Whitecap Announces a Light Oil Cardium Focused Acquisition, a $40 Million
Bought Deal Financing and Provides Increased 2010 and 2011 Guidance

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TSX VENTURE: WCP

CALGARY, July 12 /CNW/ - Whitecap Resources Inc. ("Whitecap" or the "Company") (TSX VENTURE:WCP) is pleased to announce that it has entered into an agreement to acquire a private company ("PrivateCo") for total consideration of approximately $52.0 million (the "Acquisition"). The primary assets to be acquired (the "Acquired Assets") are located in the Pembina region of west central Alberta with production and reserves focused in the Cardium formation. The Acquisition will be funded in part through a $40.05 million bought deal subscription receipt financing (the "Offering") plus an over-allotment of $4.95 million with a syndicate of underwriters led by GMP Securities L.P. and including National Bank Financial Inc., Cormark Securities Inc., FirstEnergy Capital Corp., Haywood Securities Inc., Macquarie Capital Markets Canada Ltd., Casimir Capital L.P., and Mackie Research Capital Corporation (the "Underwriters").

SUMMARY OF THE ACQUISITION

The Acquired Assets consist primarily of Cardium production and undeveloped lands in the Greater Pembina area of west central Alberta. 19 net sections of lands to be acquired are located in the Eastern Pembina Cardium fairway, where the main Cardium reservoir is found at relatively shallow depths ranging from 1,200 to 1,600 meters. These Cardium lands are situated in the "Halo" areas surrounding the producing legacy Cardium oil pools. The Acquired Assets have limited Cardium oil depletion and are ideal for multi-stage, horizontal wells. Whitecap has 2 high working interest horizontal wells currently drilled and awaiting completion and tie-in and has budgeted 4 additional Cardium horizontal wells for the second half of 2010. Management of Whitecap believes that there is the potential to drill an additional 35 Cardium horizontal locations on the Acquired Assets.

The profile for the Acquisition is as follows:

    
    Current Production (boe/d)                                           600
    Proved Reserves (mboe)(1)                                          1,617
    Proved Plus Probable Reserves (mboe)(1)                            4,517
    Estimated Proved Plus Probable Reserve Life Index (years)(2)        20.6
    Net Undeveloped Land (acres)                                      17,600
    Total Drilling Locations                                              35
    Operating Netback ($/boe)(3)                                      $38.00
    Total Transaction Value ($mm)                                      $52.0
    

Notes:

(1) Based an evaluation prepared by AJM Petroleum Consultants effective as at March 31, 2010 in accordance with the Canadian Oil and Gas Evaluation Handbook.

(2) Reserve life index calculation based on current production of 600 boe/d.

(3) All operating netbacks in this press release have been calculated based on US$82.00/bbl WTI, $4.75 AECO and C$/US$0.95.

TRANSACTION METRICS

Based on the above expectations and net of $8.8 million for the estimated value of undeveloped land associated with the Acquired Assets, the expected Acquisition metrics are as follows.

    
    Current Production ($/boe/d)                                     $72,000
    Proved Reserves ($/boe)(1)                                        $26.72
    Proved Plus Probable Reserves ($/boe)(1)                           $9.56
    Proved Plus Probable Reserves Recycle Ratio(2)                      4.0x
    

Notes:

(1) Based upon an evaluation prepared by AJM Petroleum Consultants effective as at March 31, 2010 in accordance with the Canadian Oil and Gas Evaluation Handbook.

(2) Recycle ratio calculation based on operating netback of $38.00/boe.

STRATEGIC RATIONALE

The Acquisition is the next step in the Company's aggressive growth strategy and is consistent with Whitecap's strategy of being a premier oil weighted growth company. The Acquisition is focused and has complementary characteristics to Whitecap's existing asset base of low declines, long life reserves and significant growth potential.

In addition to the 16 producing Cardium vertical wells, there are 2 producing Cardium horizontal wells on the Acquired Assets, 2 horizontal Cardium wells recently drilled and awaiting completion and tie-in, and 4 additional horizontal Cardium wells budgeted for the second half of 2010. Whitecap has identified 35 drilling locations on the Acquired Assets in the emerging Pembina Cardium resource play. The horizontal wells qualify for the five percent royalty rate on up to 60,000 boe, for a maximum of 24 months which significantly enhances the economics of the wells.

