Whitecap Resources – Mixed Q1 results
Posted: Thu Apr 24, 2025 6:15 am
Whitecap is a mid-cap Canadian oil and gas producer, operating oil and gas assets in Western Canada (Northern Alberta and British Columbia, Central Alberta, and Saskatchewan).
In mid May 2025 Whitecap will merge with Veren. Q1 will be the last quarter for Whitecap to report on as a stand-alone company.
Summary
Q1 results were mixed. Q1 production was above guidance. Production in Q2 will grow as the Veren merger will be concluded in mid-May. After 2025 with ample reserves and a high RRR, the production growth should continue. The balance sheet is solid and allows ample shareholder returns. Profitability is good. Profit was lower than expected as realized oil and gas prices were lower than expected. The PE is medium. Shareholder returns are very generous.
In my 85 oil and gas companies ranking the merger of Whitecap/Veren ranks in the top 25 at a high 17th position.
Production
• Q1 production (179 K BoE/d) was above Q4 (176 K BoE/d) and well above guidance (173 K BoE/d). I had expected 177 K BoE/d.
• Whitecap did not provide a Q2 outlook. An outlook will be provided after conclusion of the merger with Veren in mid-May. I expect a Whitecap only production in Q2 of 180 K BoE/d. With Veren included after mid-May, Q2 production can reach 270-275 K BoE/d.
• In H2 the combined production can build up to levels of 376-382 K BoE/d.
• As both Whitecap and Veren combined have ample reserves and a good RRR, after 2025 production can grow with 3-5%/year to 445-450 K BoE/d in 2029 (see chart below).
Balance sheet
• Whitecap has a solid balance sheet
• The equity ratio =-equity/balance sheet total) improved from 57.8% (Q4) to 59.4% (Q1).
• The long-term debt was flat at C$ 1,024 M.
• The debt/EBITDA ratio on an annual basis is a low 0.48 and can fall further over time.
• The balance sheet allows ample shareholder returns.
Profitability
• Whitecap is a very profitable company.
• Realized oil prices continued to show the positive effect of the start-up of the Trans Mountain 2024. The Q1 realized oil price discount compared to WTI was a bit disappointing US $ 4.69/bbl versus US$ 1.97/bbl in Q4. A year ago, the discount was US$ 11.61/bbl (Q1 2024).
• The Q1 realized natural gas price (C$ 2.39/MM Btu) was well above the C$ 1.57/MM Btu in Q4. Based on the Henry Hub gas price I had expected a bigger jump. Canadian gas prices are clearly trailing US gas prices.
• Due to the lower-than-expected oil and gas process the Q1 adjusted eps of C$ 0.28 was below m expectation.
• With WTI = US$ 60-65/bbl, the eps in 2025 can reach C$ 0.90-1.07 (PE is a medium 7.5-9.0).
• After 2025 the eps can reach C$ 0.67-0.99 (PE a medium 8.1-11.9) in 2029.
Shareholder returns
• Whitecap paid in Q1 a monthly dividend of C$ 0.063 or C$ 0.73 on an annual basis.
• Whitecap did not buy back shares in Q1.
• With the dividend maintained throughout 2025, I expect shareholder returns in 2025 to be 9.1%.
• After 2025 returns can increase to 10-12% in 2029.
Conclusions
Q1 results were mixed. Q1 production was above guidance. Production in Q2 will grow as the Veren merger will be concluded in mid-May. After 2025 with ample reserves and a high RRR, the production growth should continue. The balance sheet is solid and allows ample shareholder returns. Profitability is good. Profit was lower than expected as realized oil and gas prices were lower than expected. The PE is medium. Shareholder returns are very generous.
In my 85 oil and gas companies ranking the merger of Whitecap/Veren ranks in the top 25 at a high 17th position.
In mid May 2025 Whitecap will merge with Veren. Q1 will be the last quarter for Whitecap to report on as a stand-alone company.
Summary
Q1 results were mixed. Q1 production was above guidance. Production in Q2 will grow as the Veren merger will be concluded in mid-May. After 2025 with ample reserves and a high RRR, the production growth should continue. The balance sheet is solid and allows ample shareholder returns. Profitability is good. Profit was lower than expected as realized oil and gas prices were lower than expected. The PE is medium. Shareholder returns are very generous.
In my 85 oil and gas companies ranking the merger of Whitecap/Veren ranks in the top 25 at a high 17th position.
Production
• Q1 production (179 K BoE/d) was above Q4 (176 K BoE/d) and well above guidance (173 K BoE/d). I had expected 177 K BoE/d.
• Whitecap did not provide a Q2 outlook. An outlook will be provided after conclusion of the merger with Veren in mid-May. I expect a Whitecap only production in Q2 of 180 K BoE/d. With Veren included after mid-May, Q2 production can reach 270-275 K BoE/d.
• In H2 the combined production can build up to levels of 376-382 K BoE/d.
• As both Whitecap and Veren combined have ample reserves and a good RRR, after 2025 production can grow with 3-5%/year to 445-450 K BoE/d in 2029 (see chart below).
- Whitecap production profile.jpg (40.48 KiB) Viewed 399 times
• Whitecap has a solid balance sheet
• The equity ratio =-equity/balance sheet total) improved from 57.8% (Q4) to 59.4% (Q1).
• The long-term debt was flat at C$ 1,024 M.
• The debt/EBITDA ratio on an annual basis is a low 0.48 and can fall further over time.
• The balance sheet allows ample shareholder returns.
Profitability
• Whitecap is a very profitable company.
• Realized oil prices continued to show the positive effect of the start-up of the Trans Mountain 2024. The Q1 realized oil price discount compared to WTI was a bit disappointing US $ 4.69/bbl versus US$ 1.97/bbl in Q4. A year ago, the discount was US$ 11.61/bbl (Q1 2024).
• The Q1 realized natural gas price (C$ 2.39/MM Btu) was well above the C$ 1.57/MM Btu in Q4. Based on the Henry Hub gas price I had expected a bigger jump. Canadian gas prices are clearly trailing US gas prices.
• Due to the lower-than-expected oil and gas process the Q1 adjusted eps of C$ 0.28 was below m expectation.
• With WTI = US$ 60-65/bbl, the eps in 2025 can reach C$ 0.90-1.07 (PE is a medium 7.5-9.0).
• After 2025 the eps can reach C$ 0.67-0.99 (PE a medium 8.1-11.9) in 2029.
Shareholder returns
• Whitecap paid in Q1 a monthly dividend of C$ 0.063 or C$ 0.73 on an annual basis.
• Whitecap did not buy back shares in Q1.
• With the dividend maintained throughout 2025, I expect shareholder returns in 2025 to be 9.1%.
• After 2025 returns can increase to 10-12% in 2029.
Conclusions
Q1 results were mixed. Q1 production was above guidance. Production in Q2 will grow as the Veren merger will be concluded in mid-May. After 2025 with ample reserves and a high RRR, the production growth should continue. The balance sheet is solid and allows ample shareholder returns. Profitability is good. Profit was lower than expected as realized oil and gas prices were lower than expected. The PE is medium. Shareholder returns are very generous.
In my 85 oil and gas companies ranking the merger of Whitecap/Veren ranks in the top 25 at a high 17th position.