Whitecap Resources Inc

TSX:WCP

Earnings Call Transcript 2022-Q1

[Operator]

Good morning. My name is Sylvie, and I will be your conference operator today. At this time, I would like to welcome everyone to Whitecap Resources' First Quarter 2022 Results Conference Call. [Operator Instructions]

And I would like to turn the conference over to Whitecap's President and CEO, Mr. Grant Fagerheim. You may begin, sir.

[Grant Fagerheim, executive]

Good morning, and thanks, Sylvie. And good morning to everyone, and thank you for joining us here today. Here with me are 4 members of our senior management team: our Senior Vice President and CFO, Thanh Kang; as well as Joel Armstrong, Senior Vice President of Production and Operations; Darin Dunlop, Senior Vice President, Engineering; and Dave Mombourquette, Senior Vice President of Business Development and Information Technology.

Before we get started, I would like to remind everybody that all statements made by the company during this call are subject to the same forward-looking disclaimer and advisory that we set forth in our news release issued earlier this morning.

The first quarter of 2002 (sic) [ 2022 ] has been an exceptional one for Whitecap. We advanced from integration of high-quality asset base we have consolidated over the past couple of years to a very successful operational execution on our assets, which have outperformed expectations as demonstrated by our first quarter results. Our total capital program of $392 million in the first quarter included $211.5 million of development capital, drilling 71 gross, 63.4 net, wells spread out each of our 4 core areas of operation. Our production of 132,691 boe per day was not only our highest as a company. Funds flow of $506 million or $0.80 per fully diluted share was also 45% higher than our previous record.

Increase in commodity prices through the quarter had an obvious impact on funds flow, and including our growth through accretive acquisitions over the past 18 months has enabled us to capture the commodity price upside. As a result, we are in an even more advantageous position to deliver significantly higher returns to shareholders over the remainder of the year and into 2023. We remain steadfast in our disciplined capital allocation strategy in each of our core areas and in continuing to improve the long-term profitability and sustainability of our company.

Our 2022 capital program has been designed to drill upwards of 200 wells and has been impacted marginally by supply chain, labor and logistical challenges. I must say that our team did an excellent job of mitigating these impacts during the first quarter, and we have the flexibility to move capital between assets and adjust scheduling over the back half of the year to ensure we continue to minimize these impacts and deploy capital to obtain the most efficient return as possible.

Moving over to the new energy part of our business. We have been asked frequently what the federal CCUS investment tax credit means for Whitecap overall. We feel this is a good move in the right direction and the level of refundable tax credits was positive and is a good start towards incentivizing larger-scale CCUS in both Alberta and Saskatchewan. As the operator of the world's largest anthropogenic carbon sequestration project, we believe that by excluding EOR as an eligible use for ITC, there will be a lost opportunity to accelerate decarbonization into the future. Including EOR increases the number of projects that are economic as the ITC alone will not be enough for all emitters to invest in carbon capture, and it also reduces the burden on tax payers. That said, we are excited to move forward with our Alberta and Saskatchewan hubs now that we have clarity on one of the federal incentive programs.

Lastly, I want to just touch on Board nomination that we announced today. We are pleased to have Chandra Henry stand for election to our Board of Directors at our AGM on May 18, which will be held virtually. She brings a wealth of experience to our Board, and we're looking forward to her contributions. With that, we also announced that Heather Culbert will not stand for reelection at next month's Annual General Meeting. She has been a valued member of our Board since 2017, and I would like to thank her for her contributions over that time.

I would now like to pass on to Joel to comment on our HSE programs that we are seeing today and inflationary pressures impacting our business. Joel?

[Joel Armstrong, executive]

Thanks, Grant. The first quarter was the busiest quarter in Whitecap's history with approximately 2.9 million person hours deployed, and it resulted in a low total recordable injury frequency of 0.27, which is consistent with our 2-year average. COVID-related protocols were lifted on Whitecap workplaces. In lockstep with the provincial phaseout of restrictions, we're proud to say that at no point during the pandemic that restrictions or positive cases result in work disruptions or severe outcomes.

We have approximately $34 million, or $18 million net, to Whitecap budgeted for ARO expenditures this year. The program is progressing well, and we're able to abandon 65 wells and received 19 reclamation certificates for the first quarter. As Grant discussed, we are seeing inflationary pressures and supply chain issues in the market today. Inflationary costs started to creep up in the first quarter capital program. However, we were able to mitigate our exposure by locking in key services for our winter drilling program.

