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2013 Key Operating Assumptions (1)
Guidance Updated ------------------------------Annual Average March 7, 2013 November 8, 2012----------------------------------------------------------------------------Daily production boe/d 8,500 8,400WTI oil price US$/bbl 95.00 95.00Western Canada Select (WCS) Cdn$/bbl 71.00 76.00AECO natural gas price Cdn$/Mcf 3.10 3.25Exchange rate Cdn$/US$ 1.00 1.00Operating costs $/boe 5.00 5.00General and administrative costs (2) $/boe 2.60 2.60Capital expenditures $ millions 30 33Dividends paid in shares (DRIP) (3) $ millions 28 28Long-term debt at year end $ millions 48 48Cash taxes payable in 2013 for 2012 tax year (4) $ millions 23 25Cash taxes payable for 2013 tax year (instalments) (4) $ millions 25 25Weighted average shares outstanding millions 67 67--------------------------------------------------------------------------------------------------------------------------------------------------------(1) A sensitivity analysis of the potential impact of key variables on funds from operations per share is provided in our 2012 Annual MD&A.(2) Excludes share based and other compensation.(3) Assumes average 25% participation rate in Freehold's dividend reinvestment plan, which is subject to change at the participants' discretion.(4) Corporate tax estimates will vary depending on commodity prices and other factors.
As 2012 capital was ahead of guidance, we have revised our 2013 capital budget to $30 million. Our development plans are primarily oil related, focused almost entirely on our mineral title lands, and include approximately 40 gross (13 net) wells. Roughly half of our capital will be deployed in southeast Saskatchewan (light oil), with the balance allocated to our expanding mineral title opportunity base in both the Lloydminster area (heavy oil) and western Alberta (Cardium oil). Almost half of our total capital for the year will be spent in the first quarter of 2013, with area allocations similar to our annual budget. Spending may be adjusted as the year progresses, depending on the operating environment and well results.
Based on this level of capital investment, anticipated drilling activity by lessees on our royalty lands, and normal production declines (and excluding any potential acquisitions), we expect 2013 production to average approximately 8,500 boe per day. On a boe basis, production volumes for 2013 are expected to be approximately 64% oil and NGL and 36% natural gas. We continue to maintain our royalty focus with royalty production accounting for 67% of forecasted 2013 production.
In February 2013, we remitted $23 million for estimated 2012 corporate taxes. We expect to pay approximately $25 million for the 2013 tax year by way of monthly instalments. The large cash outlay for income taxes in 2013 is an anomaly that we have prepared for and have the financial capacity to handle. We expect our tax bill will normalize in 2014, at approximately 20% of pre-tax cash flow.
