Q2 2024 Whitecap Resources Inc Earnings Call
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Sylvie: Good morning, my name is Sylvia, and I will be your conference operator today. At this time, I would like to welcome everyone to Whitecap Resources' Q2 2024 Results Conference Call. Note that all lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session, and if you would like to ask a question during this time, simply press star, then number two, I'm sorry, star, then number one on your telephone keypad. And should you wish to withdraw your question, please press star, then number two. I would now like to turn it over to Whitecap's President and CEO, Mr. Grant Fagerheim. You may begin, sir.
Sylvie: Good morning, my name is Sylvie, and I will be your conference operator today.
Sylvie: At this time, I would like to welcome everyone to Whitecap Resources Q2-2024 results conference call. Note that all lines have been placed on mute to prevent any background noise.
Good morning, my name is Sylvie and I will be your conference operator today. At this time, I would like to welcome everyone to Whitecap Resources' Q2 2024 Results Conference Call.
Sylvie: After the speaker's remarks, there will be a question-and-answer session. And if you would like to ask a question during this time, simply press start and number two.
Note that all lines have been placed on mute to prevent any background noise.
After the speaker's remarks, there will be a question and answer session. And if you would like to ask a question during this time, simply press star then number two, I'm sorry, star then number one on your telephone keypad. And should you wish to withdraw your question, please press star then number two.
Sylvie: I'm sorry, start at number one on your telephone keypad. And should you wish to withdraw your question, please press start at number two.
Grant Fagerheim: I would now like to turn it over to Whitecap's President and CEO, Mr. Grant Fagerheim. You may begin, sir.
I would now like to turn it over to Whitecap's President and CEO , Mr. Grant Fagerheim. You may begin, sir.
Grant Bradley Fagerheim: Thanks very much, Sylvie. Good morning, everyone, and thank you for joining us. There are four members of our management team here with me today. Our senior vice president and CFO, Thanh Kang. Our senior vice president of Business Development and Information Technology, Dave Mombourquette. Our vice president of our West Division, Joey Wong, and our vice president of our East Division, Chris Bullin.
Grant Fagerheim: Thanks very much, Sylvie.
Grant Fagerheim: Good morning, everyone, and thank you for joining us. There are four members of our management team here with me today: her senior vice president and CFO, Tom Kang; her senior vice president, business development, information technology, Dave Marble-Keth; her vice president, our West Division, Joey Wong; and our vice president, our East Division, Chris Bullin.
Thanks very much, Sylvie. Good morning, everyone, and thank you for joining us. There are four members of our management team here with me today. Our Senior Vice President and CFO , Thanh Kang.
Our Senior Vice President of Business Development and Information Technology, Dave Mombourquette.
Our Vice President of our West Division, Joey Wong, and our Vice President of our East Division, Chris Bullin. Before we get started today, I would like to remind everybody that the statements made by the company today during this call are subject to the same forward-looking disclaimer and advisory that we set forth in our news release issued yesterday afternoon.
Grant Bradley Fagerheim: Before we get started today, I would like to remind everybody that the statements made by the company today during this call are subject to the same forward-looking disclaimer and advisory that we set forth in our news release issued yesterday afternoon. I am pleased to report that we had a very successful second quarter, with record quarterly production averaging over 177,000 BUE per day, especially when compared to our forecast of 170,500 BUE per day. This generated $426 million of fund flow and $23 million of free fund flow.
Grant Fagerheim: Before we get started today, I would like to remind everybody that the statements made by the company today during this call are subject to the same poor-looking disclaimer and advisory that we set forth in our news release yesterday afternoon. I am pleased to report that we had a very successful second quarter with record quarterly production, averaging 170,000 over 177,000 BUE per day, especially when compared to our forecast of 170,500 BUE per day. This generated $126 million a fund flow and $23 million a free fund flow. These results are directly attributed to the exceptional work of our exceptional technical teams. Our year-to-date operation and asset performance-wise has been exceptional, resulting in production of performance across our entire portfolio.
I am pleased to report that we had a very successful second quarter with record quarterly production averaging over 177,000 BUE per day.
Especially when compared to our forecast of 170,500 BUE per day.
Grant Bradley Fagerheim: These results are directly attributed to the exceptional work of our exceptional technical teams. Our year-to-date operationally and asset performance-wise has been exceptional, resulting in production outperformance across our entire portfolio. In particular, our southeast Saskatchewan Frobisher assets, our central Alberta Cardium and Glockenheit assets, as well as our unconventional Montney and DuVernay assets, all outperformed our internal expectations. Since acquiring XTO assets in August 2022, we have taken meaningful steps to develop our Montney and DuVernay assets, which has underpinned our strong operational performance in our unconventional assets.
This generated $426 million dollars of fund slow and $23 million dollars of free fund slow. These results are directly attributed.
to the exceptional work of our exceptional technical teams. Our year-to-date operationally and asset performance-wise has been exceptional, resulting in production outperformance across our entire portfolio. In particular, our southeast Saskatchewan Fulbisher assets,
Grant Fagerheim: In particular, our Southeast Saskatchewan Fulvesher assets, our Central Alberta Cardium and Glockenite assets, as well as our unconventional Montany and Duvernay assets, all outperformed our earned internal expectations. Since acquiring XTO assets in August 2022, we have taken meaningful steps to develop our Montany and Duvernay assets, which has underpinned our strong operational performance in our unconventional assets. Today, we have designed and executed on a development plan across both our Montany and Duvernay assets, providing confidence to the market in the deliverability of our asset base and our operational execution, designed, constructed and brought on our Mosul battery on time and under budget, developed a long-range plan showcasing the meaningful growth and depth of inventory within our Montany and Duvernay assets.
Our Central Alberta Cardium and Gluconate assets, as well as our unconventional Montigny and DuVernay assets, all outperformed our Arnold's internal expectations.
Since acquiring XTO assets in August 2022, we have taken meaningful steps to develop our Montney and DuVernay assets, which has underpinned our strong operational performance in our unconventional assets.
Grant Bradley Fagerheim: To date, we have designed and executed on a development plan across both our Montney and DuVernay assets, providing confidence to the market in the deliverability of our asset base and our operational execution, designed, constructed, and brought on our Mosrow battery on time and under budget, and developed a long-range plan showcasing meaningful growth and depth of inventory within our Montigny and Duvernay assets, and in particular, our next stage of Mont Subsequent to the end of the second quarter, we also announced a positive FID on our Phase 1 new build in the Tor facility, which is fully funded by PGI.
To date, we have designed and executed on a development plan across both our Montney and DuVernay assets, providing confidence to the market in the deliverability of our asset base and our operational execution, designed, constructed, and brought on our Mosrow Battery on time and under budget.
Developed a long-range plan showcasing meaningful growth and depth of inventory within our Montigny and Duvernay assets, and in particular, our next stage of Montigny growth and development in our Latour area of Alberta.
Grant Fagerheim: And in particular, our next stage of Montany growth and development in our laboratory of Alberta. Subsequent to the end of the second quarter, we also announced a positive FID on our Phase I new build in the Torre facility that is fully funded by PGI. This, in addition to the partial working interest disposition of our Mosul and Kibab facilities to strong partners, Topaz and PGI, for total proceeds of $520 million. Through our extensive scale and depth of our high-quality inventory, we have been able to secure additional pipeline and facility access, enhance contract terms, and highly competitive fees on our processing, transportation, fractionation, and marketing for all areas of our Montany and Duvernay development.
