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

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Post by retiredcfon Sep 01, 2023 9:47am

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Post# 35615684

RBC

August 31, 2023

Whitecap Resources Inc.
Net debt milestone triggers planned dividend increase

TSX: WCP | CAD 11.05 | Outperform | Price Target CAD 14.00

Sentiment: Neutral

Whitecap announced that the company expects to reach its $1.3 billion net debt target by the end of September, triggering a planned 26% base dividend increase to $0.73/share annually ($0.0608/share monthly), effective with the October 2023 dividend (payable in November). The company also announced a CO2 purchase and sale agreement with SaskPower through the end of 2034, alongside the release of its 2023 ESG report. We view the update positively given a continued focus on enhanced shareholder returns and an improved ESG profile, though we expect the dividend increase was broadly anticipated.

Details:

Key debt milestone unlocks enhanced shareholder returns. Management expect to reach its $1.3 billion net debt target by the end of September, mapping to 1.0x D/EBITDA at US$50/bbl and C$3/GJ AECO and highlighting management's focus on financial sustainability. The company reiterated plans to return 75% of free funds flow to shareholders, supplementing the base dividend of $0.73/share with share buybacks and special dividends. Management noted a current preference for share buybacks, though we expect this could change over time.

Weyburn CO2 contract extension. Whitecap's CO2 contract extension with SaskPower runs through December 31, 2034 and covers the purchase of CO2 captured at the Boundary Dam Power Station, Unit 3 in Estevan, Saskatchewan. The Weyburn Project currently produces ~15,000 boe/d net (65.3% w.i.) of 30-degree API crude oil with a decline rate below 5%; since 2000, over 40 million tonnes of CO2 have been safely sequestered at Weyburn.

2023 ESG report released. Whitecap released its 2023 ESG report (link here), reflecting 2022 ESG data and outlining progress towards key ESG goals. The report highlights a 19% y/y decrease in scope 1 & 2 emissions intensity alongside a 29% increase in production from 2021 to 2022; Whitecap continues to track towards its methane/scope 1&2 emissions intensity reduction targets of 30%/15% by 2025 (based on a 2020 baseline).