Our first quarter capital expenditures of $211.5 million includes approximately $7 million of capital costs we did not anticipate in our original budget released last year in October. Moving forward to the back half of the year, we expect these issues to persist where we can not only use our size and scale to mitigate cost increases and delays, but we do not anticipate having -- but we do anticipate having to be flexible as we move forward with our capital program for the balance of the year.

Operating and transportation costs realized for the first quarter totaled $15.83 per boe, which is in line with our expectations and the prior year. However, as discussed, we continue to see inflationary pressure across our business and expect to see approximately 5% increase to our operating and transportation costs for the remainder of the year. The majority of those costs is coming from chemicals, labor and fuel.

I'll now pass on to Darin to highlight some of our operational achievements to date.

[Darin Dunlop, executive]

Thanks, Joel. There were many accomplishments across our asset base over the past 6 months, but I would like to focus on the recently acquired assets where results are coming in ahead of expectations relative to when we acquired the assets. There have been obvious wins on these recent deals with respect to commodity price increases since acquiring them. We are equally as excited to see the exceptional results from an asset performance perspective.

At Kakwa, our 3-well 14-13 Montney pad was tied into permanent facilities in the first quarter. This was the first pad at Kakwa that was entirely drilled and completed by Whitecap. So far, the wells have cleaned up and stabilized quicker than original expectations with the wells averaging over 1,800 boe per day for the first 90 days on production. This is more than 75% higher than our Tier 1 type curve expectation, which is projected at just over 1,000 boe a day for the first 90 days. Condensate rates over these 90 days averaged 530 barrels a day, which is also 9% above expectations. This pad is well on the way to paying out in under 6 months.

Not only have initial results exceeded expectations, but we believe our refined well spacing and completion design will result in improved type curves and economic returns across the condensate-rich asset base. A total of 9, 6 net, wells are expected to be brought on production at Kakwa in the second half of 2022, and we expect to exit the year at over 18,000 barrels a day in Kakwa.

Our Central Alberta business unit has been strengthened with the recent acquisition of TimberRock, the assumed operatorship of the Pembina Cardium Unit 11 and also recent operational success. The team was eager to get their hands on the consolidated asset base that resulted from the acquisition of TimberRock as they had identified significant enhancement opportunities because of the consolidation.

Firstly, it allows for effective use of extended reach horizontals to develop the glauconitic reservoirs, and our wells drilled in the first quarter are approximately double our type curve expectations. This validates the benefits of applying extended reach well designs as well as reservoir and completion performance exceeding our initial assessment of the acquired assets. These wells are expected to pay out in under 4 months.

Secondly, the team immediately executed facility optimizations and well reactivations, significantly increasing base production from the acquired assets into a very strong commodity price environment. These optimizations were made possible by the synergies created via the merging of the TimberRock and Whitecap infrastructure.

For PCU 11, we are excited to assume operatorship and have an agreed-upon development program for the unit. The asset has been underdeveloped since it was acquired in 2014. Now that ownership and operatorship are simplified and clarified, our optimized development plans, which have been trialed and validated in offsetting reservoirs, are expected to drive improved reserve recoveries and economics as we operate this asset going forward.

In Southeast Saskatchewan, operational performance on assets consolidated over the past 18 months continue to exceed initial expectations. Our 18 conventional Frobisher horizontal oil wells drilled over the winter program have exceeded expectations by 45% on average, and we are forecasting these wells to pay out in less than 5 months. We have 258 net locations of similar quality to what was drilled in our winter program remaining. This represents 6 years of high-quality inventory at the current pace of development. When you include our total conventional inventory in Southeast Saskatchewan, we have over 10 years of inventory, all of it with less than 1 year payout at strip pricing.

I will now pass it on to Thanh to comment on our financial results.

[Thanh Kang, executive]

Thanks, Darin. First quarter for Whitecap with high commodity prices and continued tight differentials. WTI averaged $94 a barrel, and AECO averaged $4.74 per GJ. The MSW and WCS differential were $3 a barrel and $14.50 a barrel, respectively. And the Canadian dollar continues to be range bound, trading at $0.79.

Funds flow for the quarter was $506 million, which was almost 50% of our funds flow for all of 2021. Profitability was also up as our profit margins increased to 50% from 45% in Q4 of '21. Funds flow per share at $0.80 was up over 120% compared to the prior year and over 45% compared to the prior quarter as we realized the benefits of higher commodity prices and our acquisition strategy that started in 2020. Free funds flow was $294 million, of which $47 million was allocated to the dividend, $180 million spent on the TimberRock acquisition, $5.5 million on the cash settlement of share awards and the balance toward debt repayment.