Subsequent to the end of the second quarter, we also announced a positive FID on our Phase 1 new build in the TOR facility.
Grant Bradley Fagerheim: This is in addition to the partial working interest disposition of our Musro and Kibob facilities to strong partners Topaz and PGI for total proceeds of $520 million. Through our extensive scale and depth of our high-quality inventory, we have been able to secure additional pipeline and facility access, enhance contract terms, and highly competitive fees on our processing, transportation, fractionation, and marketing for all areas of our Monteney and Duvernay developments. These synergies will enhance our future netbacks and reduce the overall financial impact of the infrastructure working interest dispositions.
that is fully funded by PGI. This in addition to the partial working interest disposition of our Musro and Kibob facilities to strong partners Topaz and PGI for total proceeds of $520 million.
Through our extensive scale and depth of our high quality inventory, we have been able to secure additional pipeline and facility access.
Enhanced Contract Terms and Highly Competitive Fees on our Processing, Transportation, Fractionation, and Marketing for all areas of our Monteney and DuVernay Development.
Grant Fagerheim: These synergies will enhance our future netbacks and reduce the overall financial impact of infrastructure working interest disposition. We are very excited to move ahead with both partners and look forward to continued progression of our unconventional longing to donate development.
These synergies will enhance our future netbacks and reduce the overall financial impact of infrastructure working interest dispositions.
Grant Bradley Fagerheim: We are very excited to move ahead with both partners and look forward to continued progression of our unconventional Montanian and Tubernate development. I will now pass the phone on to Tom to discuss our second quarter financial results.
We are very excited to move ahead with both partners and look forward to continued progression of our unconventional Montanean Tubernate development.
Tom Kang: I will now pass the phone on to Tom to discuss our second quarter financial results. Thanks, Grant. Our second quarter financial results were equally as strong as our operational results, generating fund flow of 426 million or 71 cents per share and free fund flow of 223 million or 37 cents per share. Our predominantly light oil and condensate production base benefited from crude oil prices averaging over $110 per barrel on a Canadian dollar basis, with total liquids representing 95% of our revenue for the quarter. Our operating cost decreased to $13.49 per year in the second quarter, a strong result for our team and reflect higher production and continued focused on cost savings.
I will now pause.
Thanh C. Kang: Thanks Grant. Our second quarter financial results were equally as strong as our operational results, generating fund flow of $426 million, or $0.71 per share, and free fund flow of $223 million, or $0.37 per share. Our predominantly light oil and condensate production base benefited from crude oil prices averaging over $110 per barrel on a Canadian dollar basis, with total liquids representing 95% of our revenue for the quarter. Our operating costs decreased to $13.49 per BOE in the second quarter, a strong result for our team and reflecting higher production and continued focus on cost savings.
They've flown on to Tom to discuss our second quarter financial results. Tom? Thanks, Grant. Our second quarter financial results were equally as strong as our operational results.
Generating funds flow of $426 million or $0.71 per share and free funds flow of $223 million or $0.37 per share.
Our predominantly light oil and condensate production base benefited from crude oil prices averaging over $110 per barrel on a Canadian dollar basis, with total liquids representing 95% of our revenue for the quarter.
Our operating costs decreased to $13.49 per BOE in the second quarter, a strong result for our team and reflect higher production and continued focus on cost savings.
Tom Kang: Cash tax expense of 100 million in a quarter included 33 million or 5 cents per share impact on capital gains from the partial infrastructure disposition. Excluding this one-time impact, the tax rate as a percentage of pre-tax fund flow of 6 months ended with 12%, which is consistent with our forecast of between 12 to 14% for 2024. Year to date, we have returned almost 250 million to shareholders, including 25 million of share repurchases in July. We plan to use 200 million of the proceeds for the partial infrastructure dispositions toward share repurchases in the second half of the year.
Thanh C. Kang: Cash tax expense of $100,000,000.25 included $0.33 million or $0.05 per share impact on capital gains from the partial infrastructure disposition. Excluding this one-time impact, the tax rate, as a percentage of pre-tax funds flow for the six months ended, was 12%, which is consistent with our forecast of between 12 to 14% for 2024. Year-to-date, we have returned almost $250 million to shareholders, including $25 billion of share repurchases in July. We plan to use $200 million of the proceeds from the partial infrastructure dispositions towards share repurchases in the second half of the year.
Cash tax expense of $100,000,000.25 included $0.33 million or $0.05 per share impact on capital gains from the partial infrastructure disposition.
Excluding this one-time impact, the tax rate as a percentage of pre-tax funds flow for the six months ended was 12%, which is consistent with our forecast of between 12 to 14% for 2024.
Year to date, we have returned almost $250 million to shareholders, including $25 million of share repurchases in July . We plan to use $200 million of the proceeds from the partial infrastructure dispositions towards share repurchases in the second half of the year.
Tom Kang: Proformer of the dispositions are net debt set that below 900 million and after share repurchases we forecast net debt of below a billion dollars at year end. This low level of debt relative to our projected 1.7 billion in fund flow provides us with capital allocation optionality going forward.
Thanh C. Kang: Pro forma of the dispositions, our net debt sits at below $900 million, and after share repurchases, we forecast net debt of below $1 billion at year end. This low level of debt relative to our projected $1.7 billion in funds flow provides us with capital allocation optionality going forward. I will now pass it off to Joey for remarks on our West Division results.
Pro forma of the dispositions, our net debt sits at below $900 million, and after share repurchases we forecast net debt of below $1 billion at year end.
This low level of debt relative to our projected $1.7 billion in funds flow provides us with capital allocation optionality going forward.
Joey Wong: I will now pass it off to Joy for remarks on our West Division results. Thanks, Tom. Our Montany and Durin A assets continue to perform well, with updated data showing that our recent wells are outperforming on both an initial and longer term basis. As we progress, development of this asset base incremental data is analyzed by our team and informs production strategies and forecasting models for existing wells while also helping to shape development and expectations for our plan going forward. As we highlighted in our investor day in early June, our approach to customized pad design, completion parameters, and development plans has yielded positive results across our Montany and Durin A assets at Kaqwa, Latour, and K-Buff.
I will now pass it off to Joey for remarks on our West Division results.
Joey Wong: Our Montigny and DuVernay assets continue to perform well, with updated data showing that our recent wells are outperforming on both an initial and longer-term basis. As we progress the development of this asset base, incremental data is analyzed by our team and informs production strategies and forecasting models for existing wells, while also helping to shape development and expectations for our plans going forward. As we highlighted at our Investor Day in early June, our approach to customized pad design, completion parameters, and development plans has yielded positive results across our Montney and DuVernay assets at Kaqua, Latour, and KBOPS.
Thanks Thanh. Our Montigny and DuVernay assets continue to perform well, with updated data showing that our recent wells are outperforming on both an initial and longer term basis.
As we progress development of this asset base, incremental data is analyzed by our team and informs production strategies and forecasting models for existing wells, while also helping to shape development and expectations for our plans going forward.
