions will interact with those parameters. Those inputs might include interval spacing, lateral placement, completion parameters, and production practices. Ultimately, our efforts are focused on yielding incremental improvements in our already strong economics and enhancing the value of our asset base. In Lator, we are pleased with the continued outperformance of our two-well pad. This pad, along with the two wells that will be drilled later in 2024, will provide key inputs to the design of phase one of our infrastructure solution for this catchment area.

Joey Wong: That approach is to tailor individual well-designed inputs based on our assessment of localized geological and reservoir parameters and how our completions will interact with those parameters. Those inputs might include inter-wall spacing, lateral placement, completion parameters, and production practice. Ultimately, our efforts are focused on yielding incremental improvements in our already strong economics and enhancing the value of our asset base.

Joey Wong: That approach is to tailor individual well design inputs based on our assessment of localized geological and reservoir parameters and her completions will interact with those parameters. Those inputs might include inter well spacing lateral placement completion parameters and production practices.

Joey Wong: Ultimately our efforts are focused on yielding incremental improvements in our already strong economics and enhancing the value of our asset base.

Joey Wong: And mature we are pleased with the continued outperformance of our two well pad. This pad along with the two wells that will be drilled later in 2024 will provide key inputs to the design of phase one of our infrastructure solution for this catchment area. We are making good progress on the initial design stages and expect to have an update on this front later this year.

Joey Wong: In Latour, we are pleased with the continued outperformance of our two-well pad. This pad, along with the two wells that will be drilled later in 2024, will provide key inputs to the design of Phase 1 of our infrastructure solution for this catchment area. We are making good progress on the initial design stages and expect to have an update on this front later this year.

Joey Wong: We are making good progress on the initial design stages and expect to have an update on this front later this year. At Kaybob, our first 7 Duvernay wells drilled since the XTO acquisition are continuing to outperform our initial expectations by 22%, and we are very pleased with the results to date. As mentioned, our follow-up next 3-well pad at 11-34 B with 4,200-meter laterals has been rig released with on-production dates expected at the end of Q2. Following up on the 11-34 B pad, we have just commenced drilling on a 5-well pad at 11-14 B. Lateral lengths will range from 2,800 to 3,600 meters, depending on the lateral length of offset wells to the north.

Joey Wong: I came up our first seven Duvernay wells drilled since the <unk> acquisition are continuing to outperform our initial expectations by 22% and we are very pleased with the results to date.

Chris Bullin: At KBOP, our first seven DuVernay wells drilled since the XTO acquisition are continuing to outperform our initial expectations by 22%, and we are very pleased with the results to date. As mentioned, our follow-up next three-well pad at 1134B with 4,200-meter laterals has been rigged-released with on-production dates expected at the end of the second quarter. Following up on the 11-34B pad, we have just commenced drilling on a 5-well pad at 11-14B. Lateral lengths will range from 2,800 to 3,600 meters, depending on the lateral length of offset wells to the north.

Chris Bullin: As mentioned our follow up next three well pad at 11 34, B with 4200 meter laterals has been rig released with on production dates expected at the end of the second quarter.

Chris Bullin: Following up on the 11, a 34 B pad, we have just commenced drilling on a five well pad at 11 of 14 B lateral lengths will range from 2800 to 3600 meters, depending on the lateral length of offset wells to the north.

Joey Wong: As part of our ongoing well design initiatives, we plan to land laterals with a 15- to 20-meter vertical offset. This is otherwise referred to as multi-benching or a wine rack approach within the Duvernay formation. This is done in an effort to both increase our total contacted reservoir and limit interaction between individual wells. Upon success, this has the potential to increase both our inventory and per well EURs in the area. I will now pass it on to Chris for his comments on the East Division.

Chris Bullin: As part of our ongoing well-designed initiatives, we plan to land laterals with a 15 to 20 meter vertical offset. This is otherwise referred to as multi-benching or a wine rack approach within the DuVernay Formation. This is done in an effort to both increase our total contacted reservoir and limit interaction between individual wells. Upon success, this has the potential to increase both our inventory and per-well EURs in the area. I will now pass it on to Chris for his comments on the e-mail. Thanks, Joey. Record activity.

Chris Bullin: As part of our ongoing well design initiatives, we plan to land laterals with a 15 to 20 meter vertical offset this as otherwise referred to as multi benching or a wine rack approach within the Duvernay formation.

Chris Bullin: This is done in an effort to both increase our total contacted reservoir and limit interaction between individual wells.

Chris Bullin: On successes has the potential to increase both our inventory and per well EUR is in the area.

Chris Bullin: I will now pass it on to Chris for his comments on the East Division.

Chris Bullin: Thanks, Joey. Record activity levels and subsequently record production were the main themes in our East Division for Q1. Our predominantly light oil assets in this division reached 100,000 BOE per day in late March through a combination of both base and new well outperformance. From a new well perspective, we're particularly excited for early time well results from our 4 Glauconite wells that came on production during the quarter. The Central Alberta team did an exceptional job executing on our 3-well, 5- to 17-pad at West Pembina, which targeted 2-mile lateral lengths in a technically challenging area due to faulting. These wells are approaching 30 days on production and are significantly outperforming our type curve on both total production and liquids rates based on early time data.

Chris Bullin: Thanks Julie.

Chris Bullin: Record activity levels and subsequently record production were the main themes in our East Division for the first quarter.

Chris Bullin: Record activity levels and, consequently, record production were the main themes in our East Division for the first quarter. Our predominantly light oil assets in this division reached 100,000 BOE per day in late March through a combination of both base and new well outperformance. From a new well perspective, we're particularly excited for early-time well results from our four glauconate wells that came on production during the quarter. The Central Alberta team did an exceptional job executing on our three-well, 5-of-17 pad at Westward Ho, which targeted two-mile lateral lengths in a technically challenging area due to faults.

Chris Bullin: Our predominantly light oil assets in this division reached 100000 BOE per day in late March through a combination of both base and new well outperformance.

Chris Bullin: From a new well perspective, we're particularly excited for early time well results from our four glauconite wells that came on production during the quarter.

Chris Bullin: Central Alberta team did an exceptional job executing on our three well five to 17 pad at westward Ho, which targeted two mile lateral lengths and a technically challenging area due to faulting.

