Whitecap Resources Inc T.WCP

Ink Research

[retiredcf]

Morning Report: Range-bound Whitecap has the INK Edge on its side

March 7, 2023

Today we revisit Whitecap Resources (WCP), last featured here on October 7th. Since that report, the stock is up 9.8%, but it has been range-bound between about $9.50 and $11.50. Despite some insider public market net selling, the stock remains in the top 10% of all stocks ranked. That is not a guarantee that Whitecap will break out to the upside, but nevertheless its bright INK Edge outlook ranking should provide some encouragement for the bulls.

When we last reported on it, Whitecap was anticipating exiting 2022 with net debt of $1.8 billion based on commodity prices at the time. While they ended 2022 with $1.9 billion in debt, early in 2023, Whitecap closed the disposition of three non-strategic assets helping to drive net debt down to $1.5 billion. In December, Whitecap increased its monthly dividend by $0.0116 to $0.0483 per share ($0.5796 annualized). It expects to reach its next net debt milestone of $1.3 billion in 2023. Once that is achieved, Whitecap plans to return 75% of free funds flow back to shareholders, targeting a $0.73 per share base annual dividend. It would also supplement the regular dividend with share buybacks or special dividends.

When it reported 2022 results on February 22nd, production averaged 144,389 barrels of oil equivalent per day (70.6% liquids), a record year for the firm and up from 112,222 boe/d (76.4% liquids) in 2021. 2022 funds flow was also the highest in Whitecap's history, coming in at $3.74 per diluted share, up from $1.82 in 2021. Whitecap now expects 2023 production to average between 160,000 and 162,000 boe/d (64% liquids), down from an earlier expected 171,000 boe/d due to the dispositions.