As we highlighted in our Investor Day in early June , our approach to customized pad design, completion parameters, and development plans has yielded positive results across our Montney and Duvernay assets at Kaqua, Latour, and Kaibab. Our recent results on our first eight wells at Musro are another data point that validates this approach.
Joey Wong: Our recent results on our first eight wells at Muzro are another data point that validates this approach. Over the first 90 days, the eight wells have averaged 1,600 buoys a day per well, with almost 1,100 barrels per day of condensate per well. At times we were producing at over 80 percent of our condensate stabilization capacity of our new facility, and after bringing on our third four well pad in late Q3, we expect to be producing consistently at sales condensate capacity of almost 11,000 barrels per day. The economics of these first eight wells are very robust and are projected to pay out in only five months.
Chris Bullin: Our recent results on our first eight wells at Musro are another data point that validates this approach. Over the first 90 days, the eight wells have averaged 1,600 BOEs a day per well, with almost 1,100 barrels per day of condensate per well. At times, we were producing at over 80% of our condensate stabilization capacity of our new facility, and after bringing on our third 4-well pad in late Q3, we expect to be producing consistently at a sales condensate capacity of almost 11,000 barrels per day.
Over the first 90 days, the eight wells have averaged 1600 BOEs a day per well, with almost 1100 barrels per day of condensate per well.
At times we were producing at over 80% of our condensate stabilization capacity of our new facility, and after bringing on our third four-well pad in late Q3, we expect to be producing consistently at sales condensate capacity of almost 11,000 barrels per day.
Chris Bullin: The economics of these first eight wells are very robust and are projected to pay out in only five months. In total, we plan to bring on 15 Montigny and DuVernay wells in the second half of the year after bringing on our latest DuVernay 3-well pad at 11 of 34B in the second quarter. Although we would define each area as drilling liquids-rich natural gas wells, the liquids, and more specifically, the condensate volumes, drive the economics of each area.
The economics of these first eight wells are very robust and are projected to pay out in only five months.
Joey Wong: In total, we plan to bring on 15 Montany and Durin A wells in the second half of the year after bringing on our latest Durin A 3 well pad at 11 to 34 B in the second quarter. Although we would define each area as drilling liquids-rich natural gas wells, the liquids and, more specifically, the condensate volumes drive the economics of each area. When running sensitivities on our k-bubberane plus cacqua, litor, and muzzromontomy type curves, we can run zero dollar natural gas prices for the first four months of production and still achieve average pay-out in less than one year across the four areas.
In total, we plan to bring on 15 Montigny and DuVernay wells in the second half of the year, after bringing on our latest DuVernay 3-well pad at 11 of 34B in the second quarter.
Although we would define each area as drilling liquids-rich natural gas wells, the liquids and, more specifically, the condensate volumes, drive the economics of each area. When running sensitivities on our K-Bob DuVernay plus Kaqua, Latour, and Muz-Ro-Montney type curves,
Chris Bullin: When running sensitivities on our Kaibab-Douvernay plus Kakwa-Latorre and Musro-Montagny type curves, we can run $0 natural gas prices for the first four months of production and still achieve average payout in less than one year across the four areas. This is why it makes sense for us to adhere to our schedule and continue to bring wells on production despite the challenging natural gas environment at this time I'll now pass it on to Chris for his comments on the East Division. Thanks, Joey.
we can run $0 natural gas prices for the first four months of production and still achieve average payout in less than one year across the four areas. This is why it makes sense for us to adhere to our schedule and continue to bring wells on production despite the challenging natural gas environment at this time.
Joey Wong: This is why it makes sense for us to adhere to our schedule and continue to bring wells on production despite the challenging natural gas environment at this time.
Chris Bullin: I'll now pass it on to Chris for his comments on the East Division. Thanks, Joey. As you've heard, consistently strong results are the theme so far, and the East Division results are no exception. Momentum carried through from our first quarter drilling program, and we are very pleased with what our assets and teams were able to accomplish in the second quarter. We brought on a total of 26, 20.4 net wells during the second quarter, 14 of which carried over from the first quarter, and 12 were spotted in the second quarter. Our performance relative to our expectations has come from both the new 2024 wells and higher-than-forecasted base production levels.
I'll now pass it on to Chris for his comments on the East Division.
Grant Bradley Fagerheim: As you've heard, consistently strong results are the theme so far, and the East Division results are no exception. Momentum carried through from our first quarter drilling program, and we are very pleased with what our assets and teams were able to accomplish in the second quarter. We brought on a total of 26 20.4 net wells during the second quarter, 14 of which carried over from the first quarter, and 12 were spud in the second quarter.
Thanks, Joey. As you've heard, consistently strong results are the theme so far, and the East Division results are no exception. Momentum carried through from our first quarter drilling program, and we are very pleased with what our assets and teams were able to accomplish in the second quarter.
We brought on a total of 26 20.4 net wells during the second quarter, 14 of which carried over from the first quarter and 12 were spud in the second quarter. Outperformance relative to our expectations has come from both the new 2024 wells and higher than forecasted base production levels.
Grant Bradley Fagerheim: Our performance relative to our expectations has come from both the new 2024 wells and higher than forecasted base production levels. In southeast Saskatchewan, our 2024 Frobisher results have been exceptionally strong, with expectations for these wells to pay out in less than six months. Highlighting the attractiveness of these assets is that not only in the initial payout, which is very quick, but we actually forecast these wells to pay out our capital investment three times in the first three years.
Chris Bullin: In Celticis cacqua, our 2024 Probe Show results have been exceptionally strong with expectations for these wells to pay out in less than six months. Highlighting the attractiveness of these assets is that not only in the initial pay-out, very quick, we actually forecast these wells to pay out our capital investment three times in the first three years. This is truly a top tier asset, and we are very pleased with the land position.
In southeast Saskatchewan, our 2024 Frobisher results have been exceptionally strong, with expectations for these wells to pay out in less than six months.
Highlighting the attractiveness of these assets.
is that, not only in the initial payout, very quick,
We actually forecast these wells to pay out our capital investment three times in the first three years.
Grant Bradley Fagerheim: This is truly a top-tier asset, and we are very pleased with the land position we have built in only three years since entering into play through the TORC acquisition in early 2021. Moving west to our Viking assets in west central Saskatchewan, where the initial results on recently acquired land in the Elrose area are meeting our expectations and are above historical results for the area. We continue to advance enhancement opportunities as we have just installed our first 1.5 mile ERH in the Elrose area.
Chris Bullin: We have built in only three years since entering the play through the Torque acquisition in early 2021. Moving west to our Viking assets in west central Cacqua, where the initial results on recently acquired land in the Elrose area are meeting our expectations and are above historical results for the area. We continue to advance enhancement opportunities as we have just spot our first 1.5 mile year-age in the Elrose area. The ability to drill year-age wells into the newly consolidated land position will improve capital efficiencies and enhance our future inventory. In Alberta, we have achieved strong production results from our recent lock-on-ite drilling program.
This is truly a top tier asset and we are very pleased with the land position we have built in only 3 years since entering into play through the TORC acquisition in early 2021.
Moving west to our Viking assets in west-central Saskatchewan, where the initial results on recently acquired land in the Elrose area are meeting our expectations and are above historical results for the area. We continue to advance enhancement opportunities as we have just spot our first 1.5 mile ERH in the Elrose area.
