Earnings Call: Whitecap Resources Q3 2023 Results Show Strong Performance, Plans For Future Growth Outlined

Whitecap Resources (OTC:) has reported robust operational and financial results for Q3 2023, with $281 million in capital expenditure and 76 successful wells drilled. The company announced the production of over 157,000 barrels of oil equivalent (BOE) per day and generated $466 million of funds flow. After dividend payments, Whitecap allocated approximately $100 million of free funds flow to its balance sheet, achieving its $1.3 billion debt milestone. According to InvestingPro data, the company has a market cap of 4700M USD and a P/E Ratio of 7.57.

Key takeaways from the earnings call include:

• Whitecap’s total liquid production, including oil, condensate, and NGLs, was over 103,000 BOE per day.
• The company has seen significant growth over the past three years, increasing production from 60,000 BOE per day to 160,000 BOE per day. This is in line with the InvestingPro Tip that the company has shown a strong return over the last five years.
• Whitecap plans to return 75% of its free funds flow to shareholders through dividends and share repurchases. This aligns with the InvestingPro Tip that which the company pays a significant dividend to shareholders and has maintained dividend payments for 11 consecutive years.
• The company aims for moderate annual organic production growth of 3% to 8% and plans to increase dividends in line with this growth rate.
• Whitecap’s 2024 budget of $1 billion to $1.2 billion aims to generate an average production of 162,000 to 168,000 BOE per day.
• The company plans to drill 258 wells and invest $165 million in infrastructure projects, and $150 million in EOR projects in 2024.
• Whitecap expects inflationary pressures and anticipates $1.8 billion of funds flow in 2024, generating $700 million of free funds flow.

In the East Division, Whitecap plans to drill 215 wells in 2024, focusing on quick payout, short-cycle light oil-weighted assets. The company will allocate approximately $150 million to enhanced oil recovery (EOR) initiatives, with a significant portion directed towards the Weyburn CO2 project. Whitecap aims to achieve $1 billion of net debt in 2024 and plans to allocate 75% of its free cash flow to shareholders. As per InvestingPro data, the company’s revenue for LTM2023.Q2 stood at 2628.46M USD, showcasing its strong financial standing.

In the West Division, the company will focus on the Montney and Duvernay assets, allocating $600 million for drilling and $130 million for infrastructure projects. Whitecap will also continue to invest in infrastructure build-out to support future drilling programs. Grant Fagerheim, a representative of the company, noted that they have the potential to add another 30,000 barrels a day of capacity and intend to stay ahead with infrastructure build-out. He expects similar infrastructure build-out programs in excess of $100 million per year in 2025 and 2026.

Fagerheim concluded the call expressing optimism about the company’s progress and plans for 2023 and 2024. He emphasized the company’s commitment to operational control and building out infrastructure in front of drilling programs. This reflects the InvestingPro Tip that Whitecap operates with a moderate level of debt, further solidifying its position as a strong investment. For more insightful tips like these, you can check out InvestingPro which offers a plethora of additional tips.

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