Chris Bullin: These wells are approaching 30 days on production and are significantly outperforming our type curve on both total production and liquids rates based on early time data. The fourth drill is a fully bound, one mile infill well, with early time results outperforming our standard type curve for the area. The early results from all four wells brought on during the first quarter are encouraging for future inventory upside potential. Our Glockenegg program continues to exceed our expectations and provide meaningful volumes for the division.

Chris Bullin: These wells are approaching 30 days on production and are significantly outperforming our type curve on both total production and liquids rates based on early time data.

Chris Bullin: The fourth drill is fully bound, 1-mile infill well, with early time results outperforming our standard type curve for the area. The early results from all 4 wells brought on during Q1 are encouraging for future inventory upside potential. Our Glauconite program continues to exceed our expectations and provide meaningful volumes for the division. As mentioned in the press release last night, our well results in Eastern Saskatchewan are showing outperformance based on early time data. We are also encouraged by Saskatchewan government's recent multilateral royalty program. 35% of our Eastern Saskatchewan 2024 program already utilizes triple leg laterals, and given the new incentives, we will evaluate our H2 and potential 2025 drilling programs to see where we can add lateral legs to our planned single and dual leg wells. At present, we have 3 rigs active in central Alberta on spring breakup pads.

Chris Bullin: The fourth drill is fully bound one mile infill well with early time results outperforming our standard type curve for the area.

Chris Bullin: The early results from all four wells brought on during the first quarter are encouraging for future inventory upside potential.

Chris Bullin: Our glauconite program continues to exceed our expectations and provide meaningful volumes for the division.

Chris Bullin: As mentioned in the press release last night, our well results and eastern Saskatchewan are showing outperformance based on early time data. We're also encouraged by Saskatchewan governments recent multilateral royalty program, 35% of our eastern Saskatchewan 'twenty 'twenty four program already utilized this triple League laterals and given the new incentives, we will evaluate our second half and potential <unk>.

Chris Bullin: As mentioned in the press release last night, our well results in eastern Saskatchewan are showing outperformance based on early time data. We are also encouraged by the Saskatchewan government's recent multilateral royalty program. 35% of our Eastern Saskatchewan 2024 program already utilizes triple leg laterals, and, given the new incentives, we will evaluate our second half and potential 2025 drilling programs to see where we can add lateral legs to our planned single and dual leg wells.

Chris Bullin: 25 drilling programs to see where we can add lateral legs to our planned single and dual leg wells.

Chris Bullin: At present, we have three rigs active in central Alberta on spring breakup pads to are focused on the glauconite, while the third is drilling cardium and west Pembina and.

Chris Bullin: At present, we have three rigs active in central Alberta on spring breakup pads. Two are focused on glauconite, while the third is drilling cardium in West Pembroke. In Saskatchewan, we are monitoring breakup conditions, and our team is looking forward to getting back into the field and building off our strong first quarter. With that, I will turn it back over to Grant for his closing remarks.

Chris Bullin: Two are focused on the Glauconite while the third is drilling Cardium in West Pembina. In Saskatchewan, we are monitoring breakup conditions, and our team is looking forward to getting back into the field and building off our strong Q1. With that, I will turn it back over to Grant for his closing remarks.

Chris Bullin: In Saskatchewan, we are monitoring breakup conditions and our team is looking forward to getting back into the field and building off our strong first quarter with that I will turn it back over to grant for his closing remarks.

Grant Fagerheim: Thanks. Thanks, Chris. We feel that the outlook for Canadian energy is very positive as long-dated infrastructure projects are beginning to come online. More broadly speaking, capital discipline within the energy sector and increasing demand for oil are supporting global crude oil prices. We are in an exceptionally strong position with a large defined drilling inventory and believe that our team has the technical expertise, creativity, and drive to extract significant value from our asset base, leading to long-term sustainability, increased profitability, and ultimately, healthy returns for shareholders well into the future. As mentioned at the start of this call, our increased production guidance reflects our strong start to the year, and we look to build off this momentum as we move through the balance of 2024.

Grant Bradley Fagerheim: Thanks, Chris. We feel that the outlook for Canadian energy is very positive as long-term infrastructure projects are beginning to come online. More broadly speaking, capital discipline within the energy sector and increasing demand for oil are supporting global crude oil prices. We are in an exceptionally strong position with a large, defined drilling inventory and believe that our team has the technical expertise, creativity, and drive to extract significant value from our asset base, leading to long-term sustainability, increased profitability, and ultimately healthy returns for shareholders well into the future.

Chris Bullin: Thanks.

Speaker Change: Thanks, Chris we feel that the outlook for Canadian energy is great pleasure as long dated infrastructure projects are beginning to come online more broadly speaking capital discipline within the energy sector and increasing demand for oil are supporting global crude oil prices.

Grant Bradley Fagerheim: An exceptionally strong position with a large defined drilling inventory and believe that our team has a technical expertise creativity and drive to extract significant value from our asset base, leading to long term sustainability increased profitability and ultimately how the returns for shareholders well into the future as.

Grant Bradley Fagerheim: As mentioned at the start of this call, our increased production guidance reflects our strong start to the year, and we look to build off this momentum as we move through the balance of 2024. In current strip prices, we forecast funds flow of $1.7 billion, resulting in $700 million of free funds flow after capital, of which $435 million will be returned to shareholders through the base dividend and further enhanced with share repurchases under our normal course issuer bill. With that, I will now turn the call over to the operator, Sylvie, for any questions. Thank you.

Grant Bradley Fagerheim: As mentioned at the start of this call.

Grant Bradley Fagerheim: Our increased production guidance reflects our strong start to the year and we look to build off this momentum as we move through the balance of 2024.

Grant Fagerheim: On current strip prices, we forecast funds flow of CAD 1.7 billion, resulting in CAD 700 million of free funds flow after capital, of which CAD 435 million will be returned to shareholders through the base dividend and further enhanced with share repurchases under our normal course issuer bid. With that, I will now turn the call over to the operator, Sylvie, for any questions. Thank you.

Grant Bradley Fagerheim: At current strip prices, we forecast funds flow of $1 7 billion.

Grant Bradley Fagerheim: Resulting in $700 million of free funds flow after capital of which $435 million.

Grant Bradley Fagerheim: We returned to shareholders through the base dividend and further enhanced the share purchase repurchases under our normal course issuer bid.

Sylvie: With that I will now turn the call over to the operator Sylvia for any questions. Thank you. Thank.