Grant Bradley Fagerheim: The ability to drill ERH wells into the newly consolidated land position will improve capital efficiencies and enhance our future inventory. In Alberta, we have achieved strong production results from our recent Glockeney drilling program, as our first six wells online continue to significantly outperform expectations. A combination of flowing unrestricted through alternative infrastructure, along with attractive subsurface qualities, despite being a challenging area to drill, has initial liquids production outperforming our expected rates by 40% over the first 90 days on production.
The ability to drill ERH wells into the newly consolidated land position will improve capital efficiencies and enhance our future inventory.
Chris Bullin: As our first six wells online continue to significantly outperform expectations, a combination of flowing unrestricted through alternative infrastructure, along with attractive subsurface qualities, despite being a challenging area to drill, has initial liquids production outperforming our expected rates by 40% over the first 90 days on production.
In Alberta, we have achieved strong production results from our recent Glockenegg drilling program, as our first six wells online continue to significantly outperform expectations.
A combination of flowing unrestricted through alternative infrastructure, along with attractive subsurface qualities, despite being a challenging area to drill, has initial liquids production outperforming our expected rates by 40% over the first 90 days on production.
Chris Bullin: I also wanted to take a moment to highlight a recent operational enhancement initiative in our Central Alberta Cardium Program. We recently drilled a 4-well pad in West Pemana and successfully implemented an updated frac design, which increased our daily sand placement by 25-50% compared to previous, resulting in 6% total cost savings on completions relative to budget expectations. We are actively investigating the applicability of this new frac design across our conventional asset base. A recent West Pemana results have been very strong, and these well-cost savings are improving the already robust economics of our light oil Cardium assets.
Grant Bradley Fagerheim: I also wanted to take a moment to highlight a recent operational enhancement initiative in our Central Alberta Cardium Program. We recently drilled a four-well pad in West Pamina and successfully implemented an updated frac design which increased our daily sand placement by 25 to 50 percent compared to previous, resulting in a 6 percent total cost savings on completions relative to budget expectations. We are actively investigating the applicability of this new frac design across our conventional asset base.
I also wanted to take a moment to highlight a recent operational enhancement initiative in our Central Alberta Cardium Program.
We recently drilled a four-well pad in West Pamina and successfully implemented an updated frac design which increased our daily sand placement by 25 to 50 percent compared to previous resulting in 6% total cost savings on completions relative to budget expectations.
We are actively investigating the applicability of this new frac design across our conventional asset base. Our recent West Pembroke results have been very strong and these well-cost savings are improving the already robust economics of our light-oil-cardium assets.
Grant Bradley Fagerheim: Our recent West Pembroke results have been very strong, and these well-cost savings are improving the already robust economics of our light-oil-cardium assets. Although some of our East Division plays don't receive the same notoriety as our unconventional assets, our teams continue to do an excellent job of improving the long-term sustainability and profitability of these assets, thereby further strengthening our corporate free cash flow. With that, I'll turn it back over to Grant for his closing remarks.
Chris Bullin: Although some of our East Division plays don't receive the same notoriety as our unconventional assets, our teams continue to do an excellent job of improving the long-term sustainability and profitability of these assets. They are by further strengthening our corporate free cash flow.
Although some of our East Division players don't receive the same notoriety as our unconventional assets, our teams continue to do an excellent job of improving the long-term sustainability and profitability of these assets, thereby further strengthening our corporate free cash flow.
Grant Fagerheim: With that, I'll turn it back over to Grant for his closing remarks. Thanks, Chris, Joey, and Tom for your remarks. As you've heard, the first six months of the year have been very strong for Whitecap, and we look forward to building off this momentum in the second half of the year. We have not changed our production guidance of 167,272,000 Huey per day, but given this success to date, we do expect to come in close to the higher end of the range, not higher. As we advance through the remainder of the year, we expect our price realizations to remain very robust, given our exposure to light oil, as well as our strong US dollar. Although commodity price volatility is expected to continue.
With that, I'll turn it back over to Grant for his closing remarks.
Sylvie: Thanks Chris, Joey, and Tom for your remarks. As you know, the first six months of the year have been very strong for Whitecap, and we look forward to building on this momentum in the second half of the year. We have not changed our production guidance of 167,000 to 172,000 VU per day, but given the success to date, we do expect to come in close to the higher end of the range, if not higher.
Thanks Chris, Joey and Tom for your remarks. As you've heard, the first six months of the year have been very strong for Whitecap and we look forward to building off this momentum in the second half of the year.
We have not changed our production guidance of 167,000 to 172,000 Huey per day, but given the success to date, we do expect to come in close to the higher end of the range, if not higher.
Sylvie: As we advance through the remainder of the year, we expect our price realizations to remain very robust, given our exposure to light oil, as well as our strong U.S. dollar, although commodity price volatility is expected to continue. We are in an advantageous position financially with low net debt or low decline, which further supports long-term sustainability and profitability across our commodity cycle. The outlook for Whitecap continues to be positive, and we are looking forward to the second half of this year as we develop and grow our assets into 2025 and beyond. With that, I will now turn the call over to the Operator, Sylvie, for any questions.
As we advance through the remainder of the year, we expect our price realizations to remain very robust, given our exposure to light oil, as well as our strong U.S. dollar, although commodity price volatility is expected to continue.
Grant Fagerheim: We are in advantageous position financially with low net debt; our low decline rate further supports long-term sustainability and profitability across our commodity cycles.
We are in an advantageous position financially with low net debt,
rate further supports long-term sustainability and profitability across our commodity cycles.
Grant Fagerheim: The outlook for Whitecap continues to be positive, and we are looking forward to the second half of this year as we develop and grow assets into 2025 and beyond.
The outlook for Whitecap continues to be positive and we are looking forward to the second half of this year as we develop and grow our assets into 2025 and beyond. With that, I will now turn the call over to the operator, Sylvie, for any questions.
Sylvie: With that, I'll turn the call over to the operator, Sylvie, for any questions. Thank you, sir. Ladies and gentlemen, I stated if you do have a question, please press star followed by one on your touchstone farm. You will then hear a three-tone prompt acknowledging your request, and should you wish to withdraw your question, simply press star followed by two. When we do ask that if you're using a speaker phone, please lift the handset before pressing any keys. Please go ahead and press star one now if you do have any questions.
Sylvie: Ladies and gentlemen, as stated, if you do have questions, please press star followed by 1 on your touchtone phone. You will then hear a three-tone prompt acknowledging your request. And should you wish to withdraw your question, simply press star followed by 2. We do ask that if you're using a speakerphone, please lift the handset before pressing any keys. Please go ahead and press star 1 now if you do have any questions. And your first question will be from Dennis Fong at CIBC. Please go ahead. I get it.
Thank you, sir.
Ladies and gentlemen, as stated, if you do have questions, please press star followed by 1 on your touchtone phone. You will then hear a three-tone prompt acknowledging your request. And should you wish to withdraw your question, simply press star followed by 2.
And we do ask that if you're using a speakerphone to please lift the handset before pressing any keys. Please go ahead and press star 1 now if you do have any questions.
Dennis Fong: And your first question will be from Dennis Phong at CIBC. Please go ahead.
