I would now like to turn it over to Whitecap's President and CEO, Mr. Grant Fagerheim. You may begin, sir.
Thanks very much, Shelby. Good morning, everyone, and thank you for joining us. There are four members of our management team here with me today. Our Senior Vice President and CFO, Thanh Kang, our Senior Vice President of Business Development and Information Technology, Steve Mobassef, our Vice President of our West Division, Judd Wing, and our Vice President of our East Division, Chris Baldwin. Before we get started today, I would like to remind everybody that the statements made by the company today during this call are subject to the same forward-looking disclaimer and advisory that we set forth in our news release this very afternoon.
I am pleased to report that we had a very successful second quarter with record quarterly production averaging over 177,000 BOE/d , especially when compared to our forecast of 170,500 BOE/d . This generated $ 426 million of funds flow and $ 23 million of free funds flow. These results are directly attributed to the exceptional work of our assessment technical teams. Our year-to-date, operationally and asset performance-wise, has been exceptional, resulting in production outperformance across our entire portfolio. In particular, our Southeast Saskatchewan Frobisher assets, our Central Alberta Cardium and Glauconite assets, as well as our unconventional Montney and Duvernay assets, all outperformed our internal expectations.
Since acquiring XTO assets in August 2022, we have taken meaningful steps to develop our Montney and Duvernay assets, which have underpinned our strong operational performance in our unconventional assets. To date, we have designed and executed a development plan across both our Montney and Duvernay assets, providing confidence to the market in the deliverability of our asset base and our operational execution. Designed, constructed, and brought on our Musreau battery on time and under budget. Developed a long-range plan, showcasing meaningful growth and de-risked tapped inventory within our Montney and Duvernay assets, and in particular, our next stage of Montney growth and development in our Latornell area of Alberta. Subsequent to the end of the second quarter, we also announced a positive FID on our phase one redeveloped Latornell facility that is fully funded by PGI.
This, in addition to the partial working interest disposition of our Musreau and Kaybob facilities to strong partners, Topaz and PGI, for total proceeds of $ 520 million. Through our extensive scale and depth of our high-quality inventory, we've been able to secure additional pipeline and facility access, enhanced contract terms and highly competitive fees on our processing, transportation, fractionation, and marketing for all areas of our Montney and Duvernay, Duvernay development. These synergies will enhance our future netbacks and reduce the overall financial impact of infrastructure working into disposition. We are very excited to move ahead with these partners and look forward to continued progression of our unconventional Montney and Duvernay development. I will now pass the phone on to Thanh to discuss our second quarter financial results. Thanh?
Thanks, Grant. Our second quarter financial results were equally as strong as our operational results, generating fund flow of $ 426 million, or $ 0.71 per share, and free fund flow of $ 223 million, or $ 0.37 per share. Our predominantly light oil and condensate production base benefited from crude oil prices averaging over $ 110 per barrel on a Canadian dollar basis, with total liquids representing 95% of our revenue for the quarter. Our operating costs decreased to $ 13.49 per BOE in the second quarter, a strong result for our team and reflects higher production and continued focus on cost savings. Cash tax expense of $ 100 million in the quarter included $ 33 million, or $ 0.05 per share, impact on capital gains from the partial infrastructure disposition.
Excluding this one-time impact, the tax rate as a percentage of pre-tax fund flow for the six months ended was 12%, which is consistent with our forecast of between 12%-14% for 2024. Year to date, we have returned almost $ 250 million to shareholders, including $ 25 million of share repurchases in July. We plan to use $ 200 million of the proceeds from the partial infrastructure dispositions towards share repurchases in the second half of the year. Pro forma the dispositions, our net debt sits at below $ 900 million, and after share repurchases, we forecast net debt of below $ 1 billion at year-end. This low level of debt relative to our projected $ 1.7 billion in fund flow provides us with capital allocation optionality going forward. I will now pass it off to Judd for remarks on our West Division results.
Thanks, Than. Our Montney and Duvernay assets continue to perform well, with updated data showing that our recent wells are outperforming on both an initial and longer-term basis. As we progress development of this asset base, incremental data is analyzed by our team and informs production strategies and forecasting models for existing wells, while also helping to shape development and acquisitions for our plan going forward. As we highlighted in our Investor Day in early June, our approach to customized pad design, completion parameters, and development plans have yielded positive results across our Montney and Duvernay assets at Kakwa, Latornell, and Kaybob. Our recent results on our first eight wells at Musreau are another data point that validates this approach. Over the first 90 days, the eight wells have averaged 1,600 BOEs a day per well, with almost 1,100 barrels per day of condensate per well.