Joey Wong: Thank you, sir. Ladies and gentlemen, if you would like to ask a question, please press star followed by one on your touchtone phone. You will then hear a three-tone prompt acknowledging your request. If you would like to withdraw from the question queue, please press star followed by two. If you're using a speakerphone, you will need to lift the handset before pressing any keys. Please go ahead and press star one now if you have a question. Your first question will be from Dennis Fong at CIBC World Markets. Please go ahead.

Operator: Thank you, sir. Ladies and gentlemen, if you would like to ask a question, please press star followed by one on your touchtone phone. You will then hear a three-tone prompt acknowledging your request. If you would like to withdraw from the question queue, please press star followed by two. If you're using a speakerphone, you will need to lift the handset before pressing any keys. Please go ahead and press star one now if you have a question. Your first question will be from Dennis Fong at CIBC World Markets. Please go ahead.

Sylvie: Thank you, sir. Ladies and gentlemen, if you would like to ask a question, please press star followed by 1 on your touchtone phone. You will then hear a three-tone prompt acknowledging your request. And if you would like to withdraw from the question queue, please press star followed by 2. And if you're using a speakerphone, you will need to lift the handset before pressing any keys. Please go ahead and press star 1 now if you have a question. And your first question will be from Dennis Fong at CIBC World Market. Please go ahead.

Sylvie: Thank you, Sir ladies and gentlemen, if you would like to ask a question. Please press star followed by one on your touched homes.

Sylvie: He will then here as we told prompt acknowledging your request and if you would like to withdraw from the question queue. Please press star followed by two and if you're using a speaker phone you will need to lift the handset before pressing any keys. Please go ahead and press star one now if you have a question.

Sylvie: And your first question will be from Dennis Fong at CIBC World markets. Please go ahead.

Dennis Fong: Hi, good morning, and thanks for your overview and taking my question. My first one here is maybe directed to Tan. I was just hoping to understand how you think about your current capital structure. Obviously, you've made a lot of progress with respect to improving aggregate leverage. I was wondering, can you quantify maybe where an ultimate leverage level or maybe an optimized capital structure happens to be, and maybe what factors influence the way you think behind that debt level?

Dennis Fong: Hi, good morning, and thanks for your overview on taking my question. My first one here just maybe directed to torn I was just hoping to understand how you think about.

Dennis Fong: Hi, good morning, and thanks for your overview and taking my question. My first one here is probably directed to Thanh.

Dennis Fong: I was just hoping to understand how you think about your current capital structure. Obviously, you've made a lot of progress with respect to improving aggregate leverage. And I was wondering, can you quantify maybe where an ultimate leverage level or maybe an optimized capital structure happens to be and maybe what factors influence the way you think behind that debt level?

Dennis Fong: Your current capital structure, obviously, you've made a lot of progress with with respect to improving.

Dennis Fong: Aggregate leverage and I was wondering can you quantify maybe wearing ultimate leverage level or maybe an optimized capital structure happens to be and maybe what factors influence the way you've seen behind that that debt level.

Grant Fagerheim: Yeah, thanks for that question there, Dennis. Yeah, I think when we look at an optimized run rate level, we look at everything, you know, our dividend as well as our cash flows down to $50 WTI and $2 gas. What we'd like to be is less than 1x debt to EBITDA at that low commodity price environment. Run rate, you know, call it CAD 1.3 billion, would allow us to achieve that. You know, debt at the end of Q1 was CAD 1.5 billion with the active drilling program that we had. Based on our forecast, we're expected to be about CAD 1.2 billion by the end of the year there.

Speaker Change: Yeah. Thanks for that question there Dennis Yeah, I think when we look at an optimized run rate level. We look at everything you know our dividend as well as our cash flows down to $50 W. T I and $2 gas and so what we'd like to be is less than one times debt to EBITDA at that low commodity.

Thanh C. Kang: Yeah.

Thanh C. Kang: Yeah, thanks for that question there, Dennis. Yeah, I think when we look at an optimized run rate level, we look at everything, you know, our dividend, as well as our cash flows, down to $50 WTI and $2 gas. And so what we'd like to be is less than one times debt to EBITDA at that low commodity price environment. So a run rate, you know, call it $1.3 billion, would allow us to achieve that.

Thanh C. Kang: This environment. So a run rate you know call it $1 3 billion.

Thanh C. Kang: <unk> would get would allow us to achieve that you know that at the end of the first quarter was $1 5 billion.

Thanh C. Kang: You know, debt at the end of the first quarter was $1.5 billion with the active drilling program that we had. But based on our forecast, we're expected to be about $1.2 billion by the end of the year. So it puts us in a really good financial position where we've protected our shareholders down to a low WTI level, and gives us lots of liquidity to be able to execute on our program. The dividend is sustainable down to $50 WTI, and it provides us an opportunity to execute on potentially a larger share buyback as we think about the back half of 2024.

Thanh C. Kang: With the active drilling program that we had but based on our forecast were expected to be about $1 2 billion by the end of the year. There. So it puts us in a really good financial position, where we've protected our shareholders down to a low double UTI level gives us lots of liquidity to be able to execute on our.

Grant Fagerheim: It puts us in a really good financial position, where we've protected our shareholders down to a low WTI level. Gives us lots of liquidity to be able to execute on our program. The dividend is sustainable down to $50 WTI, and it provides us an opportunity to execute on potentially a larger share buyback as we think about the H2 2024 here.

Thanh C. Kang: Graham the dividend is sustainable down to $50 W. T I and it provides us an opportunity to execute on potentially a larger share buyback as we think about the back half of 2024 here.

Dennis Fong: Great. Appreciate that color. Maybe shifting focus, thank you for highlighting some of the factors you're focusing on to drive stronger well results, especially at Kakwa and potentially across the West Division acreage. I was just curious as well, how quickly do you view the application of revised completion or development techniques to new wells? When, if successful, can we potentially see some of the, we'll call it the fruits of this work?

Speaker Change: Great appreciate that color maybe.

Dennis Fong: Great, appreciate that color. Maybe focusing on something else, and thank you for highlighting some of the factors you're focusing on to drive stronger well results, especially at CACWA and potentially across. On the West Division acreage, I was just curious as well, how quickly do you view the application of revised completion or development techniques to new wells? And when, if successful, can we potentially see some of the, we'll call it, fruits of

Dennis Fong: Maybe shifting focus.

