Q2 2025 Whitecap Resources Inc Earnings Call

Good morning. My name is Joanna and I will be your conference operator. Today at this time I would like to welcome everyone to Whitecap resources, second quarter, 2025 results, call all lines have been placed on you to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time simply Press Start, then the number 1 on your telephone keypad. If you would like to withdraw your question, please press star. Then the number 2.

Speaker Change: I would now like to turn the conference over to what caps president and CEO, Mr. Grant fagerheim, you may begin your conference call.

Grant Fagerheim: Thanks, Joanna, and good morning, everyone. And thank you for joining us here today. There are 4 members of our management team here with me today, our senior vice president and CFO Tom cang,

Grant Fagerheim: Our senior vice president of production and operations Joel Armstrong. Our vice president on conventional division Julie Wong and our vice president conventional division, Chris Poland.

Grant Fagerheim: Before we get started today, I would like to remind everybody.

Grant Fagerheim: That all statements made by the company. 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 Fagerheim: To begin.

Grant Fagerheim: It would be remissed uh, of me to not highlight the most significant development of the quarter, the completion of the VIN business combination on May the 12th, which is increased, our production to approximately 365,000 be per day and our Enterprise Value to over 15 billion dollars. I'm also pleased to report that we had a very successful operational. Second quarter,

Grant Fagerheim: Continuing to build on the momentum that we've developed year to date.

Grant Fagerheim: Strong second quarter production of 292,754 be per day was well above our internal forecast.

Grant Fagerheim: An asset level performance exceeded expectations, across our conventional and unconventional portfolios. Our production in the quarter benefited, from strong new volumes across our montney, do Renee,

Grant Fagerheim: and Southeast Saskatchewan assets as well as production optimization.

Grant Fagerheim: Through downtown avoidance within the Juvenile and the Glock formation.

Grant Fagerheim: The transformational milestone for the company, the newly expanded. White Cap is now, Canada's 7th largest oil and natural gas producer and fifth largest natural. Gas producer with an exceptionally deep, portfolio of Premium drilling inventory. For advancing incremental growth and value added for our shareholders. As a result of the significant effort and coordination among our various team members the integration of the VIN assets and stop has been

Grant Fagerheim: successful in a remarkably short period of time.

Grant Fagerheim: We've seen plenty of early wins through the consolidation of corporate costs and our improved credit profile by leveraging combined best practices and our enhanced scale.

Grant Fagerheim: We are expecting to see Capital efficiency improvements and operating costs reductions across the portfolio. We remain confident in our ability to unlock sustainable synergies and look forward to updating shareholders as our progress, over the next 6 to 12 months period of time.

Grant Fagerheim: Through the second half of 2025, we plan to allocate 75% of our Capital program to our unconventional Monty and Dwayne assets where we currently have 7 active rigs running and focused in areas where we have strong technical understanding with available infrastructure capacity. The remaining 25% of our second half Capital program will be invested in our conventional assets in Saskatchewan and central Alberta.

Grant Fagerheim: We currently have 3 active rigs on our conventional assets, peaking at 8 in the second half building off the strong momentum of the first half program.

Grant Fagerheim: We will continue to stay on.

Grant Fagerheim: The course on strategic priorities that have underpinned, our success to date, including maintaining our balance sheet, strength, Capital discipline, and providing sustainable returns to our shareholders. Our balance sheet is in excellent shape with low leverage, and ample liquidity.

Grant Fagerheim: Our flexible Capital program and sustainable based dividend of 73 cents per share per Anum remain. Well, covered within funds flow at current commodity prices supported by our best-in-class portfolio of assets. I will now pass off to Joy Wong for more remarks on our own conventional results. Thank you.

Joy Wong: Thanks Grant.

Speaker Change: We delivered strong operational performance across our unconventional portfolio during the second quarter while working diligently to integrate new assets and Personnel across the combined Monty and duret asset base.

Speaker Change: We've seen early operational wins from the integration of the combined assets, through knowledge sharing of technical best practices, the optimization of rig lines and initial procurement optimization efforts.

Speaker Change: Our DNA production at kbab was a notable driver of unconventional outperformance during the quarter.

Speaker Change: Production was higher than forecast as strong operational execution accelerated, new pad development into the quarter and downtime, optimization allowed us to mitigate the impact of turnaround activity at our operated 15 of 7, gas, processing facility.

Speaker Change: we were also successful in mitigating the impact of an extended outage at a third-party facility in the area as adjustments were made in the field by our field operations team, to limit our exposure

Speaker Change: we recently brought our third, third wine rack style pad on production, through per permanent facilities in KOB, with promising, early results,

Speaker Change: Strong observed, Reservoir performance and positive production results across our first 3, wine rack pads, support moving this design from Pilot to development mode on applicable lands in our cable asset.

Speaker Change: This wine rack design has the potential to prove to improve per well, recoveries and Associated. Well, economics on over 3 quarters of the undeveloped Legacy White Cap acreage and just under a quarter of the VIN acreage.

Speaker Change: Our measured approach to delivering optimized and predictable results. In the do Renee demonstrates our commitment to enhancing returns and maximizing. Our high-quality inventory, in our unconventional asset base,

Speaker Change: We acquired our first juvenile Assets in the second half of 2022. And at that time, underwent a rigorous technical review.

