Whitecap Resources Inc T.WCP

TD on PPL/TPZ Deal

[retiredcf]

STRATEGIC INFRASTRUCTURE DEALS FURTHER IMPROVE BALANCE SHEET LIQUIDITY

THE TD COWEN INSIGHT

Whitecap entered infrastructure agreements with two separate parties. In aggregate, Whitecap will receive $520mm in cash ($480mm AT), has offloaded $250-300mm of future facility capital spending to Pembina and may benefit from a company-estimated $190mm in future partnership synergies. We estimate this will result in an incremental ~$200mm directed to the NCIB in H2/24.

Event: Enters Strategic Partnership With Pembina (PPL-T) and Divests Portion of Newly Constructed Musreau Facility to Topaz (TPZ-T)

IMPACT: SLIGHTLY POSITIVE

Pembina Gas Infrastructure (PGI) Agreement:

• 50% Sale of Kaybob Complex: For proceeds of $420mm, Whitecap has agreed to sell a 50% interest in its Kaybob complex (165 mmcf/d of gas processing and 15 mbbls/d of C5+ stabilization). We expect the annual cost to Whitecap to be ~$24mm (after company- expected synergies). The gross take-or-pay commitment was not disclosed by the parties.

• Pembina to Fund/Own New Whitecap-Operated Facility at Lator: Incremental to the agreement above, Pembina will fund this new facility (150 mmcf/d + 10-15 bbls/d of C5+ stabilization). Whitecap has agreed to a long-term fixed take-or-pay commitment and area dedication agreement. Although this saves Whitecap $250-$300 million in capital spending in 2026, we understand that the 5-year plan had previously assumed a third- part would finance/own this facility. There is an undisclosed take-or-pay commitment associated with this agreement.

• Beyond the financing, Whitecap expects access to Pembina's network to come with synergies in the form of transport, fractionation and marketing.

  Topaz Agreement:

 50% Sale of Musreau Facility: Whitecap has entered an agreement to sell a 50% interest in the newly built Musreau facility (43 mmcf/d + 12,500 bbls/d of C5+ stabilization) for proceeds of $100mm. In exchange, WCP has committed to a 10-year take-or-pay, providing the counterparty with ~ $13-14mm/yr. This equates to a transaction multiple of ~7.5x CF or 13.5% FCF yield.

Our View: These transactions further enhance the company's balance sheet liquidity. We estimate Whitecap will exit 2025 with D/CF of 0.6x (from 0.8x). This provides significant liquidity should it look to compete in upstream asset sales. Assuming a transaction at 4x 2025E CF, we estimate Whitecap could fund an acquisition of ~$1B with debt, while keeping YE-2025 D/CF <1x.

[Westcoastenergy]

Hmmmmm, "we estimate Whitecap could fund an acquisition of ~$1B with debt, while keeping YE-2025 D/CF <1x". Didn't WCP go in to the doghouse the last time it went on a spending spree?  Would much prefer the strategy of paying down debt, buying back shares, increasing the share price.  They already have more than enough drilling opportunities just from the purchase of NAL

[Citizen13]

These CEO's feign that they care about shareholders but at the end of the day do almost whatever they want for what they perceive as the best for the company LONG LONG term . I'm running out of runway myself and cant wait that long. If I was him I would have spent the $ 520 Mil immediately on debt reduction and buybacks .  If he wants to get this up to $ 15 as he stated then why isnt

[pierrelebel]

Last time I checked the CEO owned 3,506,568 shares in WCP (that is over $35,000,000 worth). I would rather own shares in a company where the CEO is heavily invested than one where he only earns a salary. As stated many times over the years, WCP is for investors with long term view, not for traders or speculators. We are earning over 7% in (tax advantaged) dividends while waiting for an eventual

[meritmat]

Give me a return of 7% all day long.   How is this a bad thing 

[DivChase]

Yeah!   And tomorrow under 10 again.  

[pierrelebel]

DivChase "... And tomorrow under 10 again. " If this is the way you really feel, in my opinion you should sell your shares now and move the proceeds to something that is more satisfying to you. Investing is difficult and not worth the frustration you are experiencing. I currently own BPO.PR.T and ECN.PR.C both earning 11%+. These may be of interest if dividend is your thing!

[DivChase]

Good advice.  Already sold the vast majority 3 months ago.   I'm stuck with some of  this stock cause the good wife never did let me mess around with our RDSP.   All this time and it still won't make a real move past 10.  Been around this level since 2016.   Definitely not the stock for capital appreciation ;  is an understatement.   I suppose it'

[Citizen13]

It that's your goal why not buy ENCC ?  13-14% dividend but likely not a whole lot of capital appreciation just like  like WCP.  Double your dividend . I have some . There are guys out there who know how to do options and they are absolute geniuses . There are guys who do options who have millions in their TFSA. Unfortunately the CRA are after them for a piece of that action

[barneyj44]

I disagree Grant continues to buy shares on the open market and holds just shy of 3 million shares. I don't know of many oil executives that have that much of their own skin in the game. 

