Whitecap Resources Inc T.WCP

RBC

[retiredcf]

Their upside scenario target is $18.00. GLTA

October 23, 2024

Outperform

TSX: WCP; CAD 10.49

Price Target CAD 14.00

Whitecap Resources Inc.
Q3/24 Results - Outlook Intact

Our view: Q3/24 results were slightly ahead of the Street estimates, leaving the company well positioning to meet/exceed FY24 guide and continue with return of capital programs. Management also unveiled its 2025 outlook, which incorporates a volume growth target of +5% YoY, with the majority of free cash pointed to base dividends ($424 million).

Key points:

• Q3/24 – Quality Beat on Liquids. WCP reported Q3/24 production of 173,302 boe/d (RBC: 170,110 boe/d; Street: 169,400 boe/d) driving AFFO (f.d.) of $0.68 (RBC/Street: $0.67/0.66). Capital expenditures came below expectations at $273mm (RBC/Street: $300mm/$275mm); $136 million ($0.23/share) in FCF was generated in the quarter. See Exhibit 1 for key variances and estimate changes.

• Operations Update - In Good Shape. WCP drilled its 11-14B Duvernay pad (5 wells), which will be tied in by the end of October and its 15-07 gas facility will be operating at capacity in H2/25. At Musreau, WCP completed drilling its last four well pad in 2024 with production expected prior to year-end with one 4-well pad planned in H2/25. In Kakwa, the company is drilling its first triple bench pad, testing each D2, D3 and Lower Montney zones. WCP has one 4-well pad planned at southeast Kakwa including wider spacing in 2025. At Lator, WCP is progressing with its technical analysis to coincide with its planned 04-13 battery in late 2026/27 with two wells coming onstream prior to year-end and two additional wells in 2025. Of note, the company continues to test multi- laterals in several core areas, with initial results showing promising early results.

• 2025 guidance unveiled; Nudging up 2024. Whitecap unveiled formal 2025 guidance, calling for production of 176-180 mboe/d (+5% y/y, prior RBCe: 179 mboe/d) and capital spend of $1.1-$1.2bn (+15% y/y, prior RBCe: $1.2bn). WCP plans to allocate 50% of its budget ($550-$600mm) to its Montney and Duvernay assets that includes drilling 30 (30 net) wells (67% Duvernay) and tieing in 34 (32.5 net) wells in 2025. The company plans to drill 190 (171.8 net) conventional wells in Alberta and Saskatchewan in 2025. WCP's 2024 production guidance increases slightly to 172,500 boe/d, capital spending of $0.9–1.1bn was unchanged (RBC: $1.1bn).

• Return of Capital - A Key Focus. Whitecap exited Q3/24 with $1.4bn in net debt (RBC: $1.0bn) and pro-forma ~1.0bn debt while awaiting PGI final regulatory approval while in tandem returning 75% of FCF through a mix of its base dividend ($0.74/share) and NCIB utilization. YTD, the company has bought back 11.7mm shares for a total of $119mm.

• Increasing Estimates, Outperform. Our 2024 estimates increase slightly reflective of margin adjustments and production (+1%); CFPS increases by +2%. Our adjusted 2025 volume outlook (to ~178,000 boe/d; 63% liquids) points towards CFPS of $2.81/sh. See additional details in Exhibit 1 of this report.

[Westcoastenergy]

Thanks for posting.  A very positive review. Grant was definitely making the rounds in the last couple of days giving multiple interviews.  Also a positive article in the Calgary Herald outlining his bullish view on oil (not gas unfortunately).  Still hoping WCP will make the leap upwards that many of us have been waiting on for a couple of years.  WCP continues to have so many