• Average Production: 173,302 BOE per day, exceeding forecast.

• Funds Flow: $409 million or $0.68 per share.

• Free Funds Flow: $136 million for the quarter, $350 million for the first nine months of 2024.

• Shareholder Returns: Over $200 million returned, including $108 million in dividends and $117 million in share repurchases.

• Capital Investments: $273 million to drill 67 wells, 63 net wells.

• Net Debt: $1.4 billion, with a debt-to-EBITDA ratio of 0.6 times.

• Production Guidance for 2025: 176,000 to 180,000 BOE per day.

• 2025 Capital Budget: $1.1 billion to $1.2 billion.

• Operating Costs: Approximately $14 per BOE.

• Transportation Costs: $2.10 per BOE.

• Cash Tax Rate: 11% to 12% of pretax funds flow.

• Net Debt Post-PGI Transaction: Expected to be approximately $1 billion.

• 2025 Free Operating Income from Musreau Asset: Forecasted at $150 million.

• Warning! GuruFocus has detected 4 Warning Signs with SPGYF.

Release Date: October 23, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Whitecap Resources Inc (SPGYF) reported strong operational and financial performance, with average production exceeding forecasts at 173,302 BOE per day.

• The company generated significant funds flow of $409 million or $0.68 per share, with $136 million of free funds flow in the quarter.

• Whitecap Resources Inc (SPGYF) returned over $200 million to shareholders, including $108 million in dividends and $117 million in share repurchases.

• The 2025 budget plan includes capital investments of $1.1 billion to $1.2 billion, aiming for production growth of 176,000 to 180,000 BOE per day, representing a 5% per share growth.

• The company's balance sheet is strong, with net debt of $1.4 billion and a debt-to-EBITDA ratio of 0.6 times, expected to improve further post-PGI transaction.

Negative Points

• AECO natural gas prices contributed to less than 3% of revenue, indicating a potential vulnerability to natural gas market fluctuations.

• The company faces infrastructure limitations at Musreau, which could restrict growth unless addressed through debottlenecking or facility expansion.

• The liquids production ratio is expected to decline slightly from 64% to 63% in 2025, potentially impacting revenue from higher-margin liquids.

• The 2025 capital budget includes significant infrastructure spending, which may limit funds available for other strategic initiatives.

• Whitecap Resources Inc (SPGYF) must manage both economic and infrastructure challenges in balancing well allocation between Montney and Duvernay assets.

Q & A Highlights

Q: Is growth at Musreau limited by infrastructure or inventory based on the five-year plan expansion possibilities? A: Joey Wong, Director, Central Alberta Business Unit: Growth at Musreau is influenced by both infrastructure and inventory. The facility is designed for a capacity of 20,000 BOEs per day, which aligns with the current inventory of 50 to 60 locations. Considerations for future growth include improving capital efficiencies or targeted debottlenecking, but not a significant increase in facility capacity.