Whitecap Resources Inc T.WCP

Alternate Symbol(s): SPGYF

Energy Oil & Gas E&P

Whitecap Resources Inc. is an oil-weighted growth company. The Company is engaged in the business of acquiring, developing and holding interests in petroleum and natural gas properties and assets. Its core areas include the West Division and East Division. Its West Division is comprised of three regions: Smoky, Kaybob and Peace River Arch (PRA). The properties in its Smoky region include Kakwa and Resthaven, all located in Northwest Alberta. The primary reservoir being developed is the Montney resource play, mainly comprised of condensate-rich natural gas. Kaybob is located in the Fox Creek region of Northwest Alberta. The primary reservoir being developed is the Duvernay resource play, mainly comprised of condensate-rich natural gas. The PRA is its original asset area. Its East Division is comprised of four regions: Central AB, West Sask, East Sask and Weyburn. Its Central Alberta region represents the bulk of its Cardium and liquids-rich Mannville assets.

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Whitecap Resources Inc > RBC

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Post by retiredcfon Jun 08, 2022 11:06am

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Post# 34740229

RBC

June 7, 2022

Outperform

TSX: WCP; CAD 11.95

Price Target CAD 14.00

Whitecap Resources Inc.

Highlights from the RBC Capital Markets Global Energy, Power & Infrastructure Conference

Our view: We hosted Whitecap Resources at the 2022 RBC Energy, Power, and Infrastructure Conference with Grant Fagerheim (President and CEO) presenting. Management reiterated the financial strength of the business, underpinned by material FCF generation; we reiterate our Outperform rating. See below for key highlights from management's presentation.

Shareholder returns a key priority. Whitecap reiterated its focus on reducing net debt to $800mm, with the team anticipating reaching this at the end of Q2/22. Management continues to prioritize: (1) protecting its base dividend to $50/bbl WTI; (2) growing organically at 3-5% annually; and, (3) continuing with share buybacks to clean up larger blocks. Management highlighted a $50 million increase to the capital program owing to cost inflation; the new program now maps to $570 million (previously $510-530 million).
M&A remains a key focus in the back half of 2022. Whitecap touched on M&A in the basin, citing widened bid-ask spreads and market volatility making M&A more challenging. With larger acquisitions conducted at lower price levels over the past two years, Whitecap is now focused on consolidating around core areas. As touched on in our recent retail call (note here), Whitecap continues to see the Montney oil window as an area of interest with opportunities for consolidation.
Operational highlights. As highlighted in our recent retail call, Montney results have outperformed expectations with IP90 rates at roughly 1,800 boe/d (type curve: 1,000 boe/d) and paying out in 6 months. Whitecap reiterated guidance to exit 2022 with Montney volumes at 18,000 boe/d. The team also called out Central Alberta (Glauconite) results nearly doubling internal type curves at 1,100 boe/d, with Conventional Frobisher rates 45% above type curve expectations. The team plans to drill 186 (151 net) wells for the year; management has identified more than 5,400 drilling locations in the broader portfolio.
ESG leadership a key focus. Whitecap's ESG leadership amongst Canadian E&Ps is supported by the Weyburn project, which sequesters 2 MTCO2e per annum with total capacity of 86 MTCO2e (expandable to 115 MTCO2e). Whitecap remains focused on sustaining Weyburn operations with $27 million in annual maintenance capital given the exclusion of EOR initiatives in Federal ITC credits. Whitecap currently has CO2 agreements with volumes of 3.0-5.0 Mtpa at its Saskatchewan hub, with the Alberta Carbon Hub project (note here) expected to be operational in mid-2024.