Dennis Fong: Hi, good morning; congratulations on the second quarter results as well as the strong well performance. I've got a couple of questions here. The first one kind of goes back to well-performance and multi-bench development. I was actually hoping to get a little bit more clarity or understanding around what your view would be or what results you're frankly looking for to help you confirm both your development strategy and then, secondarily, feel more comfortable rolling out a kind of an improved type curve throughout both guidance and kind of your five-year plan that you outlined that you're investing in.
Dennis Fong: Hi, good morning. Congrats on the second quarter results as well as the strong well performance. I've got a couple questions here. The first one kind of goes back to the well performance and the multi-bench development.
And your first question will be from Dennis Fong at CIBC. Please go ahead.
Hi, good morning. Congrats on the second quarter results as well as the strong well performance.
I've got a couple questions here. The first one kind of goes back to the well performance in the multi-bench development.
Dennis Fong: I was actually hoping to get a little bit more clarity or understanding around what you view would be or what results you're frankly looking for to help you confirm both your development strategy, and then secondly, feel more comfortable rolling out a kind of an improved type curve throughout both guidance and kind of your five-year plan that you outlined at your investor day.
I was actually hoping to get a little bit more clarity or understanding around what you view would be or what results you're frankly looking for to help you confirm both your development strategy and then secondarily feel more comfortable rolling out a kind of an improved type curve throughout both guidance and kind of your five-year plan that you outlined at your investor day.
Joey Wong: Hey Dennis, Joey Wong here. So the first question in terms of what we're looking for on results, of course the results themselves on a production basis, we put in our release there that at the 1600 barrels per day or so, that's slightly above our reference type curve. So the short answer on what we're seeing on results is that they're a slight beat to our expectations, which is good. What we're also looking for, which won't be quite as visible on the production, is the interaction between wells, be it on a short-term or long-term basis, and I think we had talked about that a little bit in the last call there, is that what we're looking at is Do we see the wells interacting with each other, whether that be on initial completion, whether that be kind of in the short-term production period, or whether that be in the long-term production period?
Joey Wong: Hey, Dennis, Joey Wong here. So the first question in terms of what we're looking for on results, of course, the results themselves on a production basis. We put in our release there that at the 1,600 barrels per day or so that's slightly above our reference type curve. So the short answer on what we're seeing on results is that there are slight beats to our expectations, which is good. What we're also looking for, which won't be quite as visible on the production, is the interaction between wells, be it on a short-term or long-term basis. And I think we had talked about that a little bit in the last call. There is that what we're looking at is, do we see that the wells interacting with each other, whether that be on initial completion, whether that be kind of in the short-term production period, or whether that be in the long-term production period.
Hey Dennis, Joey Wong here. So the first question in terms of...
What we're looking for on results, of course, the results themselves on a production basis.
We put in our release there that...
at 1,600 barrels per day or so, that's slightly above our reference type curve. So the short answer on what we're seeing on results is that they're a slight beat to our expectations, which is good.
What we're also looking for, which won't be quite as visible on the production, is the interaction between wells, be it on a short-term or long-term basis. And I think we had talked about that a little bit in the last call there, is that what we're looking at is
Do we see the wells interacting with each other, whether that be on initial completion, whether that be kind of in the short-term production period, or whether that be in the long-term production period? In the short-term production period and the interaction on frac, what we're seeing is actually some really, really encouraging results that the wells are just barely seeing interaction from each other, which is kind of what we want to see.
Joey Wong: In the short-term production period and the interaction with frack, what we're seeing is actually some really, really encouraging results that the wells are just barely seeing interaction from each other, which is kind of what we want to see. As we move to the balance of our asset base, what we're going to do is look at how the rock changes, look at how the condensate ratio has changed, and tailor our development plan from there. But that's a long-winded way of saying we're liking what we're seeing, and it's reaffirming the plans we've got right now.
Joey Wong: In the short-term production period and the interaction on FRAC, what we're seeing is actually some really, really encouraging results that the wells are just barely seeing interaction from each other, which is kind of what we want to see.
Joey Wong: As we move to the balance of our asset base, what we're going to do is look at how the rock changes, look at how the currency ratios change, and tailor our development plan from there. But that's a long-winded way of saying we're liking what we're seeing, and it's reaffirming the plans we've got right now.
As we move to the balance of our asset base, what we're going to do is...
is look at how the rock changes, look at how the condensate ratios change.
and tailor our development plan from there. But that's a long-winded way of saying we're liking what we're seeing and it's reaffirming the plans we've got right now.
Dennis Fong: Thank you.
Dennis Fong: Great. I appreciate that context.
Dennis Fong: Great. I appreciate that context.
Dennis Fong: The second question that I have, and it might be a little bit early for this, obviously, just given it still kind of mid to late summer, and you guys are probably just starting your capital budget planning. How should we be thinking about the context cadence going into 2025, especially with the now we'll call it accelerated, quote unquote, development into the tour with that recently signed infrastructure deal. Thanks.
Great. I appreciate that context. The second question I have, and it might be a little bit early for this, obviously, just given it's still kind of mid to late summer and you guys are probably just starting your capital budget planning. How should we be thinking about the CapEx cadence going into 2025, especially with the now, we'll call it accelerated, quote unquote, development of Latour with that recently signed infrastructure deal?
Thanh C. Kang: The second question that I have, and it might be a little bit early for this, obviously, just given it's still kind of mid to late summer, and you guys are probably just starting your capital budget planning. How should we be thinking about the CAPEX cadence going into 2025, especially with the now, we'll call it, accelerated, quote unquote, development of Latour with that recently signed infrastructure deal? Thanks.
Tom Kang: Yeah, thanks for that question, Dennis.
Thanh C. Kang: Yeah, thanks for that question, Dennis. It's Thanh here.
Tom Kang: It's Pawn here. I think as we look at, you know, production and capital spending for the balance of the year here, you know, Q3 will be higher than Q4, but expect to be within the range there.
Thanks.
Yeah, thanks for that question, Dennis. It's Thanh here. I think as we look at, you know, production and capital spending...
For the balance of the year here, you know, Q3 will be higher than Q4, but...
Tom Kang: You know, somewhere in that billion to one point billion for 2024 thinking about 2000 and 25, and certainly this wouldn't be budget quality at this particular time here, but I would use 5% growth, which gets us to about 180,000 views per day. Capital plans despite kind of the acceleration of a tour with the PGI funding there on the facility, I would still expect to see between 1.1 and 1.2 billion for 2025.
Expect to be within the range there, you know, somewhere in that billion to one point billion.
Thanh C. Kang: I think as we look at, you know, production and capital spending for the balance of the year here, Q3 will be higher than Q4, but I expect it to be within the range there, you know, somewhere in that billion to 1. billion for 2024. Thinking about 2025, and certainly this wouldn't be budget quality at this particular time, but I would use 5% growth, which gets us to about 180,000 BUEs per day. Capital plans, despite kind of the acceleration of Latour with the PGI funding there for the facility, I would still expect to see between 1.1 and 1.2 billion for 2025.
for 2024. Thinking about 2025, and certainly this wouldn't be budget quality at this particular time here, but I would use 5% growth, which gets us to about 180,000 BOEs per day.
