Post by
incomedreamer11 on Jul 28, 2022 11:32am
TD comments
Event
Reports Q2 Results and New Montney Well Results (Guidance Unchanged)
Impact: SLIGHTLY POSITIVE
Volumes as Expected, Strong CF Beat on Volumes and Pricing: Q2 production was 132.3 mBOE/d, which was at the high-end of the company's guidance and modestly ahead of both TD and Consensus (~129 mBOE/d).
CFPS of $1.08 was well ahead of both TD ($0.98) and Consensus ($0.97) expectations . The strongerthan-expected CF was the result of more liquids-weighted production than we had forecast, which contributed to higher realized pricing than we had anticipated.
Q2 Drilling Program Biased to Montney, WCP/XTO Joint Pad Posts Strong Results:
During the quarter Whitecap drilled 5.4 net wells, with the majority (3.4 net wells) targeting the Montney at Kakwa. Interestingly, the company released well data from a 4 (2.6 net) well pad with a shared XTO working interest that it will acquire through the recently announced XTO acquisition (expected close in Q3). The wells posted a robust average IP30 rate of 2.2 mBOE/d (45% liquids) per well.
Base Dividend (Recently Increased), Complemented by Strong NCIB Participation in Q2: Whitecap generated $589 million in Q2 FCF. Of this amount $56 million was paid out via the dividend (1% of current market cap), with $121 million used to repurchase 2% of the shares outstanding.
Debt Reductions to Trigger Successive Dividend Increases and More Buybacks:
Looking ahead, in 2023 we are modeling WCP to meet its $1.8 B net debt target by YE-2022, which should result in the base dividend increasing by ~30%.
By Q2/2023E, we forecast WCP will reduce net debt to $1.3 B, which could trigger an incremental ~30% base dividend and rekindled NCIB purchases to meet its 75% return of capital target. In 2023E, we forecast WCP will return 12% of the current market cap through dividends (7%) and buybacks (5%).
TD Investment Conclusion Whitecap's recent XTO acquisition added significant production and CF beyond what is reflected in the Q2 results. Looking ahead, as the debt associated with this acquisition is reduced through 2023, we expect successive dividend increases. New well results in the Montney and Duvernay should result in incremental investor comfort and confidence in WCP's evolving asset base.
Comment by
retiredcf on Jul 28, 2022 12:19pm
Like National Bank, TD also rates the company as a Buy with a $17.50 target. GLTA