Whitecap Resources Inc T.WCP

Latest from Peters & Co

[jimgeorge]

Whitecap Resources Inc. (WCP $9.31)

Sector Outperform

Target 12 MO $16.00

Corporate Update

Improvements Through M&A; Differentiation Through Inventory & New Energy Opportunities

 

Outlook & Recommendation: We have provided a detailed operations update and have outlined Whitecap’s upcoming activity for the remainder of this year. Over the past two years, Whitecap has successfully completed several transactions that in conjunction with the increase in commodity prices have significantly improved the base business and free cash flow profile of the company. Whitecap has utilized M&A to further enhance its base business by adding significant inventory and growth potential in the Montney through the XTO transaction. Upon achieving its near-term net debt thresholds, the company plans to further enhance shareholder returns and will ultimately pay out 75% of free cash flow to shareholders (we estimate by mid-2023 at current strip). Additionally, Whitecap continues to advance its various New Energy initiatives through leveraging its Weyburn expertise (evidenced with the Alberta CCUS project and five Saskatchewan MOUs), which differentiates the company from its peers and provides potential upside to the current valuation. We maintain our Sector Outperform recommendation, with a 12-month target price of $16.00 per share. Our target price is based on the combination of a 2023E EV/DACF multiple of ~5 times, a DAFCF yield of ~12%, and is a discount to our risked PAV of ~$19/share.

[cashworx]

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[Davesnothere]

Thanks jimgeorge, good substantial analysis. Reasonable conservative target. Go WCP Improvements Through M&A; Differentiation Through Inventory & New Energy Opportunities

[ppp]

A very important statement. Will pay out 75% of Free CF. So from pg 11 WCP guided 1.1bil FCF  at 85 dollar oil. This means they could pay around 750 mil in div for 23. Share count around 620 mil. means 1.20 a share. Todays buyers at 9.00 dollars could be making around 13 % div. Remember thats 85 dollar oil. Outlook & Recommendation: We have provided a