Whitecap Resources Inc. has signed a carbon dioxide supply contract extension with SaskPower for volumes delivered to the Weyburn CO2 Unit Enhanced Oil Recovery Project.
The agreement for the purchase of carbon dioxide that is captured at the Boundary Dam Unit 3 power plant in Estevan, Saskatchewan runs until Dec. 31, 2034, Whitecap said in a recent news release.
The Weyburn project currently produces approximately 15,000 net barrels of oil equivalent per day (boepd) of American Petroleum Institute (API) 30 grade Whitecap crude oil and generates an annual operating netback of more than $200 million at $75 per barrel West Texas Intermediate (WTI). ), said Whitecap. By the end of 2023, Whitecap expects the asset to have generated more than $800 million of cumulative operating free cash flow to the company, according to the statement.
To date, the Weyburn asset has recovered more than 500 million barrels of oil, and Whitecap’s year-end 2022 independent reserve assessment indicates that the asset is expected to continue producing for the next 50 years and recover a total of more than 700 million barrels of oil. By using carbon dioxide to enhance the recovery factor of the Weyburn oil pool, the company said it is “minimizing the surface impact required to replace production declines for a product that continues to experience increased of global demand”.
The Weyburn project has safely sequestered more than 40 million metric tons of carbon dioxide since 2000, according to the release. The company’s internal modeling suggests that the final carbon dioxide storage capacity of the partially depleted oil reservoir is 115 million metric tons, and at the current injection rate of approximately two million metric tons per year, provides more than 35 years more of carbon dioxide injection capacity. Whitecap said.
According to the company’s website, the Weyburn property is the “world’s largest carbon capture, utilization and storage project.” Whitecap has a 65.3 percent operating interest in the Weyburn unit, which produces primarily light oil.
Dividend increase
Meanwhile, Whitecap announced a 26 percent increase in its monthly dividend to $0.0608 per share, effective with the October 2023 dividend, payable in November 2023, as it expected to meet its debt target net of $1.3 billion on or before September 30. Since September 2022, the company said it has reduced its net debt by approximately $900 million and returned more than $400 million to shareholders through dividends and share buybacks.
Whitecap noted that the company is “in a very healthy position with our strong balance sheet and balanced portfolio of high-quality drilling opportunities.” The company’s East division, producing approximately 90,000 boepd, generates significant operating free cash flow through its low-low, high-netback assets, while its West division, which produces approximately 70,000 boepd and includes the Montney and Duvernay assets, provides the company with a large resource base, significant reserves and inventory for decades of sustainable growth per share, according to the statement.
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