Dennis Fong: And thank you for highlighting some of the factors you're focusing on to drive stronger well results, especially a CAC one potentially cross.

Dennis Fong: The West Division acreage I was just curious as well how quickly do you view the application of revised completion or development techniques, new world and win if successful can we potentially see some of the call. It the fruits of this.

Joey Wong: Yeah, Dennis, and Joey here. I'll take that one.

Dennis Fong: This work.

Joey Wong: Yeah, Dennis, Joey here. I'll take that one. I mean, the short answer is, you'll get some initial indications upon completion of how the fracs are potentially interacting with each other or not. That would be the first check mark we look for, kind of on day zero. It's a process of monitoring it through, I'd say, the first kind of six to 12 months, and we'd hope to start to see deviation from alternative development profiles or I guess legacy ones in the area. You know, you'd start to feel pretty comfortable around somewhere in that six- to 12-month timeframe if things are working out.

Speaker Change: Yes, Dennis Joey here I'll take that one I mean, the short answer is you'll get some initial indications upon completion of how how the fracs are potentially interacting with each other we're not.

Joey Wong: I mean, the short answer is you'll get some initial indications upon completion of how the fracs are potentially interacting with each other or not. So that would be the first check mark we look for would be kind of on day zero. It's a process of monitoring it through, I'd say, the first kind of six to 12 months, and we'd hope to start to see deviation from alternative development profiles or, I guess, legacy ones in the area.

Joey Wong: So that would be the first checkmark, we look forward would be kind of on day zero.

Joey Wong: It's a process of monitoring it through I'd say, the first kind of six to 12 months and we'd hope to start to see deviation from alternative development profiles or I guess legacy ones in the area. So.

Joey Wong: So, you know, you'd start to feel pretty comfortable around somewhere in that six to 12 month time frame if things are working out. In terms of, you know, how we roll that out in our program, we would expect that. Things that we do this year are very likely to impact the next calendar year in terms of capital activity. So, pretty quick turnaround.

Joey Wong: You'd start to feel pretty comfortable around somewhere in that six to 12 month timeframe. If things are working out in terms of how we roll that out in our program, we would expect things.

Joey Wong: In terms of, you know, how we roll that out in our program, we would expect things that we do this year very likely to impact the next calendar year in terms of capital activity. Pretty quick turnaround.

Joey Wong: Things that we do this year are very likely to impact.

Joey Wong: The next calendar year in terms of capital activity, So pretty quick turnaround.

Dennis Fong: Great. Thanks. Appreciate the color. I'll turn it back.

Speaker Change: Great. Thanks, I appreciate the color I'll turn it back.

Dennis Fong: Great. Thanks. Appreciate the color. I'll turn it back.

Operator: Thank you. Next question will be from Jeremy McCrea at BMO Capital Markets. Please go ahead.

Dennis Fong: Thank you next question will be from Jeremy Mccrea at BMO capital markets. Please go ahead.

Sylvie: Thank you. The next question will be from Jeremy McCrea at BMO Capital Markets. Please go ahead.

Jeremy McCrea: Yeah. Hey, it's a bit of a follow-up question to Dennis here. Just you talk about some new learnings that you picked up at Lator. I'm wondering if, Joey, you could be a little bit more specific in maybe in terms of what that looks like, what you wanna do for the next round of wells, and just with a lot of the improvements, you know, a couple of these wells coming in better than expected, how do you guys look to shift CapEx for 2025 to the east versus the west here?

Sylvie: Yeah.

Jeremy McCrea: Yeah, I guess this is actually a bit of a follow-up question to Dennis here. You talk about some new learnings that you picked up on the tour. I'm wondering if, Joey, you could be a little bit more specific in terms of what that looks like, what you want to do for the next round of wells, and just with a lot of the improvements. You know, a couple of these wells coming in better than expected. How do you guys look to shift CAPEX for 2025 to the east versus the west here?

Jeremy McCrea: This is actually a bit of a follow up question to Dennis here, just you talked about some new learnings that you picked up at the tour I'm wondering if you could be a little bit more specific and maybe in terms of what that looks like.

Joey Wong: What you want to do for the next round of wells and just with a lot of the improvements.

Jeremy McCrea: A couple of these wells coming in better than expected. How do you guys look to shift Capex for 2025 to the east versus the west here.

Joey Wong: Yeah, I guess specifically, Jeremy, as it pertains to Lator, well design, our two wells are single well pads, and they serve a dual purpose to both delineate and kinda spread out our coverage in terms of what we know about wells. So if we're talking about things like interwell spacing or benching or things like that, with our program, we're not gonna be assessing that with our wells. That said, you identified offsetting wells. There is quite a bit of activity that we are chewing through as we speak, as every month turns over and new bits of data come available to us. So given that our full development in the area is a little bit further out, we'll be assessing that as time goes forward.

Joey Wong: Yes, I guess, specifically Jeremy as it pertains to <unk>, a well designed our two wells are single well pads.

Joey Wong: Yeah, I guess specifically, Jeremy, as it pertains to Latour well design, our two wells are single well pads, and they serve a dual purpose to both delineate and kind of spread out our coverage in terms of what we know about wells. So if we're talking about things like inter-well spacing or benching or things like that, with our program, we're not going to be assessing that with our wells. That said, you identified offsetting wells.

Joey Wong: They serve a dual purpose to both delineate and kind of spread out our coverage in terms of what we know about wells. So if we're if we're talking about things like inter well spacing or benching or things like that with our program, we were not going to be assessing that with our wells that said.

Joey Wong: You identified offsetting wells there there is quite a bit of activity that we are chewing through as we speak is every month turns over in new bits of Datacom come available to us so.

Joey Wong: There is quite a bit of activity that we are chewing through as we speak, as every month turns over and new bits of data come available to us. So given that our full development in the area is a little bit further out, we'll be assessing that as time goes forward.

Joey Wong: Given given that our full development in the areas is a little bit further out we'll be assessing that as time goes forward.

Grant Bradley Fagerheim: I'm just going to take on, it's Grant, Jeremy, just take on the second part of your question and that was about, for 2025, do we look to shift capital from east to west or west to east and that isn't the case. What we'll look to is each of the areas, respectfully, our eastern division is providing some very, very, very good results as well. Chris had talked about some of those in the Glockenite formation, but we also talk about eastern Saskatchewan, western Saskatchewan, so each of the divisions will look to most profitable assets that we possibly can advance forward and our western division is very much providing a lot of growth for us at this particular time, so we'll continue and methodically advance our technical advancements there, but also the eastern division is equally as important for what they're doing in all other assets, so from our perspective, 2025 is a little ways out, but we'll start looking forward to making those plans for 2025, 26 and 27 here as we move through the summer months.

