WHITECAP RESOURCES INC (WCP.TO) Q1 2026 Earnings Call Transcript
Bullish Oil & Gas Exploration & Production 12.31B Canada
Whitecap Resources Inc. engages in the acquisition, development, and production of petroleum and natural gas properties and assets in Western Canada. The company's primary areas of focus of development programs located in Northern Alberta, British Columbia, Central Alberta, and Western and Eastern Saskatchewan. Whitecap Resources Inc. was founded in 2009 and is based in Calgary, Canada.
Whitecap delivered resilient 2025 results with record per-share production and strong free cash flow, while maintaining guidance and advancing a diversified hedging and liquidity position to support continued shareholder returns.
⭐ Key Highlights
Record Q4 production per share
Q4 production averaged over 379,000 BOE per day, with Q4 production per share being the highest quarterly result in Whitecap's history.
Strong full-year funds flow and free cash flow
2025 funds flow of $2.95 per share, second highest annually, plus approximately $900 million of free cash flow.
Significant shareholder value delivery
Returned $736 million to shareholders via dividends and $193 million via share repurchases; 2025 total shareholder return at the high end of the 10-15% target range (≈15%).
Debt and liquidity stance improved
Year-end net debt of $3.4 billion (below 1x annualized Q4 funds flow) with $1.5 billion of available liquidity; credit rating upgrade to BBB flat.
Guidance and near-term momentum
Q1 2026 production guidance of 375,000–380,000 BOE/d; full-year guidance unchanged at 370,000–375,000 BOE/d with $2.0–$2.1 billion capex; improving operational momentum into 2026.
✔Positive Signals
- Record Q4 and full-year funds flow and free cash flow generation
- Material shareholder returns: dividends and buybacks; TSR at high end of target
- Debt position improved with net debt <1x annualized funds flow and liquidity of $1.5B
- Hedging strategy preserved (25-35% for 2026) with additional diversification into LNG-linked pricing via Centrica and Chicago deals
- Outperformance and efficiency gains across assets (Lator, Kaybob, Musreau) enabling higher production and stabilizing cash flow
✖Negative Signals
- PDP F&D costs increased to about $17/boe in 2025 due to asset mix and efficiency realization
- Near-term reliance on commodity prices; guidance is contingent on prices and execution
- Capex plan remains sizable; future growth depends on continued operational delivery and market access
- Hedging program subject to market conditions; 2026 hedges only partially locked in with 25-35% target
- Execution risk of accelerating Kaybob debottlenecking and facility start-up timing (Phase 1, 4Q26)
📊Financial Results
- Funds flow per share: $2.95 for 2025, second highest annual result in company history
- Fourth-quarter operating costs: $12.24 per BOE, an 11% decrease vs. 2024
- Net debt: $3.4 billion at year-end, less than 1x annualized Q4 funds flow
- Hedging: 25-35% of 2026 production hedged; 25%–35% target; 2026 hedges focused on costless collars
- Liquidity: $1.5 billion available; upgraded credit rating to BBB flat
🔮Future Guidance
- First-quarter 2026 production guidance of 375,000–380,000 BOE/d
- Full-year 2026 production guidance of 370,000–375,000 BOE/d; capital expenditure guidance of $2.0–$2.1 billion
- Hedging target maintained: 25%–35% of 2026 production; additional 2027 hedges executed to reach target
- Asset-level free cash flow expectations depend on WTI and regional pricing; Kaybob debottlenecking accelerated to push to 115,000–120,000 BOE/d by year-end 2024 guidance
💡Interesting Insights
- Long-term gas diversification strategy includes 10-year Centrica and Chicago (Henry Hub) agreements to reduce AECO exposure and broaden price exposure to global gas markets
Detailed Analysis
AI-generated summary of WHITECAP RESOURCES INC earnings call transcript.
Whitecap's 2025 results reflect structural margin improvements from scale and synergies post Veren combination, delivering 2024–2025 operational momentum across Montney, Kaybob, and Conventional assets. The company generated $2.95 per share of funds flow and about $900 million of free cash flow, supported by higher liquids mix, improved operating costs, and efficiency gains. A disciplined capital plan yielded $2.0–$2.1 billion in capex, with notable progress in Musreau, Lator, Kaybob, and Conventional assets, including accelerated debottlenecking and higher condensate production. The balance sheet strengthened with a net debt of $3.4 billion and a BBB flat credit rating, plus hedging and diversified gas marketing (Centrica and Chicago paths) to reduce AECO exposure. Management reiterated 2026 production guidance and highlighted a robust inventory of development opportunities, while acknowledging sensitivity to commodity prices and capital allocation depending on cash generation.
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