In March of this year a $15-billion business combination between Whitecap Resources Inc. and Veren Inc. was announced. The deal, which closed in May, yields the seventh largest producer in the Western Canadian Sedimentary Basin with 370,000 boe/d, as well as the largest Canadian light oil focused producer and the fifth largest natural gas producer.
Continuing under the Whitecap name, the combination of the two oil and natural gas producers allows the new company to be more scalable, attract a larger subset of investors, and, importantly, increase value and returns to shareholders.
One of the architects of the deal, and the man who continues to lead Whitecap, is Grant Fagerheim. Well known in the Canadian energy industry for his ability to create and lead successful energy companies, as well as for his promotion and defense of the industry, Fagerheim is prime to this new endeavour.
“We’re in a very good position,” Fagerheim reflects from his Calgary office. It is early May and a new crop of 85 summer students have just started at Whitecap, a fact the boss seems delighted with. “We’re now at about 370,000 boe/d, which includes 235,000 boe/day of light oil and liquids and 810 MMCFD of natural gas. We’re looking to spend approximately $1 billion in the back half of 2025 and in the neighbourhood of $2.5 to $2.6 billion per year going forward. It is a very healthy capital program, but we expect to continue to grow at a measured pace while ensuring that the balance sheet remains strong and healthy.”
Informal discussions between Fagerheim and Veren CEO Craig Bryksa had begun years before, given that the two companies have lands that are either overlapping or abutting each other in certain areas. The thought was that by combining into a larger entity they could drive more scale, drive synergies and attract a broader shareholder base.
“In our discussions, we initially parked the personnel considerations on the sidelines and asked ourselves: ‘Is it better for shareholders to have one larger entity moving forward’?” Fagerheim recounts. “After much analysis and discussion about combining the two organizations, Craig and I reached an agreement that it is best to run under the Whitecap flag as Whitecap has 15 years of very solid history. That, to me, demonstrated huge leadership from Craig to focus on what would be best for shareholders.”
Ultimately, the combined company is the largest Alberta Montney and Duvernay landholder, and a prominent light oil producer in Saskatchewan. It will be led by the Whitecap executive team, and the Board consists of 11 members, seven from Whitecap and four from Veren, including Bryksa.
The Whitecap headcount is expected to almost double when including both office and field personnel with the addition of many Veren employees, to around 1,100. “Now we will have about 550 people in the office and another 580 in the field, plus our 85 summer students and interns,” Fagerheim marvels.
He notes Whitecap is expected to grow production between three to five per cent per year with its organic capital program, generate substantial free cash flow and provide shareholders with a very defensible dividend.
“We’ve come a long way from our humble beginnings in 2009,” he remarks. “At that time we started Whitecap at 850 boe/d. I believe it is important to remind ourselves where we started and where we are today on the company’s journey.”
Launched 15 years ago with the purchase of the Valhalla Alberta asset, Whitecap has indeed experienced strong and steady growth. Since day one, Fagerheim and the founding management team – Dave Mombourquette, Thanh Kang, Gary Lebsack, Dan Christensen (since retired), Darin Dunlop (since retired) and Joel Armstrong – have followed a strategy of identifying resource opportunities, technically validating those opportunities, creating value extraction plans and producing cash flow for reinvestment.
“In 2013 we converted Whitecap from a pure growth company to a dividend growth company, commencing with a dividend of five cents per month,” Fagerheim explains. “We’ve paid out $2.36 billion in dividends, or $5.75 per share, to date, and bought back over $740 million of our shares.”
A key part of the strategy has been to maintain a significant level of light oil, for two particular reasons. “First, this allows us to maintain a lower production decline rate with water floods, polymer floods and CO2 flooding activity, therefore sustaining our production longer on each of those assets,” Fagerheim says. “Second, light oil cashflow netbacks are the strongest in the basin, which assists in furthering growth and dividends for our shareholder base.”
Whitecap’s production is comprised of conventional (150,000 boe/d) in Saskatchewan and Alberta and unconventional (220,000 boe/day) in the northern Alberta Montney and Duvernay plays. “The objectives for each of the areas are a little bit different,” he notes. “On the conventional side we look to stay relatively flat, with one to two per cent annual growth. However, this side drives very significant cashflow. Whereas our unconventional side is expected to grow eight to 12 per cent on an annual basis going forward within the regions’ cashflow. The ultimate result is that we continue to be a self-funding growth vehicle that provides a sustainable dividend return to our shareholders.”
“Cashflow at the asset level is of utmost importance,” Fagerheim continues. “We’ll be paying specific attention to commodity pricing trends and how best to drive lowering costs and stronger capital efficiencies. The ultimate objective is to drive cash flow so it can be redirected back into the ground or back to shareholders in the form of dividends or share buybacks.”
Whitecap is not Fagerheim’s first kick at the start-up can.
Born in Estevan, Saskatchewan, he was a competitive kid who enjoyed all types of sports. An engaged student with a mathematical mind, he did well in school. “My passion was truly focused on hockey with a boyhood dream of perhaps playing pro,” he recalls.
