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Tuesday, April 30, 2013

Whitecap Resources Purchases Viking Light Oil Waterflood Assets


CALGARY, ALBERTA – Whitecap Resources Inc. (“Whitecap” or the “Company”) (TSX: WCP) is pleased to announce that it has entered into an agreement to purchase an existing Viking light oil waterflood asset in the Dodsland area of west central Saskatchewan for total consideration of $110 million (the “Acquisition”). The Acquisition adds 900 boe/d (95 percent light oil) of high netback, operated production with a long reserve life index and a low base decline of 20 percent. The Acquisition includes strategic facilities and oil sales pipeline infrastructure and is synergistic to our existing Viking operations at our Lucky Hills core area located only 10 miles away. 
In connection with the Acquisition, Whitecap will be raising $110 million through a $90 million bought deal common share financing and a $20 million non-brokered private placement of flow-through common shares on a CDE flow-through basis. 
STRATEGIC RATIONALE 
The Acquisition represents the successful continuation of Whitecap’s objective to strengthen the sustainability of its dividend-growth strategy by acquiring high netback, low decline assets that can provide consistent growth and substantial free cash flow. We estimate that production from the Acquisition will increase to 1,200 boe/d in 2014 from its current 900 boe/d and after planned 2014 capital expenditures of $8.2 million, generate free cash flow in 2014 of $17.2 million. The Dodsland Viking oil pool is near our existing Lucky Hills Viking assets where we have significant horizontal drilling and multi stage fracturing expertise. Acquiring an analogous pool in close proximity to our existing Viking development is consistent with our goal to remain highly focused.
The Acquisition includes 24.3 (18.7 net) sections of principally crown lands in the heart of the Dodsland Viking oil pool that has been under waterflood since 1967. This area of the pool has some of the thickest and highest quality Viking reservoir in the Dodsland trend. The waterflood has been and continues to be effective at maintaining reservoir pressure which results in a production decline of 12 percent for the vertical development in this pool. The operator has also drilled 25 horizontal wells with continually improving results, representing 390 net bopd at present. With cumulative oil production of 24 MMbbl (19 percent recovery factor), a current water-cut of only 51 percent and offsetting pool results, Whitecap believes there is considerable incremental upside to the pool which can be realized through a combination of horizontal drilling, water injector reactivations and injector conversions.

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