Capital plans, despite kind of the acceleration of Latour with the PGI funding there on the facility, I would still expect to see between $1.1 and $1.2 billion for 2025.
Dennis Fong: Great. I appreciate that context.
Dennis Fong: Great. I appreciate that context. I'll turn it back.
Dennis Fong: I'll turn it back. Thank you.
Great. I appreciate that context. I'll turn it back.
Sylvie: Thank you. As a reminder, ladies and gentlemen, if you do have any questions, please press star followed by 1 on your touch-tone phone. The next question will be from Aaron Bilkowski at TD Cowan. Please go ahead. Thanks.
Sylvie: As a reminder, ladies and gentlemen, if you do have any questions, please press star followed by one on your touched-on phone.
Thank you. As a reminder, ladies and gentlemen, if you do have any questions, please press star followed by 1 on your touchtone phone.
Aaron Bilkoski: Next question will be from Aaron Bill Cuskey at TD Cowan. Please go ahead.
Aaron Bilkowski: Thanks. So I guess I'll start with asking a prequel question to one of Dennis's questions. I'm curious about the cadence of the new Montney and DuVernay tie-in to the back half of this year. And I guess the second part of that is how you're thinking about the shape of the production profile through year end.
Aaron Bilkoski: Thanks.
Next question will be from Erin Bilkosky at TD Cowen. Please go ahead.
Aaron Bilkoski: So I just will start with asking the prequel question to one of Dennis's questions. I'm curious about the cadence of the new, new, new, new tie into the back half of this year. I guess the second part of that is how you're thinking about the shape of the production profile through your end.
Thanks. So I guess I'll start with asking the prequel question to one of Dennis's questions. I'm curious about the cadence of the new Montney and Newbernay tie-in to the back half of this year. And I guess the second part of that is how you're thinking about the shape of the production profile through year end.
Aaron Bilkoski: Yeah, thanks for that, Aaron. Yeah, I think the, you know, when we look at, you know, our money and duveting productions, you know, it is chunky in terms of production ads throughout the balance of the year here. Again, when we look at it on an average for the full year basis, you know, as Grant mentioned, there were very comfortable that we'll be at closer to the high end of the production guidance, closer to the 171, 172,000 views per day.
Thanh C. Kang: Yeah, thanks for that, Aaron. Yeah, I think the, you know, when we look at our Modny and DuVernay productions, it's chunky in terms of production ads throughout the balance of the year here. Again, when we look at it on an average for the full year, you know, as Grant mentioned there, we're very comfortable that we'll be closer to the high end of the production guidance, closer to 171, 172,000 VUEs per day.
Yeah, thanks for that, Aaron. Yeah, I think that, you know, when we look at, you know, our Modny and DuVernay productions, you know, it is chunky in terms of production ads throughout the balance of the year here.
Again, when we look at it on an average for the full year basis, you know, as Grant mentioned, there were...
Thanh C. Kang: When we look at the third quarter, with respect to the unconventional, there really aren't any wells that we're expecting to come online until August 25th at the earliest there. So, you know, a lot of our production ads will certainly come in the fourth quarter. So, again, expect that we'll be at the top end of our guidance range there between 167,000 to 172,000 VUEs per day.
Very comfortable that we'll be at closer to the high end of the production guidance, closer to the 171, 172,000 BUEs per day. When we look at the third quarter, with respect to the unconventional,
Tom Kang: When we look at the third quarter with respect to the unconventional, there really isn't any welds that we're expecting to come online until August 25th at their earliest there. So, you know, a lot of our production ads will certainly come in the fourth quarter. So again, expect that, you know, we'll be at the top end of our guidance range there between the 167,000 to 172,000 views per day.
There really isn't any welds that we're expecting to come online.
until August 25th, at the earliest there. So, you know, a lot of our production ads will certainly come in the fourth quarter. So, again, expect that we'll be at the top end of our guidance range there between the 167,000 to 172,000 viewings per day.
Aaron Bilkoski: Thanks.
Aaron Bilkowski: Thanks, maybe a follow-up question to that. Given the lumpiness of the production additions, is there any way to maybe feather wells in over time to avoid relatively lumpy quarters? Or is that just operationally not particularly feasible?
Tom Kang: Maybe a follow-up question to that given the lumpiness of the production additions is very way to maybe feather wells in over time to avoid relatively lumpy quarters or that just operation, not particularly feasible. You know what, that's a good question. You know, it's something that we'll certainly look at as we develop our budget for 2025 to smooth that out through the quarters. You know, what we've been focusing on really is maximizing cash flow for the year. And so, you know, it's been designed certainly with that in mind for 24, but smoothing it out is definitely a consideration for 2025.
Thanks, maybe a follow-up question to that. Given the lumpiness of the production additions, is there any way to maybe feather wells in over time to avoid relatively lumpy quarters, or is that just operationally not particularly feasible?
Thanh C. Kang: You know what? That's a good question.
You know what, that's a good question. You know, it's something that we'll certainly look at as we develop our budget for 2025 to smooth it out through the quarters. You know, what we've been focusing on really is maximizing cash flow for the year.
Grant Bradley Fagerheim: You know, it's something that we'll certainly look at as we develop our budget for 2025 to smooth it out through the quarters. You know, what we've been focusing on really is maximizing cash flow for the year. And so, it's been designed certainly with that in mind for 2024, but smoothing it out is definitely a consideration for 2025.
And so, you know, it's been designed certainly with that in mind for 24, but smoothing it out is definitely a consideration for 2025.
Grant Bradley Fagerheim: And just to add to that, you know, Aaron, is that what we're looking at as we focus moving forward into the 2025-26-27 budget timeframes is when do we add incremental drilling rigs in both the unconventional and the conventional part of our assets? Again, we want to ensure that as part of this facility infrastructure transaction that we did, we want to make sure that there is facility infrastructure in order to produce our wells.
Grant Fagerheim: Just to add to that, Aaron, is that what we're looking at as we focus moving forward into the 2025, 26, 27 budget time frames is when do we add incremental drilling rigs in both the unconventional and into the conventional part of our assets? And as Thomas saying, focus on our net back and our ability to increase our cash flow on an ongoing basis. So we'll look to, as part of the budget process for the next three years going forward, is how do we blend and smooth the production, the lumpiness of the production profile out as we advance through those years?
And just to add to that, you know, Aaron, is that...
What we're looking at as we focus moving forward into the 2025-26-27 budget timeframes is when do we add incremental...
Drilling rigs in both the unconventional and into the conventional part of our assets Again, we want to ensure that part of this facility infrastructure Transaction that we did I want to make sure that there's facility infrastructure in order to produce our wells
Grant Bradley Fagerheim: And as Tom is saying, focus on, you know, our net back and our ability to increase our cash flow on an ongoing basis. So we'll look to, as part of the budget process for, say, the next three years going forward, how do we blend and smooth the production, the lumpiness of the production profile out as we advance through those years?
As Thanh was saying, focus on our net back and our ability to increase our cash flow on an ongoing basis. So we'll look to, as part of the budget process for the next three years going forward, is how do we blend and smooth the lumpiness of the production profile out as we advance through those years.
