Whitecap Provides Operational Update and Maintains Balance Sheet Strength in Lower Oil Price Environment

CALGARY, June 20, 2012 /CNW/ - Whitecap Resources Inc. ("Whitecap", "we", "us", "our" or the "Company") (TSX: WCP) is pleased to provide an operations update along with a revised outlook for 2012 based on a reduced capital program for the balance of the year. It is Whitecap's plan to remain conservative in its spending in the near term until a more stable commodity price environment is experienced.

OPERATIONAL UPDATE

With the integration of both Compass Petroleum Ltd. ("Compass") and Midway Energy Ltd. ("Midway") now complete, we continue to focus on operational and capital efficiencies in our portfolio of high netback oil assets. We are pleased to report that our drilling and completion results to date have met or exceeded our type curve expectations in all of our operated areas and our capital investments are providing sound economic returns. Our extensive drilling inventory in our light oil resource plays is validated and allows us flexibility to accelerate our drilling program with a more stable oil price outlook.

West Central Alberta - Garrington (Cardium Light Oil)

Whitecap closed the acquisition of Midway on April 20, 2012, and since then has drilled 5 wells. We have fracture stimulated 6 wells utilizing the foamed water frac system compared to the hydrocarbon system which was used previously. The foamed water frac system has allowed us to reduce completion costs by 36% from $1.1 million to $0.7 million bringing our total drilling and completion ("D&C") costs to $2.25 million from $2.7 million. Production results continue to meet or exceed our type curve and we have not seen a difference in productivity between the two completion methods. In addition to increased capital efficiencies we have reduced our average spud to on production time by 42% from 55 days to 32 days.

The integration of Midway's Cardium assets has been seamless as they are very similar technically and operationally to our existing Pembina Cardium assets. Moving forward we anticipate having one drilling rig working continuously on our Garrington assets for the balance of the year drilling 21 (17.9 net) wells in 2012.

West Central Saskatchewan (Viking Light Oil)

Since the closing of the Compass acquisition on February 10, 2012 we have operated the drilling of eight wells (only two wells post break-up due to wet conditions). In this short time frame we have implemented several operational and technical optimizations which have resulted in improvements to project economics. We have reduced our average D&C costs by 11% to $1.0 million from $1.12 million and at the same time increased average well productivity IP(30) by 55% to 59 boe/d from 38 boe/d. The increase in productivity can be partly attributed to our completion efficiency whereby we are now placing 98% of our fracs compared to 90% previously.

The Compass assets are now fully integrated into our existing operations and have performed at or above our average type curves. We anticipate having one drilling rig working continuously in west central Saskatchewan for the balance of the year and drilling 41 (34.8 net) wells in 2012.

West Central Alberta - Greater Pembina (Cardium Light Oil)

We are seeing continued success in our Pembina Cardium drilling program from both productivity and cost perspectives.  Our average well productivity IP(30) rates for our 2012 wells to date is 237 boe/d (90% oil and NGLs) which is 7% above our average type curve expectation of 222 boe/d. D&C costs continue to improve with average drilling costs of $1.3 million and completion costs of $0.8 million using our foam water frac system, approximately $100,000/well lower than in 2011.

We anticipate have one drilling rig working continuously on our Pembina assets for the balance of the year and drilling 29 (21.8 net) wells in 2012.

Peace River Arch (Valhalla)

We have now completed the first phase of the Valhalla waterflood expansion. Daily water injection has increased from 1,600 to 7,000 bbls of water per day and we have seen excellent waterflood response in this pool to date which will be further enhanced with injection into new areas of the Montney pool. We have commenced drilling the first of two horizontal wells in this area and the application for phase two of the waterflood will be submitted shortly.

After significant delays due to pipeline approvals and wet weather in the quarter, our two horizontal wells that were drilled in the first quarter, including our first middle Montney horizontal well, have been brought on production in Valhalla this week.

We anticipate drilling a total of 9 (6.3 net) wells in 2012.

2012 CAPITAL SPENDING UPDATE

We have experienced a dramatic drop in realized oil prices as a result of a 24% drop in WTI prices from March at US$106/bbl to the 2012 forward strip pricing at this time in the US$85/bbl range. In addition we have also experienced a widening of the Edmonton Par differential to WTI with a high of US$19.85/bbl in March and currently trading in the US$10/bbl to US$14/bbl range. The Edmonton Par price averaged C$95/bbl in the second half of 2011 compared to our current internal forecast of C$75/bbl, a 20% decrease.