Grant Fagerheim: It's Grant, Jeremy. I'm just gonna take on the second part of your question, and that was about, for 2025, do we look to shift capital from East to West or West to East? That isn't the case. What we'll look to is each of the areas, respectfully. Our East Division is providing some very good results as well. Chris had talked about some of those in the Glauconite formation, but we also talk about Eastern Saskatchewan, Western Saskatchewan. Each of the divisions will look to most profitable assets that we possibly can advance forward.

Speaker Change: I'm just going to take on its grant Jeremy just take on the second part of your question and that was about.

Grant Bradley Fagerheim: For 2025, do we look to shift capital from east to west or west to east and that isn't the case, what we will look to as each of the areas respectfully.

Grant Bradley Fagerheim: Our eastern Division is providing some very very very good results as well.

Grant Bradley Fagerheim: And as Chris had talked about some of those in and the clock Glauconite formation, but we also talk about eastern Saskatchewan Western.

Grant Bradley Fagerheim: <unk> one so <unk>.

Grant Bradley Fagerheim: Each of the divisions.

Grant Bradley Fagerheim: Look too.

Grant Bradley Fagerheim: We will look to most profitable assets that we possibly can advance forward in time.

Grant Fagerheim: You know, our West Division is very much providing a lot of growth for us at this particular time, so we'll continue and methodically advance our technical advancements there. But also, the East Division is equally as important for what they're doing in all other assets. You know, from our perspective, 2025 is a lot of ways out, but we'll start looking forward to making those plans for 2025, 2026, and 2027 here as we move through the summer months.

Grant Bradley Fagerheim: Our Western Division is very much providing a lot of growth for us at this particular time. So we will continue to methodically advance our technical advancements there.

Grant Bradley Fagerheim: But also the.

Grant Bradley Fagerheim: The Eastern Division is equally as important.

Grant Bradley Fagerheim: For what Theyre doing in all other assets so.

Grant Bradley Fagerheim: From our perspective, 2025 is a little ways out, but where we'll start.

Grant Bradley Fagerheim: Looking forward to making those plans for 'twenty five 'twenty six 'twenty seven here as we move through the summer months.

Grant Bradley Fagerheim: Okay.

Jeremy McCrea: Just maybe a couple follow-up questions there. If you're continuing to see these wells come in better than your expectations, can we expect to see more revisions up in guidance here as the year goes through? Just before, I think it's probably in everyone's mind, the Chevron Duvernay package. Maybe just have a quick comment on what you guys are thinking of M&A here this year as well.

Jeremy McCrea: Just maybe a couple follow-up questions there, when you're continuing to see these wells come in better than your expectations. Can we expect to see more revisions to guidance here as the year goes through? And then just before I think it's probably on everyone's mind, the Chevron DuVernay package, maybe just have a quick comment on what you guys are thinking about M&A here this year as well. Yeah, just my regards.

Speaker Change: A couple of follow up questions Eric.

Jeremy McCrea: When if youre continuing to see these wells come in better than your expectations.

Jeremy McCrea: Can we expect to see more revisions up in guidance here.

Jeremy McCrea: The year goes through.

Jeremy McCrea: And then just before I think and then probably everyone's mind the Chevron Duvernay package, maybe just comment on what you guys are thinking of M&A here this year as well.

Grant Fagerheim: Yeah. Just regards to guidance, I mean, if we can continue to perform as we have performed, you know, which are very positive, we also have to go through the summer months where we're anticipating the unanticipated, I guess, if I can use that terminology, with the potential for downturn that we're not expecting. At this time, you know, we're not projecting any further increases to our guidance, but we can see how not only operational performance, but how the environment treats us from an overall perspective. Your other comment on acquisitions, I mean, Chevron package is available. We're looking for smaller scale acquisition activity to complement in and around our existing assets. Yes, the Chevron package offsets our Kaybob activity.

Speaker Change: Yeah, Joe just regards to guidance I mean, if we can continue to perform as we have performed.

Grant Bradley Fagerheim: Yeah, just in regards to guidance, I mean, if we can continue to perform as we have performed, which is very positive, we also have to go through the summer months where we're anticipating the unanticipated, I guess if I can use that terminology, with the potential for downtime that we're not expecting. So at this time, you know, we're not projecting any further increases to our guidance, but we can see how, not only operational performance but how the, we'll talk about how the environment treats us from an overall perspective.

Grant Bradley Fagerheim:

Grant Bradley Fagerheim: Which we're very positive we also have to go through the summer months, we're anticipating them.

Grant Bradley Fagerheim: The unanticipated I guess, if I can use that terminology with the.

Grant Bradley Fagerheim: The potential for downtime that we're not expecting so at this time.

Grant Bradley Fagerheim: Yeah.

Grant Bradley Fagerheim: We're not projecting any further increases to our guidance but.

Grant Bradley Fagerheim: We can see how not only operational performance, but how the I'll talk about how the environment free to us from an overall perspective.

Grant Bradley Fagerheim: To your other comment on acquisitions, I mean, chevron packages is available we're looking for smaller scale.

Sylvie: To your other comment on acquisitions, I mean, the Chevron package is available. We're looking for smaller-scale acquisition activity to complement in and around our existing assets. Yes, the Chevron package assets are KBOB activity, but it is a larger package that we wouldn't be on our front foot on. Smaller components of it we'd be interested in, but more importantly, what we're looking at is how do we improve the profitability and sustainability of our existing assets today.

Sylvie: Acquisition activity to call in and around our existing assets, yes, the chevron packets offsets.

Sylvie: <unk> activity.

Grant Fagerheim: It is a larger package that we wouldn't be on our front foot on. Smaller components of it, we'd be interested in. More importantly, what we're looking at is how do we improve the profitability and sustainability of our existing assets today. From what we'll call our beachheads out, that's the way we'll look at advancing forward. We do not need a huge amount of incremental inventory. We have a large inventory base. We're fortunate to have that. We would have to explain to our shareholders the reason for doing that would be increasing profitability and sustainability for the longer term.

Sylvie: But it is it is a larger package.

