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Whitecap Resources Inc T.WCP

Alternate Symbol(s):  SPGYF

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.


TSX:WCP - Post by User

Post by retiredcfon Apr 27, 2023 9:56am
233 Views
Post# 35416762

CIBC

CIBCHave a $15.00 target. GLTA

EQUITY RESEARCH
April 26, 2023 Flash Research
WHITECAP RESOURCES INC.

First Look: Q1/23 Results In Line With Estimates

Whitecap reported Q1/23 results that were in line with our expectations and
consensus. Key takeaways include a successful first-quarter drilling program
in Central Alberta and Southern Saskatchewan showcasing higher liquids
production than company expectations, along with a shift in the cadence of
capital spending and drilling schedule to optimize commodity exposure.
Whitecap is focusing on higher-netback oil-weighted projects, deferring
timing of natural gas-focused assets towards the latter parts of this year,
while also resolving Montney supply-chain delays.


Financial And Operating Takeaways

Q1/23 Results: Production of 155,124 Boe/d was in line with our estimate of
157,451 Boe/d and consensus of 156,800 Boe/d. Adjusted FFO per share of
$0.73 was in line with our estimate of $0.72 and consensus of $0.70. Capex
of ~$254 million was ~2% above our estimate of ~$248 million and ~5%
below consensus of ~$267 million.


Return Of Capital: $121 million was returned to shareholders in the quarter,
consisting of $88 million in dividends and $33 million in share repurchases.
The company finished the quarter with net debt of $1.47 billion and is on the
way towards its $1.3 billion target, which we see the company achieving in
Q3/23 on current strip, at which time it will raise FCF allocation to 75%
including a $0.73/share annual dividend. The company has completed ~30%
of its current NCIB and plans to renew upon its expiry on May 20, 2023.


2023 Guidance And Capital Spending Cadence: Whitecap reiterated full-
year guidance of 160 MBoe/d-162 MBoe/d on capital spending of $900
million-$950 million. This is in line with our expectation of ~161 MBoe/d and
slightly below our capital spending estimate of ~$1 billion. Q1/23 capex of
$254 million was below previous guidance of $300 million as the company
modified its drilling program to focus on higher-netback oil-weighted projects
given the movement in natural gas pricing. $40 million of Montney capital
was pushed to Q2 and Q3 due to now resolved supply-chain delays. The
company sees Q4 production averaging 170 MBoe/d as the majority of
reallocated capital starts to come online.


Operational Update: A four-well Kakwa pad brought onstream in late-2022
averaged 1,201 Boe/d (52% liquids) over the first 150 days, exceeding
liquids yield expectations. Supply-chain concerns delayed first production for
the two most recently drilled pads (seven wells); the company expects to
bring these wells online in the second half of 2023 as these issues have
been resolved. In the Duvernay, Whitecap commenced drilling on a three-
well pad at Kaybob (11-34) with production expected in Q3. Another four-well
Duvernay pad will then be drilled as part of a capital reallocation strategy to
focus on higher liquids production and is expected to be onstream in Q4.

Valuation: Whitecap trades at a 2023E EV/DACF multiple of 4.0x and a
2023E FCF yield of 12%, vs. the oil-weighted SMID-cap group at 3.4x and
16%, respectively.
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