After giving effect to the Acquisition, Whitecap has over 125 low risk development wells in inventory, which positions the Company for strong growth in 2011 and 2012. Whitecap has increased its exit 2011 production guidance from 2,700 boe/d to 4,300 boe/d with the Acquisition.

INCREASED 2010 AND 2011 GUIDANCE

Whitecap's increased guidance for 2010 and 2011, after giving effect to the Acquisition and the Offering (assuming exercise of the over-allotment option in full) is as follows.

    
                                                      2010              2011
                                           ----------------------------------
    Average production (boe/d)                       1,800             3,600
    Exit production (boe/d)                          3,200             4,300
          % Oil & NGLs                                 63%               60%
    Cash Flow ($mm)                                   20.7              48.7
       Per share ($ basic)                            0.08              0.14
    Operating Netback ($/boe)                        36.50             40.00
    Net Capital Expenditures (excludes
     acquisitions) ($mm)                              34.8              42.0
    Wells Drilled (No.)                       21 (13.3 net)     31 (22.0 net)
    Year End Net Debt ($mm)                           40.3              33.6
    Oil Price (US$/WTI)                              81.00             82.00
    AECO Gas Price (C$/Mcf)                           4.55              4.75
    C$/US$                                            0.97              0.95
    

THE OFFERING

Whitecap has entered into a bought deal financing with the Underwriters for the Offering of 89,000,000 subscription receipts ("Subscription Receipts") of Whitecap at a price of $0.45 per Subscription Receipt (the "Offering Price"). Each Subscription Receipt will represent the right to acquire, without payment of additional consideration or further action, one common share ("Common Share") of Whitecap upon closing of the Acquisition.

The gross proceeds from the Offering will be placed in escrow pending closing of the Acquisition. If the Acquisition closes on or before September 30, 2010 the gross proceeds, together with interest earned thereon, will be released to the Company. Should the Acquisition fail to close by such date, the Offering Price for the Subscription Receipts will be returned to subscribers with interest thereon.

Completion of the Offering is subject to certain conditions including the receipt of all necessary regulatory approvals, including the approval of the TSX Venture Exchange. The Subscription Receipts will be offered in each of the provinces of Alberta, British Columbia, Saskatchewan, Manitoba and Ontario (and other jurisdictions in Canada as agreed by the Company and the Underwriters) by way of a short form prospectus. Closing of the Offering is expected to occur on or about July 30, 2010.

Whitecap has granted the Underwriters an option (the "Over-Allotment Option") to purchase an additional 11,000,000 Subscription Receipts exercisable at the Offering Price on the date of closing of the Offering and for a period of 30 days following the date of closing of the Offering for additional gross proceeds of up to $4.95 million.

STRUCTURE AND TIMING OF ACQUISITION

Whitecap, PrivateCo and all of the shareholders of PrivateCo have entered into a share purchase agreement (the "Share Purchase Agreement") pursuant to which Whitecap has agreed to acquire all of the issued and outstanding shares of PrivateCo for an aggregate purchase price of approximately $52 million which includes approximately $41.2 million payable in cash to the shareholders of PrivateCo and the assumption of approximately $10.8 million of total net liabilities, subject to certain adjustments.

The Share Purchase Agreement provides, among other things, for a mutual non-completion fee of $2 million in the event the Acquisition is not completed in certain circumstances, and that completion is subject to a number of conditions including the receipt of all regulatory approvals. The Acquisition is anticipated to close no later than August 9, 2010.

Note Regarding Forward Looking Statements and Other Advisories

This press release contains forward-looking statements and forward-looking information (collectively "forward looking information") within the meaning of applicable securities laws relating to the Company's plans and other aspects of the Company's anticipated future operations, management focus, strategies, financial and operating results and business opportunities. Forward-looking information typically use words such as "anticipate", "believe", "project", "expect", "goal", "plan", "intend" or similar words suggesting future outcomes, statements that actions, events or conditions "may", "would", "could" or "will" be taken or occur in the future. In particular, forward looking information in this press release includes, but is not limited to: statements with respect to the estimated purchase price of the Acquisition; statements with respect to the reservoir characteristics of the Acquired Assets; expectations regarding the tie-in of wells drilled or being drilled on the Acquired Assets, the timing thereof and the results therefrom; future drilling, development and re-completion plans of Whitecap and with respect to the Acquired Assets; expected operating costs and efficiencies; the anticipated growth and development potential of the Acquired Assets; expectations regarding future production volumes from the Acquired Assets; the effect of the Acquisition on Whitecap's production, reserves, recycle ratio, cash flow, operating netback, debt levels and net asset value; the expected closing date of the Offering and the Acquisition; the use of proceeds of the Offering; the sources of funding for the Acquisition; expected 2010 and 2011 exit and average production and product mix; expected 2010 and 2010 financial and operating results including cash flow, operating netback and year end debt levels; expected 2010 and 2011 drilling and capital expenditure program and the results therefrom; anticipated drilling credits and royalty rates; funding of Whitecap's capital expenditure program and expected commodity prices, exchange rates and industry conditions. In addition, statements relating to "reserves" or "resources" are deemed to be forward looking statements as they involve the implied assessment, based on certain estimates and assumptions, that the resources and reserves described can be profitably produced in the future. Readers are cautioned that the foregoing list of factors should not be construed as exhaustive.