Sylvie: We wouldn't be on our front foot on smaller.

Sylvie: Smaller components of it we'd be interested in but more importantly, what we're looking at is how do we improve the profitability and sustainability of our existing assets.

Sylvie: Today, so from what we'll call our beachheads out that's doing well look at it.

Sylvie: So from what we'll call our beachheads out, that's the way we'll look at advancing forward. We do not need a huge amount of incremental inventory. We have a large inventory base. We're fortunate to have that. So we would have to explain to our shareholders the reason for doing that would be increasing profitability and sustainability for the longer term.

Sylvie: Advancing forward, we do not need.

Sylvie: A huge amount of incremental inventory, we have a large inventory base. We're fortunate to have that so we would have to explain to our shareholders. The reason for doing that would be increasing profitability and sustainability for the longer term.

Jeremy McCrea: All right. Thanks, Grant.

Speaker Change: Alright, Thanks, Dan.

Anthony Linton: Thank you. The next question will be from Anthony Linton at Jeffreys. Please go ahead. Hey, good morning, guys.

Grant Fagerheim: Thanks, Jeremy.

Speaker Change: Thanks, Jeremy.

Operator: Thank you. Next question will be from Anthony Linton at Jefferies. Please go ahead.

Anthony Linton: Thank you next question will be from Anthony Linton at Jefferies. Please go ahead.

Anthony Linton: Hey, good morning, guys, and thanks a lot for taking my questions. Maybe just on the five-year plan, and particularly within the West Division, can you just remind us where you stand from an infrastructure capacity standpoint and plans for future build-out? With the cost savings on Musreau, any key learnings that could be essentially applied to that build-out?

Anthony Linton: Hey, good morning, guys and thanks, a lot for taking my questions.

Anthony Linton: Okay, good morning guys, and thanks a lot for taking my questions. Maybe just on the 5-year plan, and particularly within the West Division, can you just remind us where you stand from an infrastructure capacity standpoint and plans for future build out? And then, with the cost savings on Muzro, any key learnings that could be intentionally applied to that build out?

Anthony Linton: Maybe maybe just on the five year plan and particularly within the West Division can you just remind us where you stand from an infrastructure capacity standpoint, and plans for future build out and then with the cost savings on Budrow any key learnings that could be essentially applied to that build out.

Grant Fagerheim: Yeah, what we're looking at at this particular time on the Western side where we're looking to grow our business in excess of from what was 100 or which was at 70,000 BOE per day to over 110,000 BOE per day will require incremental infrastructure. What we're looking at is how best to place that. We're doing a lot of engineering analysis at this particular time. How best to finance those is always under consideration as we advance forward. Because the pace may be higher than the 110,000 BOE per day over the five-year period of time that we're projecting.

Grant Bradley Fagerheim: What we're looking at at this particular time on the western side, where we're looking to grow our business in excess, from what was 70,000 BWE per day to over 110,000 BWE per day, will require incremental infrastructure. So what we're looking at is how best to place that. We're doing a lot of engineering analysis at this particular time, and how best to finance those is always under consideration as we advance forward. Because the pace may be higher than the 110,000 BWE per day over the five-year period of time that we're projecting, but it's all going to be dependent upon the build-out process that we do have of infrastructure, whether it's with our capital or third-party capital coming into the system.

Anthony Linton: So what we're looking at.

Grant Bradley Fagerheim: At this particular time on.

Grant Bradley Fagerheim: The western side, where we're looking to grow our business and access.

Grant Bradley Fagerheim: From what was 104.

Grant Bradley Fagerheim: Which was a 70000 barrel per day to over 110000 Boe per day.

Grant Bradley Fagerheim: We will require incremental infrastructure. So what we're looking at is.

Grant Bradley Fagerheim: How best to place that we're doing a lot of engineering analysis at this particular time.

Grant Bradley Fagerheim: How best to finance those.

Grant Bradley Fagerheim: As always under consideration as we advance forward so.

Grant Bradley Fagerheim: Because the pace may be.

Grant Bradley Fagerheim: It'd be higher than the 110000 Boe per day over the five year period of time that we're projecting.

Grant Fagerheim: It's all gonna be dependent upon the build out process that we do have of infrastructure, whether it's with our capital or third-party capital, coming in to assist us.

Grant Bradley Fagerheim: But it's all going to be dependent upon the build out process and we do have an infra.

Grant Bradley Fagerheim: Infrastructure, whether it's with her capital or third party capital.

Anthony Linton: Got it. Okay. And then just on the cost savings at Muz-Ro, with 10% under budget, any key learnings there that you could apply to that build out? Well, I'm going to let...

Grant Bradley Fagerheim: And to assist us.

Anthony Linton: Just on the cost savings at Musreau, with 10% under budget, any key learnings there that you could apply to that build out?

Anthony Linton: Got it Okay, and then just on the cost savings that advisor or any with 10% under budget any key learnings there that you could apply to that build out.

Anthony Linton: Just on the cost savings at Musreau, with 10% under budget, any key learnings there that you could apply to that build out?

Grant Fagerheim: Well, I'm gonna let Joel talk to that a bit, but other than to say I like it, keep it going. Yeah. Joel said nothing specifically to add to that other than, you know, they were on it right from the beginning through the planning process through last spring and summer. The execution went extremely well.

Speaker Change: I'm going to let Joel talk to that a bit but other than to say I like it keep it going.

Joel M. Armstrong: I'm going to let Joel talk about that a bit, but other than to say I like it, keep it going. Yeah, Joel said nothing specifically to add to that other than they were on it right from the beginning through the planning process through last spring and summer, and the execution went extremely well.

Joel M. Armstrong: Yeah.

Joel M. Armstrong: Yes, Joel nothing specifically to add to that other than.

Joel M. Armstrong:

Joel: We're on it right from the beginning through the planning process through our spring and summer.

Joel M. Armstrong: And the execution went extremely well.

Joel Armstrong: I think with the next phase, you'll see cost savings on the drilling side too. We're just getting warmed up there.

Joel M. Armstrong: I think with the next phase, you'll see cost savings on the drilling side too, so. Uh, we're just getting warmed up here.

Joel: I think what the next phase you'll see cost savings on the drilling side too so.

Joel M. Armstrong: We're just getting warmed up there.

Anthony Linton: Okay. Got it. Thank you. Maybe just switching gears. Just wondering when we might be able to expect an update on your new energy opportunities?