Our net debt at the end of the quarter was $1.1 billion, of which $395 million was low fixed term debt with maturities in May 2024 and December 2026. We ended the quarter in a very strong financial position with debt to EBITDA at 0.7x and over $900 million of liquidity on our credit facility. Based on current strip prices, we anticipate reaching our net debt target of $800 million by the end of the second quarter. And at the time, our forecasted debt-to-EBITDA ratio would be less than 1x at a stress-tested level of $50 WTI. Also in the quarter, Whitecap recorded a noncash impairment reversal of $630 million due to increases in forward benchmark commodity prices compared to December 31, 2021.

I'll now pass it back to Grant for his closing remarks.

[Grant Fagerheim, executive]

Thanks, Thanh. We continue to be disciplined in our capital allocation strategy, as I referenced earlier, focusing on achieving our objective of returning capital to shareholders and improving the long-term profitability and sustainability of the business. With the increase in commodity prices, we now anticipate generating funds flow of $2.2 billion at our forecast price deck of $95 WTI oil and CAD 5.50 gas for the remainder of the year. This is up from our funds flow forecast of $1.8 billion at the end of February when we reported our fourth quarter results.

Discretionary funds flow is now $1.4 billion after capital and dividends, and we are targeting 50% of that returned to shareholders. To date, we've returned approximately $300 million with the share repurchases and dividend increases. For the remainder of the year, once we achieve our targeted debt of $800 million, which is expected by the end of the second quarter, we will have the opportunity to reassess the dividend at that time.

We are excited about the outlook for Whitecap with very strong oil and natural gas prices, a tight differential market and a weak Canadian dollar. This in combination, along with exceptional operational execution from our team, will result in increasing returns to our shareholders for the remainder of 2022 and beyond. This is the time for Canadian energy to shine, and our strategy is to take full advantage of this on behalf of our current and future shareholders.

With that, I will turn the call over to the operator for questions.

[Operator]

[Operator Instructions] And your first question will be from Patrick O'Rourke at ATB Markets.

[Patrick O'Rourke, analyst]

Just wanted to touch on sort of the return of capital strategy once you hit the $800 million debt target here. I know that you just mentioned looking at the core dividend -- or base dividends here. But beyond that and thinking about how you manage that to be durable to the downside and, say, a weakening price scenario, how do you think about sort of variable cash flows and how you plan to allocate those going forward? Does that $800 million become $400 million? Or is that sort of the long-term level that you want to stay at in terms of nominal debt?

[Thanh Kang, executive]

Patrick, it's Thanh here. Yes, I think there's going to be pockets of time where we could be slightly above or slightly below the long-term target of $800 million. But I think that's a good number for us because we [ sensitize ] everything down to between $45 to $50 WTI. And at that level of debt, especially considering the currently low interest rate environment here, that would result in 1x debt to cash flow at $45 WTI. So it really gives us an ability to manage our business effectively, gives us more options to return more capital back to our shareholders.

From a return of capital perspective, I mean, this year, we've committed to returning 50% of our discretionary funds flow back to our shareholders. So it is important for us to reach that level of debt, and we think we can achieve that by the end of the second quarter here. And at that time, we can reassess the -- our current level of dividend as well as potentially being more aggressive from a share buyback perspective.

[Patrick O'Rourke, analyst]

Okay. So do you think you could get to a scenario where, for example, you could execute on a full 10% NCIB and potentially go beyond that with substantial issuer bid?

[Thanh Kang, executive]

Yes, if you look at our forecast now, we'll be $800 million by the end of the year. Even after returning 50% of our discretionary to our shareholders, we're going to be about $500 million of debt at the end of this year here, which is about 0.2x debt to cash flow. So really strong balance sheet on total debt capacity of $2 billion. So $1.5 billion of liquidity gives us an ability to really weather any type of storm that comes at us, and we know we're all in a volatile and cyclical industry here. So as we think forward in 2023, we haven't come up with our allocation strategy yet, but it's going to be somewhere between what we're doing this year, which is a 50%-50% allocation, or 100% of our discretionary back to our shareholders. And so it provides us with a lot of optionality by having a strong balance sheet, which we expect to achieve by the end of the second quarter here, as I mentioned.

[Patrick O'Rourke, analyst]

Okay. And then second question, maybe more so on the asset side of the equation here. Just looking at some pretty impressive results in the Montney, about 75% above type curve. Wondering how these wells are sort of ranking within the portfolio, especially in a strong gas price environment, and how you would be thinking about like do these assets gain some incremental capital, how that plays into managing both the decline and the liquids mix going forward.