The forward-looking information is based on certain key expectations and assumptions made by Whitecap, including expectations and assumptions concerning prevailing commodity prices, exchange rates, interest rates, applicable royalty rates and tax laws; future well production rates and estimates of operating costs; performance of existing and future wells; reserve and resource volumes; anticipated timing and results of capital expenditures; the success obtained in drilling new wells; the sufficiency of budgeted capital expenditures in carrying out planned activities; the timing, location and extent of future drilling operations; the state of the economy and the exploration and production business; results of operations; performance; business prospects and opportunities; the availability and cost of financing, labour and services; the impact of increasing competition; ability to market oil and natural gas successfully and the ability of the Company to access capital; the receipt of all necessary approvals for completion of the Acquisition and the Offering; and completion of the Acquisition and the Offering or the timing planned.

Although Whitecap believes that the expectations and assumptions on which such forward-looking information is based are reasonable, undue reliance should not be placed on the forward looking information because Whitecap can give no assurance that they will prove to be correct. Since forward-looking information addresses future events and conditions, by its very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, the risks associated with the oil and gas industry in general such as operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve and resource estimates; the uncertainty of estimates and projections relating to reserves, resources, production, costs and expenses; health, safety and environmental risks; commodity price and exchange rate fluctuations; marketing and transportation; loss of markets; environmental risks; competition; incorrect assessment of the value of acquisitions; failure to realize the anticipated benefits of acquisitions including the Acquisition; ability to access sufficient capital from internal and external sources; changes in legislation, including but not limited to tax laws, royalties and environmental regulations, actual production from the Acquired Assets may be greater or less than estimates; failure to obtain the necessary regulatory approval, stock exchange and other regulatory approvals and on the timelines planned; risks that conditions to closing of the Acquisition or the Offering are not satisfied.

Management has included the above summary of assumptions and risks related to forward-looking information provided in this press release in order to provide securityholders with a more complete perspective on the Company's future operations and such information may not be appropriate for other purposes.

Although Whitecap believes that the expectations represented in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. The Company's actual results, performance or achievement could differ materially from those expressed in, or implied by, the forward-looking information and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking information will transpire or occur, or if any of them do so, what benefits that the Company will derive there from. Readers are cautioned that the foregoing lists of factors are not exhaustive. These forward-looking statements are made as of the date of this press release and the Company disclaims any intent or obligation to update publicly any forward-looking information, whether as a result of new information, future events or results or otherwise, other than as required by applicable securities laws.

Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect the operations or financial results of Whitecap are included in reports on file with applicable securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com). The forward-looking information contained in this press release are made as of the date hereof and Whitecap undertakes no obligation to update publicly or revise any forward-looking information or statements, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

Note: "Boe" means barrel of oil equivalent on the basis of 6 mcf of natural gas to 1 bbl. Boe's may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf: 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

In this press release: (i) bbls/d means barrels per day; (ii) boe/d means boe per day; (iii) mboe means thousand boe; (iv) $mm means millions of dollars; (v) mcf means thousand cubic feet; and (vi) NGLs means natural gas liquids.

This News Release shall not constitute an offer to sell or the solicitation of an offer to buy any securities nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. The Subscription Receipts have not been and will not be registered under the United States Securities Act and may not be offered or sold in the United States except in transactions exempt from such registration.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

For further information: Whitecap Resources Inc., Grant Fagerheim, President & CEO, [phone], [phone] (FAX); or Whitecap Resources Inc., Thanh Kang, VP Finance and CFO, [phone], [phone] (FAX); or Whitecap Resources Inc., 500, 222 - 3 Avenue SW, Calgary, AB, T2P 0B4