Speaker Change: Okay got it. Thank you and then maybe just switching gears on your just wondering if theres any when we might be able to expect an update on your new energy opportunities.

Anthony Linton: Okay, got it. Thank you. And then maybe just switching gears, I'm just wondering when we might be able to expect an update on your new energy offer.

Grant Fagerheim: Yeah. Right now, what we're being delayed with is not on our own volition. It's with government challenges we're having with the government's finalizing what we'll call the investment tax credit market is looking like and how quickly they can advance through that at the federal level, and provide some guidelines for us to utilize. Our timelines would have been that we'd be up and operational this year, with some of our incremental carbon capture projects. We're waiting on finalization of what the policies come forward from our federal government.

Grant Bradley Fagerheim: Um, yeah, the... Right now, what we're being delayed with is not our own fruition; it's government challenges we're having with the governments finalizing what their, what we'll call the investment tax credit market is looking like and how quickly they can advance through that at the federal level and provide some guidelines for us to utilize. So our timeline would have been that we'd be up and operational this year with some minor, We're waiting on the finalization of what policies come forward from our federal government.

Anthony Linton: Yeah.

Grant Bradley Fagerheim: Right now what were being delayed is not on our own fruition, it's with government.

Grant Bradley Fagerheim: Challenges, we're having with governments finalizing what the what we'll.

Grant Bradley Fagerheim: The investment tax credit market is looking like and how quickly they can advance through that at the federal level.

Grant Bradley Fagerheim: And provide some guidelines for us to have to utilize.

Grant Bradley Fagerheim: So our timelines would have been that we'd be up and operational this year.

Grant Bradley Fagerheim: With some of our.

Grant Bradley Fagerheim: Incremental carbon capture projects for waiting on Finalization of.

Anthony Linton: Got it. Okay, that's all for me. I'll turn it back.

Grant Bradley Fagerheim: The policies come forward from a federal government.

Anthony Linton: Got it. Okay. That's all for me. I'll turn it back.

Speaker Change: Got it Okay. That's all for me and I'll turn it back thanks Anthony.

Sylvie: Thank you. The next question will be from Patrick O'Rourke at ATB Capital Markets. Please go ahead.

Grant Fagerheim: Thanks, Anthony.

Operator: Thank you. Next question will be from Patrick O'Rourke at ATB Capital Markets. Please go ahead.

Patrick O'rourke: Thank you next question will be from Patrick O'rourke ATB capital markets. Please go ahead.

Patrick O'rourke: Good morning, guys. Thanks for the rundown. The questions have been fairly comprehensive so far. I just want to first unpack in terms of some of the changes that you guys are making here and what the opportunity is. You're talking about potential cost savings, and you've increased the guidance here because production is outperforming. So just wondering, looking forward, as you think about these things and think about maximizing the value of the asset, is the opportunity here more so on the cost side? Is it on the IP side? Or is it ultimately on the recoverable resource side? Just help us understand what the biggest lever is going to be for Whitecap going forward.

Patrick O'Rourke: Good morning, guys. Thanks for the rundown. Questions have been fairly comprehensive so far. I just wanna, you know, first unpack in terms of some of the well changes that you guys are making here and what the, you know, what the opportunity is. You're talking about potential on cost savings, and you've increased the guidance here because production's outperforming. Just wondering, looking forward as you're thinking about these things and thinking about maximizing the value of the asset, is the opportunity here more so on the cost side? Is it on the IP side, or is it, you know, ultimately on the recoverable resource side? Just, you know, help us understand what the biggest lever is going to be for Whitecap going forward.

Patrick O'rourke: Good morning, guys. Thanks for the rundown of questions have been a fairly comprehensive so far I just wanted to first unpack in terms of some of the world changes that you guys are making here and what do you know what the opportunity is youre talking about potential on cost savings.

Patrick O'rourke: And you've increased the guidance here because production is outperforming so just wondering looking forward as youre thinking about these things and thinking about maximizing the value of the asset is the opportunity here more so on the cost side is it on the IP side or is it.

Patrick O'rourke: Ultimately on the recoverable resource side, just help us understand what the biggest lever is going to be for white cap going forward.

Joel Armstrong: Yeah. It's Joel here. I guess a couple things really. We're just trying to drive our capital efficiency as our number one objective, whether that's increasing lateral length, changing wellbore construction design, whatever it takes to take us to that next level of capital efficiency.

Joel M. Armstrong: Yeah, it's Joel here.

Patrick O'rourke: Yes, it's Joel here I.

Joel M. Armstrong: Joel here. I guess a couple things. Really, we're just trying to drive capital efficiency as our number one objective, whether that's increasing lateral length, changing wellbore construction design, whatever it takes to take us to that next level of capital efficiency.

Joel M. Armstrong: I guess a couple of things really were just trying to drive our capital efficiency is our number one objective, whether that's increasing lateral length changing wellbore construction design whatever it takes to take us to that next level of capital efficiency.

Joel M. Armstrong: Okay.

Patrick O'Rourke: Okay, thanks. Maybe just shifting gears, again here real quick. I noticed that, in terms of the risk management, the marketing, you added a little bit of hedging on the oil side, largely flat on the gas side. Just curious, what you know, how you're thinking about marketing the gas as you have increasing gas volumes, any changes there? Your outlook in terms of risk management, how you'd look to sort of hedge things heading into 2025, both on the oil and gas side.

Patrick O'rourke: Okay, thanks. And maybe just shifting gears again here real quick, I noticed that in terms of risk management, and marketing, you added a little bit of hedging on the oil side, largely flat on the gas side. Just curious how you're thinking about marketing the gas as you have increasing gas volumes; any changes there? And then your outlook in terms of risk management, how you'd look to sort of hedge things heading into 2025, both on the oil and gas side?

Speaker Change: Okay. Thanks, and maybe just shifting gears again here real quick I noticed that in terms of the risk management. The marketing you added a little bit of hedging on the oil side largely flat on the gas side just curious.

Patrick O'rourke: How are you thinking about marketing the gas as you have increasing gas volumes any changes there and then your outlook in terms of risk management.

Patrick O'rourke: Do you look to sort of hedge things heading into 2025, both on the oil and gas side.

