Whitecap Resources Inc T.WCP

Ink Research

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Morning Report: As Whitecap Resources lags its peers, insiders keep buying

April 4, 2024

The share price of Whitecap Resources (WCP) is down 0.6% since we last wrote about it on October 31, 2023. The performance lags the broad S&P/TSX Capped Energy Index which is up 11.5% (as of April 2nd). However, the stock has been paying a monthly dividend of $0.0608 since our last report, so at least investors have been paid to wait for the stock to make up ground. Meanwhile, insiders have continued to buy which helps to keep the stock near the top of our INK Edge rankings.

On February 21st, WCP announced 2023 production averaging 156,501 boe/d, up 8.4% versus 144,389 boe/d in 2022 helped by an acquisition in Q3 2022. 2023 production included 103,014 bbls/d of light oil and liquids and 320,922 mcf/d of natural gas. Q4 production was relatively flat at 166,554 boe/d compared to Q4 2022. Since our last report, the acquisition-oriented company spent $154 million to acquire additional Viking assets in Western Saskatchewan.WCP reported generating funds flow of $1.8 billion ($2.94 per diluted share) in 2023 versus $2.3 billion ($3.74 per diluted share) a year earlier due to lower commodity prices. Thanks in part to its Q4 Viking acquisition, WCP expects to produce a midpoint of 167,500 boe/d this year. Based on strip commodity prices WCP has observed, it expects 2024 funds flow of about $1.6 billion and free funds flow of $600 million after capital investments. WCP believes that is sufficient to meet its annual dividend obligation which it has stress tested to a crude oil price of US$50/bbl WTI and natural gas price of $2.00/GJ AECO. WCP also believes it has flexibility to reduce its capital program to help protect its dividend if needed.