Whitecap Resources Q2 Earnings Call Highlights

Whitecap Resources (TSE:WCP) reported record second-quarter funds flow and free funds flow as higher crude oil and condensate prices, lower operating costs and production above internal expectations supported its results.

President and CEO Grant Fagerheim said funds flow reached C$1.4 billion, or C$1.11 per share, while free funds flow totaled a record C$925 million. The company reported an operating netback of C$43.84 per barrel of oil equivalent, up 48% from the prior-year quarter.

Whitecap attributed stronger commodity pricing in part to disruptions to Middle East crude oil and condensate supply, which it said tightened global availability of light barrels and increased demand for North American light oil and condensate.

Financial Results and Balance Sheet

Petroleum and natural gas revenue rose 93% year over year to C$2.6 billion, according to Senior Vice President and CFO Thanh Kang. The increase reflected higher crude oil and condensate prices as well as a full quarter of production from the Veren assets.

Second-quarter WTI averaged US$92.79 per barrel. Whitecap realized a crude oil and condensate price of C$127.82 per barrel, aided by premiums for its light oil and condensate volumes and a weaker Canadian dollar. Liquids represented approximately 61% of production but accounted for about 93% of revenue during the quarter.

Natural gas prices remained weak, with AECO averaging C$1.63 per Mcf amid unplanned NGTL maintenance. Whitecap’s realized natural gas price was C$2.29 per Mcf, or C$0.66 per Mcf above AECO, which the company said demonstrated the benefit of its price-diversification strategy.

Operating costs declined 13% from a year earlier to C$11.88 per BOE. Whitecap lowered its full-year operating cost forecast to a midpoint of C$12 per BOE, a C$0.50-per-BOE reduction from its original budget. Kang said the lower cost outlook is expected to increase free cash flow by approximately C$70 million.

Net income increased 186% from the prior-year quarter to C$890 million, or C$0.73 per share. The company also recorded a C$282 million unrealized gain on commodity contracts, compared with an unrealized loss of C$509.1 million in the first quarter.

Whitecap reduced net debt by C$900 million over the past six months to C$2.5 billion, equivalent to 0.5 times debt to cash flow. Management said it will continue to prioritize balance-sheet strength during elevated commodity prices while maintaining flexibility for dividends, share repurchases and acquisitions.

Production Guidance Raised Again

Quarterly production averaged 388,894 BOE per day, including 239,083 barrels per day of liquids and just under 900 million cubic feet per day of natural gas. Production exceeded Whitecap’s internal forecast by roughly 8,000 BOE per day, led by performance at Kaybob and base-production optimization in Central Alberta.

As a result, Whitecap raised its 2026 production guidance by 5,000 BOE per day to 385,000 BOE per day. It marks the company’s second increase this year and brings guidance 12,500 BOE per day, or 3%, above its original budget.

Whitecap maintained its capital spending guidance of C$2.0 billion to C$2.1 billion, though Fagerheim said the company expects to spend at the high end of the range because of shorter cycle times across its asset base. The company drilled 47 wells across the Montney, Duvernay and conventional portfolio during the quarter using approximately seven rigs, and expects to use about 12 rigs through the third and fourth quarters.

Kang told analysts that approximately 55% of the production outperformance came from new well performance, while 45% came from base optimization. Whitecap expects to exit the year above 385,000 BOE per day, while incorporating about 10,000 BOE per day of planned downtime in its third-quarter outlook.

Kaybob Capacity and Development Progress

President Joey Wong said Whitecap’s unconventional division continued to see above-forecast aggregate performance from wells brought online this year. Drilling meters per day were 31% above historical levels, while proppant placed per day was 13% above historical levels.

The Kaybob Duvernay asset reached its productive capacity range of 115,000 to 120,000 BOE per day during the second quarter. Whitecap expects production to average within that range through the third and fourth quarters, supported by stronger well results, shorter cycle times, debottlenecking and base optimization.

Wong said Kaybob is shifting from growth toward sustaining capacity and generating free cash flow. Under Whitecap’s updated forecast, the asset could generate C$800 million to C$900 million of annual operating free cash flow at WTI prices between US$70 and US$80 per barrel.

At Lator, construction of the 413 facility was approximately 90% complete, with startup expected in the fourth quarter. Whitecap said the project remains on budget and on schedule. The company also continued testing plug-and-perf completion methods at Karr and plans to spud a third pilot pad at Gold Creek in the coming months.

Conventional Assets and Capital Allocation

Vice President Chris Bullin said Whitecap’s conventional division, which is 80% liquids weighted, contributed nearly 45% of operating cash flow during the first six months of the year while accounting for 22% of capital spending.

The company cited production optimization and infrastructure flexibility in Alberta, along with waterflood management and field surveillance in Saskatchewan, as contributors to results. Bullin also highlighted a three-well Charlie Lake program at Valhalla that significantly outperformed offset wells during its first 90 days after using higher proppant intensity and higher-capacity artificial lift.

Looking ahead, Fagerheim said Whitecap’s planning process for 2027 includes evaluating dividend growth, buybacks, acquisitions and potential higher-growth capital programs. Kang said the company’s base case is for 3% production growth next year, with a long-term objective of 3% to 5% production growth per share.

Management also pointed to Whitecap’s exposure to condensate demand. Fagerheim said the company currently produces about 60,000 BOE per day of condensate and could potentially increase that volume by 25,000 to 50,000 BOE per day over time, depending on development conditions and market demand.

About Whitecap Resources (TSE:WCP)

Whitecap Resources Inc is a leading Canadian energy company committed to delivering reliable returns to shareholders through the responsible development of oil and natural gas assets in the Western Canadian Sedimentary Basin. With a strong track record of profitable growth and a sustainable dividend, Whitecap delivers long-term value to investors, supported by investment-grade financial strength.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected].

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