Thanh Kang: Yeah, it's Thanh Kang here. Thanks for that question there, Patrick. You know, the way that we think about our hedge book is wanna make sure that we are fully funded down to $50 oil and $2 gas, which means that we can maintain our level of production as well as fund the current dividend there. With our hedge book currently at about 17% for this year, as I mentioned, we are fully funded both dividends and our maintenance production level. As we think about 2025, we'll continue to layer on the positions. Obviously, the oil is what drives our cash flows, right? You know, we'll be focused on that.

Patrick O'rourke: Yeah, It's Tom here. Thanks for that question there Patrick So you know the way that we think about our hedge book is want to make sure that we are fully funded down to $50 oil and $2 gas.

Thanh C. Kang: Yeah, it's Thanh here. Thanks for that question there, Patrick. So, you know, the way that we think about our hedge book is that we want to make sure that we are fully funded down to $50 oil and $2 gas, which means that we can maintain our level of production as well as fund the current dividend there. And so, with our hedge book currently at about 17% for this year, as I mentioned, we are fully funded for both dividends and our maintenance production level. As we think about 2025, we'll continue to layer on the positions. Obviously, oil is what drives our cash flows, right? And so, you know, we'll be focused on that.

Thanh C. Kang: Which means that we can maintain our level of production as well as funding the current dividend there and so with our hedge book are currently at about 17% for this year as I mentioned, we are fully funded both dividends and our maintenance production level. As we think about 2025, we will continue to layer on the <unk>.

Thanh C. Kang: <unk>, obviously, the oil is what drives our cash flows right and so we'll be focused on that and whatever we hedged on the oil side Youll see us hedge a commensurate on the on the natural gas side as well so we're targeting somewhere in that 30%. We're about 16% right now in 2025 for us to run a fully funded.

Thanh Kang: Whatever we hedge on the oil side, you'll see us hedge commensurate on the natural gas side as well. We're targeting somewhere in that 30%. We're about 16% right now in 2025 for us to run a fully funded program. You'll see us incrementally hedge those positions as we move through 2024 here. On the natural gas pricing, you know, we do produce 370 million a day of natural gas. Majority of that right now is AECO price, but our marketing team is looking at price diversification over the medium to long term here. We are part of the Rockies LNG, 100 million a day.

Thanh C. Kang: And whatever we hedge on the oil side, you'll see us hedge commensurate on the natural gas side as well. So we're targeting somewhere in that 30% range. We're about 16% right now in 2025 for us to run a fully funded program, so you'll see us incrementally hedge those positions as we move through 2024. On the natural gas pricing, you know, we do produce $370 million a day of natural gas. The majority of that right now is ACL priced, but we are looking, our marketing team is looking at price diversification over the medium to long term here.

Thanh C. Kang: Program, So you'll see us incrementally hedge those positions as we move through 2024 here are on the natural gas pricing.

Thanh C. Kang: We do produce $370 million.

Thanh C. Kang: Day of natural gas a majority of that right now is equal priced.

Thanh C. Kang: But we are looking our marketing team is looking at a price diversification.

Thanh C. Kang: Over the medium to long term here, we are part of.

Thanh C. Kang: We are part of the Rockies LNG project, $100 million a day. So part of that will be diversified as that gets FID'd as we move forward here. And we are looking, both on the physical and the financial side, to potentially move away from ACL with that Chicago pricing or NYMEX pricing. But ultimately, we're in that 25% to 30% outside of ACL would be our objective.

Thanh C. Kang: The Rockies LNG 100 million a day, so part of that will be diversified as that gets F. I need as we move forward here and we are looking at them both on the physical and financial side to potentially move away from April with that Chicago pricing or Nymex pricing, but ultimately are in that 25.

Thanh Kang: Part of that will be diversified, as that gets FID as we move forward here. We are looking at both on the physical and the financial side to potentially move away from AECO, whether that's Chicago pricing or NYMEX pricing. Ultimately, we're in that 25 to 30% outside of AECO would be our objective.

Thanh C. Kang: 5% to 30% outside of April would be our objective.

Patrick O'Rourke: Okay, great. Thank you very much.

Speaker Change: Okay, great. Thank you very much.

Patrick O'rourke: Okay, great. Thank you very much.

Patrick O'rourke: Okay.

Operator: Thank you. At this time, Mr. Fagerheim, we have no other questions registered. Please proceed.

Sylvie: Thank you. And at this time, Mr. Fagerheim, we have no other questions registered. Please proceed.

Speaker Change: Thank you and at this time Mr. <unk>, we have no other questions registered please proceed.

Grant Fagerheim: Thank you, Sylvie. Once again, we appreciate you for taking the time and interest to listen to this call today. 2024 is off to a great start, and we look forward to discussing our technical and operational performance at the upcoming Virtual Investor Day on 11 June. Wishing each of you all the best through these spring and summer days. Thank you.

Grant Bradley Fagerheim: Thank you, Sylvia. Once again, we appreciate you for taking the time and interest to listen to this call today. Again, 2024 is off to a great start, and we look forward to discussing our technical and operational performance at the upcoming Virtual Investor Day on June 11. Wishing each of you all the best through these spring and summer days. Thank you.

Fagerheim: Thank you Sylvie once again, we appreciate you for taking the time and interest and listened to this call to date.

Grant Bradley Fagerheim: 2024 is off to a great start and we look forward to discussing our technical and operational performance at the upcoming virtual Investor day on June 11th.

Grant Bradley Fagerheim: Wishing each of you all the best through the spring and summer days. Thank you.

Operator: Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. At this time, we ask that you please disconnect your lines.

Sylvie: 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 ask that you please disconnect your lines.

Speaker Change: 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 ask that you. Please disconnect your lines.

Sylvie: Hum.

Sylvie: Yeah.

Sylvie: Okay.

Sylvie: Hmm.

Sylvie: Hum.

Sylvie: Okay.

Sylvie: Hum.

Sylvie: Yeah.

Sylvie: Hum.

Sylvie: Yeah.

Sylvie: Hmm.

Sylvie: Okay.

Sylvie: Yeah.

Sylvie: Okay.

Sylvie: Hum.

Sylvie: Okay.

Sylvie: Yes.

Sylvie: Yeah.

Sylvie: Yes.

Sylvie: Yeah.

Sylvie: Yes.

Sylvie: Yeah.

Sylvie: Okay.

Sylvie: Yes.

Sylvie: Hum.

Sylvie: Okay.

Sylvie: Yes.

Sylvie: Okay.

Sylvie: Hum.

Sylvie: Okay.

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