Scotia $12 targetThanks for posting all of the various analysts take on WCP. Very tough day on the energy front today but hopefully, over the long term, the fundamentals shine through and the stock price follows. Current price is a blue light special in my view. Good luck to all.
Q4 Production Stronger Than Expected
OUR TAKE: Positive. WCP’s Q4/24 and 2024 production results are better than expected. This outperformance was driven by stronger-than-expected production from new wells, base production optimizations, timing of production adds, and lower downtime.
Q4 production beat. Management estimates that Q4/24 production will average 175.5 mboe/d vs guidance of 170 mboe/d and consensus of 170.3 mboe/d (+3%). Full year 2024 production is expected to be 174 mboe/d, which is 2% above WCP’s most recent production guidance of 172.5 mboe/d. This outperformance is due to new well type curves exceeding expectations, base production optimizations, timing of production adds, and lower downtime. Management noted that the Duvernay, Glauconite, and Frobisher assets contributed 1 mboe/d, 1.4 mboe/d, and 0.7 mboe/d to the Q4/24 production beat, respectively.
Strong Duvernay performance. WCP noted that the five well 11-14B pad was brought on production one week earlier than forecasted and production rates have exceeded expectations. The 11-14B pad is testing vertical benching and management is encouraged with the initial results.
Musreau update. At Musreau WCP is producing 17.5 mboe/d (11 mbbl/d of condensate) through the 5-9 battery. A four well pad has been completed which increases WCP production capacity to 25 mboe/d. Management is assessing whether to moderate the pace of development at Musreau or expand their facility.
Lator progressing well. Design and engineering work at the new phase 1 4-13 Lator facility is progressing. Production from two 2023 wells has now reached an IP 365 of 1,300 boe/d (435 mbbl/d condensate). As field capacity is constrained at this time, WCP’s efforts remain focused on delineation until the 4-13 facility is expected to come online in late 2026/early 2027.
Glauconite performance exceeding expectations. The outperformance from WCP’s Glauconite assets is due to higher production rates and increased third-party facility output. During 2024 WCP has worked with third-party facility operators to increase natural gas egress. Further, WCP is improving capital efficiencies with a 10% well cost reduction through monobore drilling.
Frobisher has inventory upside. At frobisher, production results from tier 1 inventory has been strong. WCP is looking to expand its inventory through step out drilling at Steelman with its open hole multi-lateral pilot well. Through 90 days WCP’s pilot well has achieved an average production rate of 224 boe/d (73% liquids). WCP notes this has the potential to de-risk the addition of up to three years of inventory.