At times, we were producing at over 80% of our condensate stabilization capacity of our new facility, and after bringing on our third well pad in late Q3. We expect to be producing consistently at full condensate capacity of almost 11,000 barrels per day. The economics of these first eight wells are very robust and are projected to pay out in only five months. In total, we plan to bring on 15 Montney and Duvernay wells in the second half of the year, after bringing on our latest Duvernay three well pad at 11-34 B in the second quarter. Although we would define each area as drilling liquids-rich natural gas wells, the liquids, and more specifically, the condensate volumes, drive the economics of each area.
Running sensitivities on our two well Duvernay plus Kakwa, Latornell, and Montney type curves, we can run $0 natural gas prices for the first four months of production and still achieve average payout in less than one year across the four areas. This is why it makes sense for us to adhere to our schedule and continue to bring wells on production, despite the challenging natural gas environment at this time. I'll now pass it on to Chris for his comments on the East Division.
Thanks, Judd. As you've heard, consistently strong results are the theme so far, and the East Division results are no exception. Momentum carried through from our first quarter drilling program, and we are very pleased with what our assets and teams were able to accomplish in the second quarter. We brought on a total of 26.4 net wells during the second quarter, 14 of which carried over from the first quarter and 12 were spud in the second quarter. Outperformance relative to our expectations has come from both the new 2024 wells and higher than forecasted base production levels. In Southeast Saskatchewan, our 2024 Frobisher results have been exceptionally strong, with expectations for these wells to pay out in less than six months.
Highlighting the attractiveness of these assets is that not only in the initial payout, very quick, we actually forecast these wells to pay out our capital investment three times in the first three years. This is truly a top-tier asset, and we are very pleased with the land position we have built in only three years since entering the play through the TORC acquisition in early 2021. Moving west to our Viking assets in West Central Saskatchewan, where the initial results on recently acquired land in the Elrose area are meeting our expectations and are above historical results for the area. We continue to advance enhancement opportunities, so we have just bought our first 1.5 mile ERH in the Elrose area. The ability to drill ERH wells into the newly consolidated land position will improve capital efficiencies and enhance our future inventory.
In Alberta, we have achieved strong production results from our recent Glauconite drilling program, as our first six wells online continue to significantly outperform expectations. A combination of flowing unrestricted through alternative infrastructure, along with attractive subsurface qualities, despite being a challenging area to drill, has initial liquids production outperforming our expected rates by 40% over the first 90 days on production. I also want to take a moment to highlight a recent operational enhancement initiative in our Central Alberta Cardium program. We recently drilled a four well pad in West Pembina and successfully implemented an updated frack design, which increased our daily sand placement by 25%-50% compared to previous, resulting in 6% total cost savings on completions relative to budget expectations. We are actively investigating the applicability of this new frack design across our conventional asset base.
Our recent West Pembina results have been very strong, and these well cost savings are improving the already robust economics of our light oil Cardium assets. Although some of our East Division plays don't receive the same notoriety as our unconventional assets, our teams continue to do an excellent job of improving the long-term sustainability and profitability of the assets, thereby further strengthening our corporate free cash flow. With that, I'll turn it back over to Grant for his closing remarks.
Thanks, Chris, Judd, and Sean, for your remarks. As you've heard, the first six months of the year have been very strong for Whitecap, and we look forward to building off this momentum in the second half of the year. We have not changed our production guidance of 167,000 to 172,000 barrels per day , and given the success to date, we expect to come in close to the higher end of the range, if not higher. As we advance through the remainder of the year, we expect our price realizations to remain very robust, given our exposure to light oil as well as our a strong US dollar. Although commodity price volatility is expected to continue. We are in an advantageous position financially with low net debt. Our low decline rate further supports long-term sustainability and profitability across our commodity cycles.
The outlook for Whitecap continues to be positive, and we are looking forward to the second half of this year as we develop and grow our assets into 2025 and beyond. With that, I'll now turn the call over to the operator, Sylvia, for any questions.
Thank you, sir. Ladies and gentlemen, as stated, if you do have questions, please press star followed by one on your touchtone phone. You will then hear a three tone prompt acknowledging your request, and should you wish to withdraw your question, simply press star followed by two. We do ask that if you're using a speakerphone, to please lift your handset before pressing any keys. Please go ahead and press star one now if you do have any questions. And your first question will be from Dennis Fong at CIBC . Please go ahead.
