Whitecap Hiking Capex at Montney, Duvernay Natural Gas as LNG Canada nears completion

Natural gas development in western Canada’s Montney and Duvernay formations is slated for 2024 for Calgary’s Whitecap Resources Inc. increase by double digits as LNG opportunities begin to emerge.

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The independent organization, which reports in Canadian dollars (C$1.00/75 cents), has set a preliminary capital expenditure (capex) budget for 2024 that is 26% higher year-over-year. Capital spending is capped at $1.2 billion, up from an estimated $950 million for this year.

Approximately $600 million is earmarked for drilling expansion in natural gas-rich formations where new well locations have been identified on 700,000 acres, mostly acquired in 2022 Takeover of ExxonMobil subsidiaries for $1.9 billion.

Another $500 million would expand drilling on the oil-rich properties that were once a mainstay of the independent state before it moved to boost its gas reserves.

“Our Western division has significant reserves of high-quality liquids in Montney and Duvernay and will be a source of growth for our corporate production,” management said in the third-quarter report.

“On the natural gas side, we are looking forward to completion of LNG in Canada in 2025“, management noted. The project, led by Shell plc, would be Canada’s first completed LNG export facility, which “along with other recently announced projects will provide further market diversification for Canadian natural gas.”

The quarterly results saw strong natural gas production and stable oil production, which management described as “robust but volatile.”

Natural gas production jumped to nearly 324 MMcf/d from last year’s production of nearly 265 MMcf/d. However, the realized average price fell to $2.76/Mcf from $4.56.

On the oil side, production remained stable year-over-year at 85,238 b/d and 84,137 b/d. Average prices fell slightly to $103.72/bbl from $111.64.

Net income in Q3 2023 fell to $152.7 million (25 cents/share) from $324.5 million (53 cents/share) in Q3 2022.

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