Mid-sized Whitecap Resources unveils cautious $450-million capital budget

CALGARY — Oil and gas producer Whitecap Resources Inc. said Tuesday it will choke back spending in the first half of 2019 in view of recent volatility in world and western Canadian oil prices, despite the resulting reduction in average production for the year.

The mid-sized producer said it plans to spend about $450 million next year, about the same as this year, to take average production to about 71,000 barrels per day, about 3.4 per cent less than its current production of 73,500 bpd.

“Given the extreme volatility in crude oil prices … we want to take a cautious and defensive approach to our capital planning for 2019,” said CEO Grant Fagerheim on a conference call.

“By shifting growth capital from the first half of the year into the second half, it reduces our average production for the year but allows us to repay $74 million of debt by the end of the second quarter and gives us maximum flexibility for organic growth in the second half of the year.”

The company usually spends more than half of its budget in the first six months of the year, when frozen ground allows better access to backcountry drilling sites in Western Canada.

In 2018, it spent 55 per cent in the first half of the year and production peaked in March; next year it plans to spend only 30 per cent in the first half, then ramp up spending in the summer to allow production to peak in November.

Uncertainty over prices has forced intermediate companies like Whitecap, Baytex Energy Corp. and Obsidian Energy Ltd. to be conservative as they rolled out their budgets this week, said analyst Thomas Matthews of AltaCorp Capital.

“Everyone’s taking a pretty cautious view for the first half of the year next year,” he said.

“The real risk now is WTI (West Texas Intermediate). You’re looking at WTI trading in that US$48 range now so let’s be conservative in the front half and then you can adjust in the back half if pricing continues to go away from you.”

Crude prices in Western Canada suffered deep discounts in October and November as a glut of oil overwhelmed pipeline and rail export capacity.

Those discounts eased after the Alberta government announced early this month it would impose industry-wide production curtailments of 325,000 bpd in the first part of 2019.

Meanwhile, New York-traded West Texas Intermediate crude has also fallen, from a peak of over US$76 per barrel in October to less than US$48 per barrel this week.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Jason Aquino has been adding to his front lawn Halloween display for the past five years. “I wanted to do it big this year, because even in the pandemic, we can still enjoy Halloween,” says the Red Deer father.
Halloween spookiness rises to new level

Rare astronomical occurrence caps off a strange holiday

Alberta Health Services' central zone jumped from 162 active COVID-19 cases to 178 on Friday. Five additional deaths were reported provincewide, bringing the toll to 323. THE CANADIAN PRESS/Graham Hughes
622 new COVID-19 cases set another daily high Friday

Province confirmed 622 additional cases Friday

Red Deer Mayor Tara Veer and Roland Gaviola, Iglesia ni Cristo Church of Christ district minister in the Calgary region, stand in front of the 300-plus boxes of donated food at the Red Deer Food Bank Saturday afternoon. (Photo by Sean McIntosh/Advocate staff)
Red Deer Food Bank receives big donation from local church

More than 300 boxes of food were donated Saturday

Advocate file photo
Man awaiting murder trial facing two new trials for breaching release conditions

Quentin Strawberry going to trial in March in connection with 2019 murder

Ecole La Prairie students and teachers dressed up in Halloween costumes and paraded by Barrett Kiwanis Place, while waving at the building’s residents in Red Deer on Friday. (Photo by Sean McIntosh/Advocate staff)
Ecole La Prairie students parade in Halloween costumes for Red Deer seniors

Dozens of Red Deer students put on their Halloween costumes to spread… Continue reading

Over the years, Janice Blackie-Goodine’s home in Summerland has featured elaborate Halloween displays and decorations each October. (File photo)
QUIZ: How much do you really know about Halloween?

Oct. 31 is a night of frights. How much do you know about Halloween customs and traditions?

Indigenous fishermen adjust lines on their boat in Saulnierville, N.S. on Wednesday, Oct. 21, 2020. THE CANADIAN PRESS /Andrew Vaughan
N.S. Mi’kmaq chiefs demand stop of alleged federal plans to seize lobster traps

HALIFAX — The Assembly of Nova Scotia Mi’kmaq Chiefs is alleging the… Continue reading

Grand Chief Arlen Dumas of the Assembly of Manitoba Chiefs speaks in Ottawa on Thursday, December 7, 2017. Dumas says he's concerned about the growing number of COVID-19 cases First Nation communities. THE CANADIAN PRESS/Fred Chartrand
The family of Allan Landrie, shown in a family handout photo, is disappointed the Saskatchewan Coroners Service isn’t considering an inquest into the 72-year-old's hospital death. Landrie's death in September 2019 was ruled a suicide. More than three days had passed before his body was discovered locked in a hospital bathroom in Saskatoon. THE CANADIAN PRESS/HO
‘He was so sick,’ says daughter of Saskatoon man who committed suicide in hospital

Allan Landrie’s body was discovered three days after his death

ll
Imagining the origins of Halloween

Long ago and far away, a small assemblage of English people gathered… Continue reading

Red Deer College president Peter Nunoda. (Photo by contributed)
Peter Nunoda: Winter term will be busier on RDC campus

In my column last month, I shared details about Red Deer College’s… Continue reading

FILE - In this Jan. 23, 1987 file photo, actor Sean Connery holds a rose in his hand as he talks about his new movie "The Name of the Rose" at a news conference in London. Scottish actor Sean Connery, considered by many to have been the best James Bond, has died aged 90, according to an announcement from his family. (AP Photo/Gerald Penny, File)
Actor Sean Connery, the ‘original’ James Bond, dies at 90

He died peacefully in his sleep overnight in the Bahamas

A man runs across the Carcross Dunes in Carcross, Yukon, on July 2, 2018. THE CANADIAN PRESS/Darryl Dyck
‘No manual or checklist:’ Yukon ditching fall time change this year

The territory decided to adopt year-round daylight time in March

Innovation Minister Navdeep Bains makes an announcement regarding vaccine procurement, in Toronto, on Wednesday, Aug., 5, 2020. Despite its status as an artificial intelligence hub, Canada has yet to develop a regulatory regime to deal with issues of privacy, discrimination and accountability to which AI systems are prone, prompting calls for regulation from businesses and experts. THE CANADIAN PRESS/Christopher Katsarov
Canada crawling toward AI regulatory regime, but experts say reform is urgent

5 million images of shoppers collected without consent at Canadian malls

Most Read