Hi, good morning. Congrats on the second quarter results, as well as the strong well performance. I've got a couple questions here. The first one kind of goes back to the well performance and the multi-stage development. I was actually hoping to get a little bit more clarity or understanding around what you view would be or what results you're frankly looking for to help you confirm both your development strategy and then secondarily, feel more comfortable rolling out a kind of an improved type curve throughout both guidance and kind of your five-year plan that you outlined yesterday?
[inaudible]. First question in terms of what we're looking for on results, and of course, the results themselves on a production basis, we put in our release there that at 1,500 barrels per day or so that's slightly above our reference anchor. So the short answer on what we're seeing on results is that they're a slight beat to our expectations, which is good. What we're also looking for, which won't be quite as visible on the production, is interaction between wells, be it on a short-term or long-term basis.
And I think we had talked about that a little bit in the last call there, is that what we're looking at is do we see the wells interacting with each other, whether that be on initial completion, whether that be kind of in the short-term production period, or whether that be in the long-term production period. In the short-term production period and the interaction on frac, what we're seeing is actually some, some really, really encouraging results that the wells are just barely seeing interaction from each other, which is kind of what we want to see.
As we move to the balance of our asset base, what we're going to do is look at how the rock changes, look at how the ratios change and tailor our development plan from there. But that's a long-winded way of saying, we're liking what we're seeing, and it's reaffirming the plans we've got right now.
Great. I appreciate that context. The second question I have, and it might be a little bit early for this, obviously, just given it's still kind of mid to late summer, and you guys are probably just starting your capital budget planning. How should we be thinking about the CapEx cadence going into 2025, especially with the now, we'll call it accelerated, quote unquote, "development" of Latornell, with that recently signed infrastructure deal? Thanks.
To answer that question, and if it's, it's Thanh here. I think as we look at, you know, production and capital spending for the balance of the year here, you know, Q3 will be higher than in Q4, but expect to be within the range there, you know, somewhere in that $ 1 billion-$ 1.1 billion for 2024. Thinking about 2025, and certainly this wouldn't be budget quality at this particular time here, but I would use 5% growth, which gets us to about 180,000 BOE/d Capital plans, despite kind of the acceleration of Latornell with the PGI funding there on the facility, I would still expect to see between $ 1.1 billion and $ 1.2 billion for 2025.
Great. I appreciate that context. I'll turn it back.
Thank you. As a reminder, ladies and gentlemen, if you do have any questions, please press star followed by one on your touchtone phone. Next question is from Aaron Bilkoski at TD Cowen. Please go ahead.
Thanks. So I guess I'll start with asking the prequel question to one of Dennis's questions. I'm curious about the cadence of the new Montney and Duvernay tie-in to the back half of this year. I guess the second part of that is, how are you thinking about the shape of the production profile through year-end?
Thanks for that, Aaron. You know, when we look at our Montney and Duvernay productions, you know, it is chunky in terms of production adds throughout the balance of the year here. Again, when we look at it on an average for the full-year basis, you know, as Grant mentioned there, we're very comfortable that we'll be at closer to the high end of the production guidance, closer to the 171,000-172,000 BOEs per day. When we look at the third quarter, with respect to the unconventional, there really isn't any wells that we're expecting to come online until August 25 at the earliest there. So, you know, a lot of the production adds will certainly come in in the fourth quarter.
So again, expect that, you know, we'll be at the top end of our guidance range there between 167,000-172,000 BOEs per day.
Maybe a follow-up question to that. Given the lumpiness of the production additions, is there any way to maybe feather wells in over time to avoid relatively lumpy quarters, or is that just operationally not particularly feasible?
You know what? That's a good question. You know, it's something that we'll certainly look at as we develop our budget for 2025 to smooth it out through the quarters. So what we've been focusing on really is maximizing cash flow for the year. And so, you know, it's been designed certainly with that in mind for 2024, but smoothing it out is definitely a consideration for 2025.
Yeah, and just to add to that, you know, Aaron, is that what we're looking at as we focus on moving forward into this 2025, 2026, 2027 budget timeframes, is when do we add incremental drilling rigs in both the unconventional and into the conventional part of our assets? Again, we want to ensure that part of this facility infrastructure transaction that we did, we want to make sure that there's facility infrastructure in order to produce our wells. And, as Than is saying, focus on, you know, our netback and our ability to increase our cash flow on a, on an ongoing basis.
So we'll look to, as part of the budget process for, let's say, for the next three years going forward, is how do we blend and smooth the production, the lumpiness of the production profile out, as we advance through those years?
Thanks for that. If I could follow up with one more financial question, and that's given your commitment to the NCIB through the back half of the year, I'm curious why share repurchases were fairly minimal in Q2, despite having, I think, excess free cash flow to do more?