He attended university in Minnesota on a hockey scholarship, then transferred to the University of Calgary to finish degrees in business and education. “As I matured I could see a professional hockey career was not in the cards, I altered my career objective to include getting into the energy business while staying close to the game of hockey. What I can say is that one of the best things about university overall was meeting my wife Penny in the last semester of my last year of school!”
Fagerheim’s first job out of university was at Dome Petroleum in 1985, working as a negotiator in the land department. “I met and worked alongside many intelligent and driven individuals, and we also had a lot of fun along the way,” he recalls.
Dome was acquired by Amoco and Fagerheim “stayed for a cup of coffee” before being recruited to work at Sceptre Resources. From there, he worked at Northrock Resources. “I was provided with many varying management responsibilities at both Sceptre and Northrock from business development to exploration to marketing,” he says, “and always included in the economics components of the business.”
It was the coaxing of long-term friend Brett Wilson, who was running First Energy at the time, which led Fagerheim (along with Dave Mombourquette) to launch his first company, Ketch Energy, in 2000. Ketch was eventually monetized into two separate companies including an income trust and spun out Ketch Resources. The latter company operated until 2005, when it merged with another junior company to form Ketch Resources Trust. This was subsequently monetized with a portion of the assets being spun out to form Kereco Energy. Kereco operated from 2005 to 2008 when it received an unsolicited bid and was acquired by Barrick Gold which concluded the Ketch/Kereco trail of companies.
Whitecap Resources would soon be formed in 2009 and the rest, as they say, is history.
With a culture of high expectations, Whitecap employees are rewarded for performance. “It’s also our hope that our people are working in a safe and healthy environment,” Fagerheim says. “That they’re able to bring forward their ideas and energy to be tried and tested. Ultimately, we want our personnel to know that their contributions matter, and they’re recognized for that.”
Like most other Canadian energy producers, Whitecap aims to be actively engaged in the communities in which it operates, by providing opportunities for employment and by being a steward of the environment. “We own and operate the largest carbon sequestration project in the world in Weyburn, Saskatchewan,” he notes. “We’re going to continue to advance carbon reducing programs. It’s engrained in our people at Whitecap that we want to make sure we’re responsibly producing our crude oil and natural gas products.”
Typically, charitable activities are employee-driven. “We support health and education initiatives,” Fagerheim says. “Our primary objective is supporting youth development, safety and healthcare for all ages. We’re active with the Children’s Hospital, Stars Air Ambulance and a number of different health and education related entities, not just in Calgary, but in all of our rural areas where we live, work and play.”
Fagerheim also gives his personal time to several causes. He was a director of Hockey Canada Foundation focusing on increasing access to the game for all youths, having joined in 2000, and served as chairman from 2010 to 2014, which included the highlight Team Canada win in Russia in 2014. 2022 was his final term as director of the Foundation. During his directorship, he was also a member of the Order of Hockey Canada Selection Committee. Fagerheim was also one of the founders of the Edge School for Athletes, serving as chairman for over a decade.
“My passion has been to combine academics and athletics for young aspiring athletes to pursue their passion for sports, while getting an advanced education,” he says. “It was probably one of the most rewarding experiences I’ve had, watching these young student athletes achieve both their athletic and academic goals.”
More recently, Fagerheim has joined the board of directors of the Fraser Institute: “Doing what I can to be helpful with federal and provincial policy across our country.”
Extremely proud of the energy industry, Fagerheim is a vocal proponent of Alberta’s oil and gas sector. When it comes to the federal government, he calls for a recognition and respect of the usable energy that the industry brings to Canadians and the world.
“We should be building pipelines,” he urges. “We should be advancing our resource development and use it as a unifier – not as a divider as it has been to this point. We have to redefine the political and economic boundaries of this country. We’ll see with the newly elected federal government if they’re willing to reach the objectives we as a united energy sector are putting forward.”
These objectives include: simplify regulations, commit to firm six-month deadlines for approvals, grow Canadian production, attract foreign investment and Canadian investment, and foster Indigenous co-investment in our country.
“I think these measures, along with cooperative federalism, are critically important right now because we are a divided country,” he warns. “We are a very divided country geographically with an opportunity to change our ways. And it is time for Western Canada to be recognized for the benefits it brings to all Canadians.”
Hopeful yet skeptical about the new federal government, Fagerheim can envision a better future: “I would love to see Canada regain its reputation as a reliable leader in energy development. To bring outsized financial contributions for improving healthcare, enhancing education and providing job opportunities. We can do this; we just need the will to make it happen.”
As for Whitecap, Fagerheim reveals high expectations for the future: “We’re at approximately 370,000 boe/d. And although we must be responsive to the market environment, including commodity prices, we have an internal goal to reach 500,000 boe/d within a five-year time horizon. We want to engage and energize our people with this goal. We’re not static. We will continue to be a growth company into the future.” Fagerheim and Whitecap represent everything the Canadian energy industry is about: hard work, responsible operation, risk taking, success. The business combination with Veren is another step in this regard, expected by most to reap many rewards. It’s a story worth celebrating