In light of the significant decrease in our realized oil price and continuing volatility in the crude oil markets, we are proactively reducing our development capital program by $40 - $45 million, a 17% reduction.  This reduces our full year 2012 development capital program to $220 - $225 million from $265 million. Our second quarter development capital spending will be reduced by approximately $10 million, primarily due to wet weather with the remaining $30 - $35 million being reduced in the second half of 2012. We have revised our 2012 average production guidance down by 5% to 14,200 boe/d from our previous guidance of 15,000 boe/d and anticipate exiting the year in excess of 17,000 boe/d (> 70% oil and NGLs) from our previous guidance of 18,000 to 19,000 boe/d. Even with the reduction in our production estimates for 2012, our production growth per fully diluted share over 2011 is 37%.

The changes to our capital program consist mainly of the following:

• deferral of eight Cardium wells by now utilizing only two rigs continuously for the balance of the year in Garrington and Pembina, rather than four rigs previously contemplated;
• deferral of two Montney horizontal wells in Valhalla which will allow for additional time to evaluate the waterflood performance post expansion and to incorporate new data to optimize future expansions;
• deferral of three wells in southwest Saskatchewan to allow for an extensive analysis of the battery expansion performance (July 2012 installation) and the associated existing well optimizations.

The revised development capital spending for 2012 will enable us to effectively apply operational and reservoir findings and efficiencies to future programs in addition to allowing Whitecap to maintain a strong balance sheet with a fourth quarter annualized debt to cash flow ratio of less than 1.7 times, in the lower commodity price environment. We have the flexibility to accelerate our capital spending at any time as all of the necessary regulatory approvals are in place.

HEDGING UPDATE

Whitecap maintains an ongoing risk management program to reduce the volatility of revenues in order to fund capital expenditures and protect project economics as necessary. Our hedging policy allows us to hedge up to 65% of our average daily production in the preceding quarter, net of royalties. In the second half of 2012 we have hedged approximately 50% of our forecasted oil and NGL production, net of royalties, at an average WTI floor price of C$99.06/bbl and approximately 32% of our forecasted natural gas production, net of royalties, at an average AECO fixed price of $2.63/GJ. In 2013 we have hedged 1,745 bbls/d at an average WTI price of C$103.56/bbl and 7,500 GJ/d at an average AECO price of $2.98/GJ. We will continue to monitor the commodity price environment to layer on incremental risk management contracts over time.

SUMMARY

Our business plan is to continue to build a high quality light oil asset base while retaining a responsible level of debt and focusing on per share growth in production, reserves, cash flow and net asset value. We continue to analyze the potential of advancing to a sustainable dividend-growth strategy at the appropriate time and will report back as to our progress at a later date.

As our industry is experiencing extreme commodity price volatility at this time, we will continue to be disciplined with our capital allocation by investing in our high netback oil assets at a more measured pace and will retain the flexibility to increase our capital spending profile when the economic environment improves.

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 our anticipated future operations, management focus, strategies, financial, operating and production results and business opportunities. Forward-looking information typically uses 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, this press release contains forward-looking information relating to our ongoing business plan (including the review of a dividend policy), strategy and targets, industry conditions, commodity prices, capital spending, waterflood plans, production and cash flow, hedging strategies, drilling inventory or development and drilling plans and potential growth.

The forward-looking information is based on certain key expectations and assumptions made by our management, including expectations and assumptions concerning prevailing commodity prices, exchange rates, interest rates, applicable royalty rates and tax laws; future 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 efficiently integrate assets and employees acquired through acquisitions, ability to market oil and natural gas successfully and our ability to access capital.

Although we believe 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. Our 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 we will derive therefrom.  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 our future operations and such information may not be appropriate for other purposes.

Readers are cautioned that the foregoing lists of factors are not exhaustive.  Additional information on these and other factors that could affect our operations or financial results are included in reports on file with applicable securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com).

These forward-looking statements are made as of the date of this press release and we disclaim 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.

"Boe" means barrel of oil equivalent on the basis of 6 mcf of natural gas to 1 bbl of oil. 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 addition, given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6: 1, utilizing a conversion on a 6: 1 basis may be misleading as an indication of value.

Grant Fagerheim, President and CEO
or
Thanh Kang, VP Finance and CFO

Whitecap Resources Inc.
500, 222 - 3 Avenue SW
Calgary, AB T2P 0B4

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