CIBCHave a $14.50 target. GLTA
EQUITY RESEARCH
December 16, 2024 Flash Research
WHITECAP RESOURCES INC.
Positive Q4/24 Operational Update
Whitecap provided a positive Q4/24 update with production forecast at
175,500 Boe/d (65% liquids), 3% above previous guidance of 170,000 Boe/d
and consensus of 170,300 Boe/d. This drives full-year production above the
guidance set with last October’s guidance by ~6%. The beat was driven by
stronger-than-expected well results, base production optimization and lower-
than-expected facility downtime from the Montney, Duvernay, Central Alberta
and Saskatchewan assets.
Key Takeaways
• Production guidance. Q4/24 production is expected to average 175,500
Boe/d (65% liquids) with FY/24 production of 174,000 Boe/d, up from the
previous guidance of 170,000 Boe/d and the original October 2023
guidance of 165,000 Boe/d (at the midpoint).
• Kaybob. Q4/24 production is 1,000 Boe/d above forecast as the
company was able to bring the latest pad (11-14B) online one week
ahead of forecast, with initial rate exceeding expectations.
• Musreau. Current rates at Musreau are 17,500 Boe/d (5-9 battery) with
condensate production at facility capacity of 11,000 Bbl/d. Following
completion of the fourth well pad, productive capability is 25,000 Boe/d.
The performance of this initial development program will help the
company determine the appropriate pace of development for this asset,
which could include moderating the activity levels of expanding the
facility.
• Lator. Front-end engineering on Phase 1 of the new 4-13 facility is
completed. Production from the two 2023 wells has reach IP365 with
average production of ~1,300 Boe/d (430 Bbl/d of condensate), an
encouraging result. The second delineation well of 2024 has been turned
in line with condensate-to-gas ratios matching initial expectations. As the
field is currently limited by facility capacity, Whitecap plans to focus on
technical delineation efforts until late 2026 or early 2027 when the 4-13
facility is expected to come online.
• Central Alberta. Glauconite assets have contributed ~1,400 Boe/d to
Q4/24 outperformance as a result of higher production rates and
increased third-party facility throughput. A combination of collaboration
with third-party facility operators to de-bottleneck and optimize operations
has enhanced gas egress in the region. In addition, the company has
achieved a 10% reduction in capital efficiencies from monobore drilling
and continued production outperformance.
• Valuation. Whitecap trades at a 2025 EV/DACF multiple of 3.5x and a
2024E FCF yield of 12%, vs. the oil-weighted SMID cap group at 3.1x
and 14%, respectively.