Join today and have your say! It’s FREE!
We will not release or resell your information to third parties without your permission.
Please Try Again
{{ error }}

Join today with :

or

By providing my email, I consent to receiving investment related electronic messages from Stockhouse.
Sign in with existing account
Please Try Again
{{ error }}

Sign In With :

or

Password Hint : {{passwordHint}}
Forgot Password?
Please Try Again {{ error }}

Send my password

SUCCESS
An email was sent with password retrieval instructions. Please go to the link in the email message to retrieve your password.

Energy Firm Reacts to Oil Price Weakening with 2019 Budget Decrease

Streetwise Reports
0 Comments|September 3, 2019

The company's revised estimates, the reasons for and repercussions of them are addressed in a CIBC report.

1.jpg

In an Aug. 26 research note, analyst Dave Popowich reported that his firm CIBC reduced its price target on Whitecap Resources Inc. (WCP:TSX) to CA$7.25 per share from CA$7.50 due to strip pricing changes. In comparison, the oil and gas company's current share price is about CA$3.67.

CIBC made other small adjustments to its estimates on Whitecap to reflect the company recently reducing its 2019 budget by CA$50 million to CA$400 million. This move, Popowich wrote, reflects "an increasingly cautious industry stance" in a worsening oil price environment.

Consequent to lower spending, Whitecap's Q4/19 production is expected decrease to 74,000–75,000 barrels of oil equivalent per day (74,000–75,000 boe/day) from 77,000–9,000 boe/day.

Full-year 2019 production guidance remains the same, however, and Whitecap forecasts free cash flow this year of about CA$135 million, an increase over previous guidance of CA$95 million. "With an estimated FY19 payout ratio of just 82% on recent strip pricing, Whitecap's 9.3% dividend yield looks very safe for the time being," Popowich highlighted.

CIBC anticipates Whitecap's lower spending in H2/19 to carry over into 2020. Thus, the bank decreased its full-year 2020 capital spending forecast on the energy firm to CA$450 million from CA$500 million and reduced its projected production by 4% to 74,015 boe/day.

Popowich concluded that "Whitecap has maintained a relatively strong balance sheet throughout the ongoing industry downturn, and we see that as a competitive advantage worth preserving, even if it comes at the expense of growth."

CIBC has an Outperformer rating on Whitecap.


Disclosure:
1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.


Comments

No comments yet. Be first to comment!

Leave a Comment

You must be logged in to access this feature.



×

StockTalk
Get our FREE StockTalk Investor Guides by sector as they are released!

Stay on top of sector specific news, get industry leaders insights and our best content, delivered to your email.

You are already a member! Please enter your password to sign in.