Tom Kang: Thanks for that. If I get followed up with a one more financial question, and that's giving your commitment to the MCIB to the back half of the year, I'm curious why share repurchases were fairly minimal in Q2 despite having access free cash flow to do more. Yes, the way that we're thinking about the MCIB purchases there, and it's really looking at it on a six-month basis there just with the way that the cadence for capital is. We'll typically have our highest capital programs in the first quarter and the third quarter, and then it'll taper down in Q2 and Q4 there.
Thanh C. Kang: Thanks for that. If I could follow up with one more financial question. And that's, given your commitment to the NCIB for the back half of the year, I'm curious why share rate purchases were fairly minimal in Q2, despite having, I think, excess free cash flow to do more.
Speaker Change: Thanks for that. If I could follow up with one more financial question, and that's, given your commitment to the NCIB through the back half of the year, I'm curious why share rate purchases were fairly minimal in Q2, despite having, I think, excess free cash flow to do more.
Thanh C. Kang: Yes, the way that we're thinking about the NCIB purchases, Aaron, is that we're really looking at it on a six-month basis there, just with the way that the cadence for capital is. We'll typically have our highest capital programs in the first quarter and the third quarter, and then it'll taper down in Q2 and Q4. So it's better for us to look at it in six-month increments.
Speaker Change: Yes, the way that we're thinking about the NCIB purchases, Aaron, is...
Speaker Change: It's really looking at it.
Speaker Change: on a six-month basis there, just with the way that...
Speaker Change: The Cadence for Capital is, you know, we'll typically have our highest capital programs.
Speaker Change: in the first quarter and the third quarter, and then it'll taper down in Q2 and Q4 there.
Tom Kang: So it's better for us to look at it in six-month increments. Effectively, you know, in the first half of the year here, you know, free cash flow was directed both to the balance sheet as well as the dividend. And as you mentioned there, as we get into the back half of the year, we'll generate more free cash flow to be able to execute on our MCIB. So the way that we're looking at it today in the back half of the year, you know, this is using our deck at $80 WTI here. We have about 30 to 50 million.
Grant Bradley Fagerheim: Effectively, in the first half of the year here, free cash flow was directed both to the balance sheet as well as to the dividend. And as you mentioned, as we get into the back half of the year, we'll generate more free cash flow to be able to execute on our NCIB. So the way that we're looking at it today in the back half of the year, this is using our deck at $80 WTI here; we have about $30 million to $50 million.
Speaker Change: You know, it's better for us to look at it in six month increments.
Speaker Change: Effectively, you know, in the first half of the year here, you know, free cash flow was directed both to the balance sheet as well as the dividend.
Speaker Change: And as you mentioned there, as we get into the back half of the year...
Speaker Change: will generate more free cash flow to be able to execute on our NCIB. So, the way that we're looking at it today in the back half of the year, you know, this is using our deck at $80 WTI here.
Tom Kang: That's over and above our dividend obligation that we'll use on the MCIB. And then, as per our press release there, we're carving out an additional 200 million that we'll use on the proceeds from the disposition towards the MCIB. So the capital allocation or should say the free cash flow allocation hasn't changed. We're still looking at 75% return back to shareholders in the form of the dividend and share buybacks. But the 200 million is incremental to that.
Grant Bradley Fagerheim: That's over and above our dividend obligation that we'll use on the NCIB. And then, as per our press release there, we're carving out an additional $200 million that we'll use on the proceeds from the disposition towards the NCIB. So the capital allocation, or I should say the free cash flow allocation, hasn't changed. We're still looking at 75% return to shareholders in the form of the dividend and share buybacks, but the $200 million is incremental to that. It's just that the last comment.
Speaker Change: We have about $30 to $50 million. That's over and above our dividend obligation that we'll use on the NCID.
Speaker Change: And then as per our press release there, we're carving out an additional $200 million that we'll use on the proceeds from the disposition towards the NCIB. So the capital allocation, or I should say the free cash flow allocation, hasn't changed.
Speaker Change: We're still looking at 75% return back to shareholders in the form of the dividends and share buybacks, but the $200 million is incremental to that.
Patrick Rook: Just the last comment to add to that is that we have to be mindful of our trading blackout periods of time as well. So as we go into different time periods, we're very respectful of trading blackouts, which we're very stringent on at Whitecap Resources. So that plays into our overall time period of releasing information to the market. We were in a long discussion about not only the infrastructure sell-down, but we were in a time period here with just dropping into our quarterly reporting as well.
Tom Kang: It's just the last comment to add into that is that part of we have to be mindful of our trading blackout periods time as well. So as we go into different time periods, we're very respectful of trading blackouts, which are very stringent on Wake Out resources. So that plays into our overall time period as releasing information to the market. We're in a long discussion with only the infrastructure sell down, but we're in a time period here with, you know, just dropping into this or quarterly reporting as well.
Aaron Bilkoski: Thank you both. I appreciate that.
Patrick Rook: Thank you. Next question will be from Patrick Rook at ATB Capital Markets.
Thanh C. Kang: Thank you. The next question will be from Patrick Rook at ATB Capital Markets. Please go ahead.
Speaker Change: Thank you both, I appreciate that.
Patrick Rook: Please go ahead.
Speaker Change: Thank you. Next question will be from Patrick Rook at ATB Capital Markets. Please go ahead.
Patrick Rook: Okay, good morning, guys. Strong quarter there. Great to see the well result. I have a couple of mostly financial questions here for you. You alluded to with the sort of the room you've made on the balance sheet, post the infrastructure, dispositions. You alluded to capital allocation flexibility, but Tom just pointed to, you know, we're pretty narrow goal posts with respect to 2025 capital spend and production at this point in time. So I'm just wondering if you can maybe walk us through, with respect to the flexibility and things you could do, sort of rank order what your priorities would be in terms of dividend growth, acquisitions, incremental production growth that could be above and beyond.
Patrick Rook: Oh, hey, good morning, guys. A strong quarter there. Great to see the well results.
Patrick Rook: Oh hey, good morning guys. Strong quarter there, great to see the well results. I have a couple of mostly financial questions here for you. You alluded to with the sort of the room you've made on the balance sheet, post the infrastructure dispositions,
Speaker Change: You alluded to capital allocation flexibility, but Thanh just pointed to what were pretty narrow goalposts with respect to 2025 capital.
Speaker Change: Spend and production at this point in time. So I'm just wondering if you can maybe walk us through
Speaker Change: With respect to the flexibility and things you could do sort of rank order what your priorities would be in terms of dividend growth, acquisitions, incremental production growth that could be above and beyond you know what you just talked about or spoke to on 2025.
Patrick Rook: You know, what you just talked about or spoke to on 2025.
Patrick Rook: Yeah, sure.
Patrick Rook: I have a couple of mostly financial questions here for you. You alluded to the sort of room you've made on the balance sheet, post the infrastructure dispositions, you alluded to capital allocation flexibility. But Thanh just pointed out that we have pretty narrow goalposts with respect to 2025 capital spend and production at this point in time. So I'm just wondering, if you could maybe walk us through, in sort of rank order, what your priorities would be in terms of dividend growth, acquisitions, incremental production growth, that could be above and beyond, you know, what you just talked about or spoke to us about in 2025.
