TORC Oil & Gas Ltd. VREYD

Energy Oil & Gas E&P

TORC Oil & Gas Ltd engages in the exploration, development, and production of oil and natural gas reserves in the southeast Saskatchewan area. Crude oil constitutes an overwhelming majority of the production mix the company gathers from its assets. TORC gains access to its assets through government issued royalties and uses various techniques to identify hydrocarbon reservoirs. The company focuses heavily on light oil resource plays and relies on a three-phased strategy of resource capture, delineation, and production growth.

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TORC Oil & Gas Ltd.

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Post by retiredcfon Jan 05, 2021 8:37am

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Post# 32222372

TD on WCP

Have a $5.50 target. GLTA

Whitecap Resources Inc.

(WCP-T) C$4.82

Higher Q4/20 Production Volumes; Gearing up for a Busy Q1/21 Event

Yesterday afternoon, Whitecap announced the closing of the acquisition of NAL Resources Ltd., along with an operational update, including higher-than-anticipated Q4/20 production volumes.

Impact: SLIGHTLY POSITIVE

Whitecap announced Q4/20 volumes are expected to be ~63.0 mBOE/d, which is 5% higher than the company's prior forecast of 59-61 mBOE/d, while capex of $20mm was in line with expectations. Including the acquired NAL assets and the anticipated closing of the transaction with TORC Oil & Gas (expected on February 24, 2021), Q1/21 volumes are expected to average 89-91 mBOE/d (in line with consensus).
The company is currently running six drilling rigs with Q1/21 capex expected to be in the $115mm-$120mm range. This constitutes ~41% of the current FY21 capital budget (at the midpoints), which has been reiterated at $280mm- $300mm. Capital will be allocated to drilling 56 (45.9 net) wells with ~$14mm going to EOR initiatives. The 2021 average production guidance of 99-101 mBOE/ d also remains unchanged from the preliminary outlook provided by Whitecap on December 8. The company plans to provide a more detailed 2021 budget upon the closing of the TORC transaction.
Acquired NAL assets outperforming initial expectations by a combined 1,800 BOE/d. This includes volumes at Sturgeon Lake outperforming original expectations by 50% (1,200 BOE/d), while the acquired assets in West Central AB have also exceeded initial production forecasts by 4% (600 BOE/d). In our view, this outperformance, along with higher-than-expected Q4/20 volumes should provide a tailwind heading into this year.
Assuming US$47/bbl WTI and C$2.50/GJ AECO, the company expects cash flow of $624mm, which yields FCF of $334mm (assuming the midpoint of capex guidance). This equates to an FCF yield of 12% and an all-in payout ratio of only 63% (including dividends).
We continue to believe a key differentiator for Whitecap is current CCUS operations at Weyburn along with future expansion opportunities. The company reiterated its commitment to ESG initiatives and plans to expand the scope of CO2 usage in H2/21.
Full Q4/20 results are expected to be released before-market on February 25, 2021. We intend to provide updated estimates in conjunction with the publication of our commodity price deck later this week.