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Morning Report: Growth bets support buybacks at Whitecap Resources September 12, 2024
Yesterday, in the #stock_ideas channel of INK Chat we uploaded our monthly list of the 100 issuers with the most share
buybacks as reported in SEDI. Whitecap Resources (WCP) caught our attention as it is an oil patch stock with a sunny INK Edge outlook with the largest reported amount of buybacks at $52.9 million last month. Buybacks have been a core component of Whitecap's shareholder return strategy along with a base monthly dividend of $0.0608 per share. Whitecap's buyback program is supported by its production growth. Since Q4 2020, production has grown 178% from 63,783 barrels of oil equivalent per day to 177,314 boe/d (64.5% oil & NGL) in Q2 2024. Acquisitions have been part of the growth story. By our count, in 2021 Whitecap issued about 49.7 million shares in relation to two acquisitions, Kicking Horse Oil & Gas in the Alberta Montney in May, and a multiple asset consolidation in December. Since the start of May 2021, Whitecap has bought back almost 70.5 million shares based on INK data, above the amounts issued in the two transactions.
Whitecap expects the buybacks to continue this year. When reporting Q2 results, it indicated that it plans to allocate $200 million in proceeds from a recent asset sale to buybacks in the second half of 2024, starting in July. Since we last featured Whitecap here on April 4th, the stock has dropped 7.3% versus a 14.2% drop for the S&P/TSX Capped Energy Index. We will have to see if the buybacks help the stock head back into positive return territory and maintain its relative momentum that has been building during a challenging period for oil patch stocks. Importantly, insiders have been net buyers of stock since our last report, which is encouraging to see as the company buys back stock.
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