Q2 reporting season is officially underway. With that in mind, we thought we would use public data tool BOE Intel to offer a preview of what we might expect from Whitecap Resources from a reporting perspective and for a glimpse into what the back half of the year might hold.
Over the last 3 months, Whitecap licensed 107 wells. Of those, 30 were for the Viking, 25 for the Montney, and 19 for the Frobisher.
Formation | Licences |
---|---|
Viking | 30 |
Montney | 25 |
Frobisher | 19 |
Cardium | 7 |
Midale | 5 |
Lower Shaunavon | 5 |
Duvernay | 5 |
Glauconitic | 3 |
Charlie Lake | 2 |
Other | 6 |
While Q2 always brings spring breakup challenges for moving equipment in the field, this year also saw wildfire issues for most producers. Despite these challenges, Whitecap was able to spud 54 wells over the last 3 months, with the majority targeting the Viking (35) and the Frobisher (9) in Saskatchewan. The company was also able to spud some of its other oilier assets as it had talked about in its Q1 report, with 4 Duvernay spuds, 2 Glauc and 1 Charlie Lake.
Formation | Spuds |
---|---|
Viking | 35 |
Frobisher | 9 |
Duvernay | 4 |
Glauconitic | 2 |
Lower Shaunavon | 1 |
Charlie Lake | 1 |
Cardium | 1 |
Montney | 1 |
This sets up an interesting second half for Whitecap, as the company has lots of recent Montney licences that it could drill after only spudding 1 (just last week) of its 25 Montney licences in the last 3 months. Most of these licences are in the Kakwa area, which is known for its big Montney wells and high condensate rates. This could be an area for Whitecap to focus on in the back half of the year if it chooses, and could set up some nice production growth in the back half. According to the company’s presentation, it is the play with the best economics and fastest payouts for Whitecap as well.
Source: Whitecap Corporate Presentation (PowerPoint Presentation (wcap.ca))
The company’s Q2 report will be interesting to see how much production was affected by the wildfires. Whitecap never issued formal guidance after the wildfires, but did indicate on May 17th that 26,000 boe/d was curtailed at that point in time, and that the range had been anywhere between 12,000-40,000 boe/d.
Luckily for us, BOE Intel has a tool that allows us to see production on a per well basis for all wells licensed to Whitecap. It won’t account for any joint venture or working interest agreements, but will show us what we call “gross licensed production.” This figure also will not account very well for condensate/NGLs as the per well data for Alberta/Saskatchewan does not report those figures, but instead comes out of the gas volumes at the plant level.
For the month of May, we can see gross licensed production for Whitecap fell from 165,287 boe/d in April to 146,925 boe/d in May. That would represent a drop of 18,362 boe/d month-over-month, which may slightly overstate the amount of production curtailed on a corporate basis when comparing historical corporate production vs. gross licensed production. While that might seem like a lot, it is actually less than this subset of producers which saw gross licensed production fall 15.5% in May. It might also be not quite as big a curtailment as the May 17th press release may have led people to believe. In about a week, we will get June gross licensed production figures and will be able to see how quickly production was restored to full capacity.
Investors will also be closing watching net debt levels for Whitecap, as the company has previously indicated that the dividend should be going up 26% once the $1.3 billion net debt level is achieved.
Source: Whitecap Corporate Presentation (PowerPoint Presentation (wcap.ca))
As of Q1, net debt stood at approximately $1.47 billion, down markedly over the last couple of quarters as the company has done an excellent job integrating in the XTO assets and paying down the debt associated with that transaction. If the company is able to continue that trend of decreasing net debt, then it could be in a position to boost its dividend sooner rather than later.
Whitecap will officially report its Q2 results on July 26th.
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