Yes, so the way that we're thinking about the NCIB purchases, Aaron, is it's really looking at it on a six-month basis here, just with the way that the cadence for capital is. You know, we'll typically have our highest capital programs in the first quarter and the third quarter, and then it'll taper down in Q2 and in Q4 there. So, you know, it's better for us to look at it in six-month increments. Effectively, you know, in the first half of the year here, you know, free cash flow was directed both to the balance sheet as well as the dividend. And as you mentioned there, as we get into the back half of the year, we'll generate more free cash flow to be able to execute on our NCIB.
So the way that we're looking at it today, in the back half of the year, you know, this is using our deck at $80 WTI here. We have about $ 30 million-$50 million. That's over and above our dividend obligation that we'll use on the NCIB. And then as per our press release there, we're carving out an additional $ 200 million that we'll use on the proceeds from the disposition towards the NCIB. So the capital allocation, or I should say the free cash flow allocation, hasn't changed. We're still looking at 75% return back to shareholders in the form of the dividend and share buybacks. The $ 200 million is incremental to that.
And just the last comment to add into that is that part of, We have to be mindful of our trading blackout period this time as well. So as we go into some time periods, we're very respectful of trading blackouts, which we are very stringent on at Whitecap Resources. So that plays into our overall time periods as releasing information to the market. We're in a long discussion with not only the infrastructure sell down, but we're in the time periods here with, you know, just locking into, you know, this our quarterly reporting as well.
Thank you both. I appreciate that.
Thank you. Next question will be from Patrick O'Rourke at ATB Capital Markets. Please go ahead.
Well, hey, good morning, guys. Strong quarter there. Great to see the well results. I have a couple of mostly financial questions here for you. You alluded to with the sort of room you've made on the balance sheet post the infrastructure dispositions. You alluded to capital allocation flexibility, but Than just pointed to, you know, what, you know, were pretty narrow goalposts with respect to 2025 capital spend, and production at this point in time. So just wondering if you could maybe walk us through, with respect to the flexibility and things you could do, sort of rank order what your priorities would be in terms of dividend growth, acquisitions, incremental, production growth that could be above and beyond, you know, what you just talked about, or spoke to on 2025?
Yeah, sure. Thanks, thanks for that, question there, Patrick. Yeah, as we go through the list of, you know, returns back to shareholders here, the dividend, you know, at that $ 0.73 there, you know, sustainable down to $50 WTI. You know, the yield, from our perspective, is too high, so there's certainly no, rush for us to increase the dividend at this time. The priority would be around share buybacks, and that's why, you know, we've allocated the $ 200 million towards, buying back our shares. Could we potentially use more? Yeah, absolutely, we can. I think the $ 1 billion that we're targeting in net debt at the end of the year, feel comfortable for us, but I would say priority is the NCIB, over any dividend increases at this particular time.
The reality is, when we continue to buy back our shares here, we reduce that, you know, overall dividend obligation, and we are increasing it on a per share basis there. Optionality around the balance sheet, outside of returning capital to the shareholders, would be around smaller tuck-in acquisitions, where, you know, we have a working interest with the operator there, and really it's just a consolidation of a play that we have expertise in versus larger scale M&A activity at this particular time.
Okay, and then maybe just build a little bit or add a little bit of nuance to Aaron's earlier question with respect to execution on the buyback. You have a $ 200 million number that's out there. You're looking at it in six month increments, and obviously, the first half of the year is a higher capital obligation, just given the way the cadence of the drilling programs tend to play out or in particular, the first quarter. Just wondering how you look at that $ 200 million in the back half of the year. Can we expect it to be sort of executed on a very ratable basis, on a month-by-month basis? Or is there gonna be a bit of finesse to that around sort of the share price performance and the blackout periods that Grant touched on?
Yeah, I mean, I think the way that we look at it is, if you look at the first quarter here, you know, we'll likely spend somewhere in that $ 125 million on the share buyback. So on a very methodical and consistent basis here. And then in the third quarter, you know, you've got the $ 75 million, plus whatever free cash flow is left after paying the dividend. So as I mentioned in that $ 30 million-$ 50 million. So expect to see in excess of $ 100 million in the fourth quarter based on our forecast at this time here.
Okay, thank you very much.
Thank you. At this time, gentlemen, there are no other questions registered. Please proceed.
Well, thank you, everyone, for your time to listen to our call today, and we would like to wish everyone a very pleasant remainder of your summer weather and summer holidays. Bye for now. Thank you.
Thank you, sir. Ladies and gentlemen, this does indeed conclude the conference call for today. Once again, thank you for attending. At this time, we would ask that you please disconnect.