[Darin Dunlop, executive]

Yes, it's Darin Dunlop here. Yes, those results do improve our -- where these inventory locations sit within our portfolio. They're definitely top quartile, if not top decile, at those rates and the current commodity prices. And we are constantly rebalancing our capital program. At this point in time, we're not -- Grant mentioned that we're not looking to increase at this point in time, but we are always rebalancing our capital program to get the most efficiency and most economic returns for the shareholders. So yes, there is definitely the possibility to increase our spending in that area.

[Operator]

Next question will be from Luke Davis at RBC.

[Luke Davis, analyst]

I just had a question regarding inflation. Grant, you kind of hit it in your opening remarks and maybe you can expand on that a little bit. Just wondering how we should think about the second half capital program, whether you see an increase there is kind of imminent. Or can you continue to sort of squeeze further efficiencies out at this point?

[Joel Armstrong, executive]

Luke, it's Joel here. Yes, it definitely has an impact for the back half of our program. So on the remaining capital of about $310 million, we're looking at potential inflation in the range of 10% to 15%. We're doing everything we can to mitigate that through strong vendor relationships, key service providers and suppliers and reducing, in some cases, suppliers in certain areas to leverage our scale and improve service and efficiency and just overall optimization of our drilling and completion designs. But overall, we're estimating 10% to 15% impact.

[Luke Davis, analyst]

That's helpful. Another one for me. I'm just curious, given where pricing is currently sitting and just how quickly wells are paying out, how good the economics look, how are you thinking about capital allocation just between incremental drilling and return of capital initiatives? Is there any desire to put incremental growth capital into the ground at this point?

[Grant Fagerheim, executive]

Sure, Luke. It's Grant. So just in 2021, for example, we grew on a per share basis by 11%. And this year, we're expecting to grow by 12% production per share relative to our base -- initial target of 3% to 5% growth. So we're happy with the growth rate so far this year. Similar to last year, we do have the option of accelerating our winter drilling program to mobilize equipment and crews prior to January 2023 to ensure we continue to have access to top-tier equipment and labor for a larger portion of our capital program that takes place in the first quarter. This will also have the added benefit of mitigating the inflationary pressures that we are currently experiencing. We have not made a decision on this at this point in time. And our full year capital guidance of $510 million to $530 million remain unchanged, subject to further review, as we're going through, which includes the supply chain logistics as well as the inflationary costs. So at this time, we're just saying $510 million to $530 million capital program at this time.

[Luke Davis, analyst]

Okay. Got it. Final one for me. Just on M&A. Just curious to get your thoughts on what you're seeing in the market currently [indiscernible] spread sitting. What are you using in terms of pricing to evaluate yields versus where sellers might be at? And can you really get deals done accretively here? Or is that kind of just something that's sitting on the back burner for now?

[Grant Fagerheim, executive]

Yes, Luke, just -- our business development team under Dave Mombourquette's guidance, they are always assessing assets on a go-forward basis. As a matter, they continue to come forward with ideas for us to strengthen our profitability and long-term sustainability. Where the market is today from our estimate is crossing the bridge between buyer and seller expectations. We certainly wouldn't be using the current price strip on any acquisitions that we'd be considering. We would not be using those at this time. But we would look to a normalized pricing environment, which obviously is -- has come up a long way in the last 6 to 12 months. But from a pricing perspective, we wouldn't be using the forward strip today in gas or oil. We'd be looking at something over, well, call it, normalized 3-year basis from a pricing perspective.

So whether deals get done or not in this environment is going to be dependent upon cash availability. From our perspective, that's -- we check the box there. We have plenty of cash available. Whether or not entities want to capture -- sellers want to capture today's price, if that's the case, then we wouldn't be in the market for today's price. But -- and then there's the other possibility of would sellers want equity. Our preference is always to perform with cash, and that's part of the reason why we'll continue to focus on our disciplined balance sheet approach.

[Operator]

Next question will be from Travis Wood at National Bank.

[Travis Wood, analyst]

So if you answered this, you can just give me the quick elevator answer. But you made some comments around inflation, no change to capital for the year, reiterated guidance. Can you give us -- kind of unpack that a little bit more in terms of where you're seeing the pressures and maybe also if you see any on the OpEx side?