Tom Kang: Thanks for that question, Patrick. As we go through the list of returns back to shareholders here, the dividend, at that 73 cents, is sustainable down to $50 WTI. The yield from our perspective is too high, so there's certainly no rush for us to increase the dividend at this time. The priority would be around share buybacks, and that's why we've allocated the 200 million towards buying back our shares. Could we potentially use more? Yeah, absolutely. We can. I think the billion dollars that we're targeting in net debt at the end of the year feels comfortable for us, but I would say priority is the NCIB over any dividend increases at this particular time.
Thanh C. Kang: Yeah, sure. Thanks for that question there, Patrick.
Speaker Change: Yeah, sure. Thanks for that question there, Patrick. Yeah, as we go through the list of, you know, returns back to shareholders here, the dividend...
Thanh C. Kang: Yeah, as we go through the list of returns back to shareholders here, the dividend, you know, at that $0.73 there, sustainable down to $50 WTI. The yield, from our perspective, is too high, so there's certainly no rush for us to increase the dividends at this time. The priority would be around share buybacks, and that's why, you know, we've allocated the $200 million towards buying back our shares. But could we potentially use more? Yeah, absolutely we can.
Speaker Change: You know, at that $0.73 there, you know, sustainable down to $50 WTI.
Speaker Change: You know, the yield from our perspective is too high, so there's certainly no rush for us to increase the dividends at this time.
Speaker Change: The priority would be around share buybacks, and that's why we've allocated the $200 million towards buying back our shares. Could we potentially use more? Yeah, absolutely we can. I think the billion dollars that we're targeting in net debt at the end of the year feels comfortable for us, but I would say...
Thanh C. Kang: I think the $1 billion that we're targeting in net debt at the end of the year feels comfortable for us, but I would say priority is the NCIB over any dividend increases at this particular time. And the reality is, when we continue to buy back our shares here, we reduce that, you know, overall dividend obligation, and we are increasing it on a per share basis there. Optionality around the balance sheet outside of returning capital to shareholders would be around smaller tuck-in acquisitions where, you know, we have a working interest, we're the operator there, and really it's just a consolidation of a play that we have expertise in versus larger-scale M&A activity at this particular time.
Speaker Change: Priority is the NCIB over any dividend increases at this particular time. And the reality is when we continue to buy back our shares here, we reduce that.
Tom Kang: And the reality is, when we continue to buy back our shares here, we reduce that overall dividend obligation, and we are increasing it on a per share basis there.
Speaker Change: You know, overall dividend obligation, and we are increasing it on a per share basis there. Optionality around the balance sheet, outside of returning capital to shareholders.
Tom Kang: Offshore reality around the balance sheet outside of returning capital to shareholders would be around smaller tuck-in acquisitions, where we have a working interest, we're the operator there, and really it's just a consolidation of a play that we have expertise in, versus larger scale emanating activity at this particular time.
Speaker Change: would be around smaller tuck-in acquisitions, where we have a working interest, we're the operator there, and really it's just a consolidation of a play that we have expertise in, versus larger scale M&A activity at this particular time.
Tom Kang: Okay, and then maybe you just build a little bit or add a little bit of nuance to Aaron's earlier question with respect to execution on the buyback. You have a 200 million dollar number that's out there. You spoke to looking at in six month increments, obviously the first half of the year is a higher capital obligation, just given the way the cadence of drilling programs tend to play out or in particular the first quarter. Just wondering how you look at that 200 million in the back half of the year, can we expect it to be sort of executed on a very rateable basis on a month-by-month basis, or is there going to be a bit of finesse to that around the share price performance and the blackout periods that Grant touched on?
Patrick Rook: Okay, and then maybe you could build a little bit or add a little bit of nuance to Aaron's earlier question with respect to execution on the buyback, you have a $200 million number that's out there, you spoke to looking at in six-month increments, and obviously, the first half of the year is a higher capital obligation, just given the way the cadence of the drilling programs tends to play out, or in particular, the Can we expect it to be sort of executed on a very rateable basis on a month by month basis? Or is there going to be a bit of finesse around that around the share price performance and the blackout periods that Grant touched on? Yeah, I mean...
Speaker Change: Okay, and then maybe you just build a little bit or add a little bit of nuance to Aaron's earlier question with respect to execution on the buyback. You have a $200 billion number that's out there, you spoke to looking at in six-month increments, and obviously the first half of the year is a higher capital obligation, just given the way the cadence of
Speaker Change: The drilling programs tend to.
Speaker Change: play out or in particular the first quarter. Just wondering how you look at that $200 million in the back half of the year. Can we expect it to be sort of executed on a very rateable basis?
Speaker Change: on a month-by-month basis, or is there going to be a bit of finesse to that around sort of the share price performance and the blackout periods that Grant touched on?
Tom Kang: Yeah, I mean, I think the way that we look at it is if you look at the third quarter here, we'll likely spend somewhere in that $125 million on the share buybacks on a very methodical and consistent basis here. And then the third quarter, you know, you've got the 75 million plus whatever free cash flow is left after paying the dividend. So, as I mentioned in that 30 to 50 million, so expect to see an excess of 100 million in the fourth quarter based on our forecast at this time here.
Thanh C. Kang: Yeah, I mean, I think the way that we look at it is if you look at the third quarter here, you know, we'll likely spend somewhere in that $125 million on the share buybacks on a very methodical and consistent basis here. And then in the third quarter, you know, you've got the $75 million plus whatever free cash flow is left after paying the dividends. So, as I mentioned in that $30 to $50 million, so expect to see in excess of $100 million in the fourth quarter based on our forecast at this time.
Speaker Change: Yeah, I mean, I think the way that we look at it is if you look at the third quarter here, you know, we'll likely spend somewhere in that
Speaker Change: $125,000,000 on the share buybacks on the very
Speaker Change: Methodical and consistent basis here and then in the third quarter, you know, you've got the 75 million
Speaker Change: Plus whatever free cash flow is left after paying the dividends, so as I mentioned in that $30 to $50 million. So expect to see in excess of $100 million in the fourth quarter based on our forecast at this time here.
Patrick Rook: Okay, thank you very much. Thank you.
Thanh C. Kang: Thank you. And at this time, gentlemen, there are no other questions registered. Please proceed.
Sylvie: And at this time, gentlemen, there are no other questions registered. Please proceed. Well, thank you everyone for your time to listen to our call today.
Speaker Change: Okay, thank you very much.
Speaker Change: Thank you. And at this time, gentlemen, there are no other questions registered. Please proceed.
Grant Bradley Fagerheim: Well, thank you everyone for your time to listen to our call today, and we would like to wish everyone a very pleasant remainder of their summer weather and summer holidays. Bye for now. Thank you.
Grant Fagerheim: And we would like to wish everyone a very pleasant remainder of your summer weather and summer holidays.
Speaker Change: Well thank you everyone for your time to listen to our call today and we would like to wish everyone the very pleasant remainder of your summer weather and summer holidays. Bye for now. Thank you. Thank you sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending.
Grant Fagerheim: Bye for now.
Sylvie: Thank you.
Sylvie: Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. At this time, we do ask that you please disconnect your lines.
Sylvie: Ladies and gentlemen, this does indeed contribute to your conference call for today. Once again, thank you for attending.
Sylvie: And at this time, we do ask that you please disconnect your lines.