[Citizen13]

Thats great but if his plan is to get this to $ 15 I'd like to know how. Once again, you keep doing the same thing you get the same results.  He is unfortunately a low energy rather boring guy to listen to in interviews. Give the market a reason to pay 50% more . Oil up a dollar today, WCP  up 0 cents. Zzzzzzzz.....

[DivChase]

Citizen13 !  Unfortunately I have held this stock  for like a decade.   I've learned that Grant is quite and boring just before pulling the trigger on an acquisition.  Your comment about him being boring is a canary in the coal mine for me.   My position isn't large in WCP anymore but I hate loss of any kind. Why else is he stashing 300 million aside other than to

[baranja]

I don't think so. Listen to his interview. HE SAID, his plan is to raise the stock price to, aprox. $15(ish) (to make a dividient in 4%-5% range). 200 M will be strictly for share buybacks on top of existing buybacks. If he want's to buy something, he would not have said that.

[baranja]

He wants divident at about 4.8% to 5.5%... I think he is aiming to $14is share price.

[DivChase]

Why wouldn't he use that cash to pay the debt down then?  He likes paying interest costs maybe??

[pierrelebel]

"Why wouldn't he use that cash to pay the debt down then?" He explained on TV that about $300 million would go to reduce the debt (saving millions in interest charges) and about $200 million would go to buyback about 3% of the shares (raising the share price in the process). In other words a little bit for everyone.  I am OK with that.

[DivChase]

Hey Pierre! Was there another interview other than the bnn one?   Maybe I missed it.  The one I watched he chose his words carefully.   200mil to share buyback and. "park the rest on the balance sheet".    That could be anything,  real estate, cash in the bank, debt payment or even small acquisition ..,  If he intends to pay down debt, why won't he

[baranja]

I agree with you, but the key here is the fact that he is planning to raise share price.  I doubt he can raise the share price if he goes out to destroy balance sheet with the new purchase.

[DivChase]

Baranja!   I hope your assumption is right.   I gotta agree with Citizen13.   The Grant doesn't present well on camera.   Doesn't communicate with shareholders very well either.  Not so hard to just say"300million pay down debt","No acquisitions for the next year".  IS IT. 

[DivChase]

Baranja! Also regarding your point about his comment to raise SP over 14$,  how exactly will he achieve that with a pidly 200mil share repurchase plan.  500mil would have been a nice chunk of change to move the needle.   Instead he announced "park the majority of these sale proceeds".   Those choice of words tell be it is a cash park and this guy is planning an

[baranja]

Maybe he is targeting shorts, but yes, I agree, the dude is good manager but he stinks when it needs to protects shareholders. Great company but shitty Stock price, but even if he wants to do another acquisition, he WILL HAVE To raise the price of it's stock and than use it to aquire. There are no more fundamentals here, as if no stockholders period, as if somebody else moves the price of

[barneyj44]

I don't know why we don't get a U.S listing on the bigger board like Cpg and Baytex. Something needs to be  done to get a spark under us.

[mugs19]

"I don't know why we don't get a U.S listing on the bigger board like Cpg and Baytex." Correct me if I"m wrong but I don't think the US listing has helped BTE sp much (if at all) and I don't own CPG... mugs

[barneyj44]

Varen, formerly known as Crescent Point.  The more exposure to markets the better ..

[baranja]

And here we go,.. VRN, as it is very exposed to US market,  is down close to 4% today, while WCP is less then 1%. It is very nice to have it run up faster, but when those NYSE hoodlums decide to attack Canadian oil and gas,.. then ouch.

[barneyj44]

I'm wondering if this selloff has to do with Suncor shutting in production do to Alberta wildfires. Most likely another buying opportunity but have enough money into oil as it is.

[Onemoreboom]

Struggles mightily to stay above $10.00.  Adds only pennies during the recent WTI rally, but gets wacked down with any commodity weakness. So, ya, it's going to $15.00.  LOL LOL.

[DivChase]

Yeah it's NEVER gonna hit 15.  12 would be a miracle.  I can convince the wife to sell off this thing at 11 I think.   But that even seems a distant dream in this NG environment.  Which is what I think is killing this stock.  35% of thier production is gas.  While 91% of income from oil.  Tells you everything in those 2 numbers.  I doubt this bad mix

[meritmat]

That monster NGL plant comes on next year.  Then they have there expansion.  The second platform was just approved a week ago.  Think it's 2028 for operational  Look the world is screaming for NGL.  Once the unless Libs are booted it will be full steam ahead.  Patience