[Joel Armstrong, executive]

Travis, it's Joel. Yes, we did touch on that. But overall, on the capital for the back half of the year, we're estimating 10% to 15%. Obviously, through drilling completions and equipment [ and time, it ] has impacted all 3 of those categories. On the OpEx, from what was budgeted last October, overall, about 7%. But going forward from today, about additional 5%. So we've already built in some of the inflation in the first part of the year here.

[Travis Wood, analyst]

Okay. And then just on the OpEx side, is that starting to show up in chemicals and kind of operating line items? Or do you think it's going to be on the [ CapEx side notably ]?

[Joel Armstrong, executive]

Yes. Look, I'd say the top 3: chemicals, labor and fuel.

[Operator]

Next question will be from Brian Zinchuk at Pipeline Online.

[Brian Zinchuk]

So I wanted to ask some clarification on the carbon dioxide import tax credit, which you've been talking about quite a bit. But it doesn't [ appear as going to cover ] EOR. So can you clarify, will your projects, specifically, one in Saskatchewan, will they see any benefits from this new program either for yourself or for FCL or your other partners?

[Grant Fagerheim, executive]

Certainly, there's an added benefit with the ITC market now that it's clarified. So the economics now at least we know from what was brought forward on the ITC market federally. As far as our proposed Saskatchewan Carbon Hub project, we will now be able to dig in, and there is going to be an advantage to Saskatchewanites as well as Albertans with this. It isn't going to be in the same extent that we believed it could have been, but we'll work within the guidelines that have been provided to us at this time. So projects will proceed. There will be fewer projects to proceed, I think, as a result because there's -- the economics are marginal. But this is where now it's over to us to work closely with the province of Saskatchewan as well as the province of Alberta on what type of incentives can be put in place by the provincial governments on top of what the federal governments have put out to this point in time.

So it is -- there's clarity now on this, and that's the positive component of it. We were obviously been hoping for the ability to -- for quicker decarbonization. That wasn't the case when they excluded enhanced oil recovery projects in the ITC market. But we -- now we know we can work with the facts that are out there today.

[Brian Zinchuk]

I also wanted to ask you regarding the war in Ukraine, and we're not hearing much of this in these quarterly calls yet. There's been calls from Europe and the Canadian government to expand oil production as well as gas production to basically displace Russian productions to get Europe off of basically what they're calling blood oil. What's Canada's place in that, and what is Whitecap's place in that? I mean you're trying to grow production somewhat. But do you feel an impetus to address the Ukrainian situation at all?

[Grant Fagerheim, executive]

Brian, that is, I think, for Canadians to know that all producers in Western Canada are sympathetic to what has taken place in the Ukraine. As far as Western Canadian production, our infrastructure is built west and south. Our infrastructure is not built to Eastern Canada to get to Europe. It is built to -- mainly directed in Asia and the U.S. So it's challenging. I mean we'll -- we're going to do -- we have been asked. The sector has been asked to do all that we can do to bring on more production at this time. It seems kind of funny that it took a type of an invasion to get the federal government to want us to increase production. But I mean, that's where we're at, at this particular time, but it is challenging. It is challenging, too, in Canada. We still have areas in Canada that don't want pipelines. And if we don't want pipelines, it's difficult to get production to their regions and off to the, what we call, off to Europe. So lots to be unfolded here yet. But at this point in time, we have to understand that we're built to the west, and we're built to the south at this time.

[Brian Zinchuk]

Do you think crude by rail could be used in the interim?

[Grant Fagerheim, executive]

I think all sources will be used: truck, rail. I think everything is going to be used, if possible. There's lots of different thoughts around -- but these are going to be -- these will take time. These projects are going to take time and [ have ] boatloads of capital to take place. So new infrastructure, we need policy framework, regulatory framework in place. There's going to be lots -- and we can't displace. Remember, we've got food challenges that we have to move on train as well. So -- across our country. So there's lots to -- like I said, there's lots to unfold here. But rail -- we'll use every possible [ modem ] that we possibly can to assist where it's possible.

[Operator]

[Operator Instructions] And your next question will be from Cameron Price at Haywood.

[Cameron Price, analyst]

Sorry. I think my question was actually already answered and I withdrew, but it didn't withdraw. But congrats on the quarter and look forward to seeing the rest of the year.

[Operator]

Next question will be from Josef Schachter at Schachter Research.

[Josef Schachter, analyst]

Congratulations on the great quarter, and I think $172 million net loss on commodity contracts and still performing as well as you did is quite spectacular. My question is about the Kakwa area and Kicking Horse. You talked about that fabulous pad and the results being 70% better than expected. How many locations do you have in Kicking Horse? And also, have you taken a different methodology of drilling and completing these wells than the predecessor company? And is that why you're getting such much better results? Maybe you can shed some light -- some color on why these results are just so much more impressive than what your type curve was.

[Darin Dunlop, executive]

Yes, Josef, it's Darin here. I don't have the exact number of locations on the Kicking Horse assets in front of me right now, but it is significant. We're talking in the 300 to 400 locations in that area. So right now with our plans, that's -- obviously, with those results, we will be looking at opportunities to accelerate development in that area. And I'll pass it on to Joel here to comment on the completion side.

[Joel Armstrong, executive]

Yes. I think your question relating to drilling completions, the answer is there's continual refinement, Josef, but really on managing the amount of -- the spacing on our clusters, the amount of stages and that overall tonnage and well placement from [ parent-child effects ]. So that's constantly being refined right up to the point where we're actually pumping and executing the fracs and making real-time decisions. So very, very fluid analysis there.

[Josef Schachter, analyst]

Okay. Now if you want to accelerate the program, is there enough infrastructure in the area? I gather it's been tightening up and [ routing ] is an issue in some places of the Montney?

[Joel Armstrong, executive]

Yes. So we currently have options to deliver in the 3 plants, 2 Pembina plants and a [ terminal-linked ] plant, all have additional capacity. So certainly nothing immediately to concern, and we're talking about future development of additional infrastructure down the road. So we're in good shape here for a while.

[Operator]

Next question is from Dennis Fong at CIBC.

[Dennis Fong, analyst]

Just a quick one for me, just from the opening comments as well as even just the last component around available processing capacity. If you're seeing payout periods within a 4-month period of time, how should we be thinking about -- or how are you guys thinking about the cash flow recycle and the ability to kind of accelerate kind of the economics and the ability to kind of recycle that cash flow either to return incremental cash to shareholders or to kind of reinvest in the business? Just was curious as to the balance and how you guys are thinking about that.

[Grant Fagerheim, executive]

Yes. Thanks, Dennis. Just -- yes, you're right. The payouts are remarkable, and this -- what we want to do is make sure that we're getting very strong return on capital employed. What we want to ensure, and this is where we're going through a lot of refinement with our teams, is when we're spending capital and when we deploy the capital, we want to ensure that we have not only -- as Joel had mentioned, we want to have the services set up in advance, but also the infrastructure and capacity to have immediate production into the future. So -- immediate production and cash flow into the future.

So if we can do that without making sure that we -- in our opinion, what we like to watch is our decline rate as well. We don't want to drive our [ per ] decline rate too aggressively. But we will look at how much capital in each one of our areas. Do we have the, let's call it, the processing capacity and infrastructure to reach market immediately as quick as possible to ensure that those payouts of 4 to 6 months remain intact? And then the second component after that is looking at this return of capital portion, how much of that should be returned to shareholders today or into the future with the commodity price that we're laying out.

So -- and I think that catching everyone off guard is how aggressively commodity prices have moved, both on oil, natural gas. We've seen the Canadian dollar actually weakening as we [ move through time ], so disconnecting from where it had historically been with the petrol dollar. So I think that all that gives us an opportunity to, right now through breakup comes at a good time, to digest and understand where -- how much capital we should be putting in. That's why we elected to stay with our existing program of $510 million to $530 million today and focus on returns but -- and return of capital back to our shareholders.

[Thanh Kang, executive]

I would just add to that, Dennis, that we've committed to returning 50% of discretionary back to our shareholders. So as that cash recycle comes back quicker to us, then it's more returns that we can provide to our shareholders, whether in the form of dividends or share buybacks. I mean, to date here, we've already returned $300 million. And on our deck here, we have in excess of another $400 million that is going to be returned back to our shareholders. And so as commodity prices improve, as Grant mentioned there, we see that continuing to build as we progress through the balance of the year here.

[Operator]

And at this time, gentlemen, we have no other questions. Please proceed.

[Grant Fagerheim, executive]

Well, thank you, Sylvie, and thank you, everyone, on the line. I wanted to provide a special thank you to our employees for your continued dedication and efforts, and our Board of Directors for your ongoing support and guidance, and to everyone on the call for your interest in Whitecap. Wishing you all a very enjoyable spring, enjoy the high commodity prices, the sunny weather. Sincere thanks to everyone. Have a good day.

[Operator]

Thank you, sir. Ladies and gentlemen, this does indeed conclude the conference call for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your lines.