Speaker Change: As our understanding of the assets grew, and our development program matured, we outlined specific goals for our team, which included the acceleration of development. And the full utilization of our 1507 gas processing facility to maximize overall asset profitability.

Speaker Change: We are pleased to report that we are now at capacity at that facility.

Speaker Change: As an example of the improved profitability of the asset, the second half operating costs on our Legacy. White Cap acreage are forecasted to be 30% lower than what was realized in 2023.

Speaker Change: Further to facilitate additional growth in the area we have completed. The construction of an offload connection to a nearby third-party processing facility.

Speaker Change: The integration of Durrett assets at kbob, has been quite seamless, given the significant overlap and stage of development.

Speaker Change: As the largest operator in the do Renee, we now have the size scale and Technical capabilities to further improve profitability on this well understood asset base.

Speaker Change: Moving over to the Monty.

Speaker Change: First half of the Year, overall results in this area are performing in line with our internal expectations.

Speaker Change: We are in the process process of assessing the impact of changes in development planning and well-designed in Gold Creek and car leveraging. Re uh, recent and Legacy pad results along with the significant technical expertise of our teams.

Speaker Change: Our Focus remains on enhancing enhancing well economics and the long-term potential of the assets. While balancing our risk exposure, consistent with how we've approached Development Across our unconventional assets over the years.

Speaker Change: We are now seeing improved infrastructure, reliability, and utilization across our Gold Creek and car assets as we reap the benefits of significant infrastructure, optimization efforts in the first half of the year.

Speaker Change: Key upgrades included enhancements to support existing production, including Improvement to gas lift capacity. And several debottlenecking projects that have improved overall operability and consistency.

Speaker Change: The impressive results has continued at our muzzle Monty asset, giving us the confidence to begin drilling larger pads to further Target. Capital efficiency improvements in the area. We are currently drilling a 6 well pad which is expected to be on production in early 2026 when additional plant capacity becomes available

Speaker Change: our investigation of debt necking options to increase gas, throughput at our 59 FAQ, also remains underway

Speaker Change: at kakwa. We recently brought on our first triple bench pad on production in the at 16 of 17 in the Northwest portion of our acreage.

Initial rates on the test pad after 90 days are over 1,200 boies per day per well with 65% liquids exceeding. Our internal expectations for the area by 14%

Speaker Change: These results are encouraging and provide significant validation points for this pad configuration.

Speaker Change: Importantly, the triple bench design is behaving as expected based on our technical observations thus far.

Speaker Change: Further observation of bottle pressure, Trends will be collected in the coming months and will be informative as we continue to assess the development potential of this pad moving forward.

Speaker Change: At lore Phase 1 of our 413 lore, facility remains firmly on schedule for commissioning. In late 2026 to early 2027.

Speaker Change: We've now received all the required permits to begin construction. And as a result have initiated Earthworks on the site,

Speaker Change: All major equipment has now been procured for delivery in the first quarter of 2026.

Strong performance from our 2 LaTour delineation. Wells brought on production in 2024 has continued. Each of these Wells has exceeded internal expectations by 20%. Providing us with the confidence in the reservoir, deliverability in the area and our long-term development plans

We will continue to advance our technical delineation program by drilling a 3-well pad in the area late in the third quarter, as the most analogous data in our modern. Well set our lore Wells, also provide an important technical read through for our adjacent Rest Haven asset.

Speaker Change: With that, I will now pass over to Chris Bolan to talk about our conventional assets.

Chris Bolan: Thanks Joey.

Chris Bolan: Our conventional portfolio continued to build on strong momentum from our first quarter program with results from our fur cardium, and Glock and ID assets. All continuing to outperform expectations.

Chris Bolan: The newly integrated view field Balkan assets. Also delivered strong production performance in the quarter. Highlighting the immediate strategic fit of Baron Saskatchewan assets within our conventional portfolio.

Speaker Change: Echo, Joey's comments, that we've seen some early operational wins from the integration of assets on the conventional side, largely through shared technical learnings between our teams and initial supply chain optimization efforts.

Speaker Change: We continue to advance open Hall multilateral Development Across, both our view field, Balkan and frobisher Assets in eastern Saskatchewan. During the second quarter with results. Exceeding our expectations in both areas.

Based on the success of our open Hall multilateral program in these regions. We continue to evaluate opportunities to enhance economics, and expand drilling inventory by applying this technology elsewhere within our conventional portfolio.

How do you feel are 5? Most recent Balkan Wells, have exceeded. Our type group, Expectations by 27%.

Speaker Change: As part of our focus on enhancement initiatives, our team has recently begun piloting longer laterals in the Balkan to increase Reservoir, contact and improve the already strong economics.

Speaker Change: Early time results from our first 2 and a half mile open hole multilateral. Well, are promising and we just spot our first 3, Mile pilot well in the area.

Speaker Change: In the fur, our active first quarter open home. Multilateral program is 4 cast to achieve a 25% Capital efficiency Improvement compared to the same period last year.

Speaker Change: This is achieved through a combination of program efficiencies and optimization of individual well-designed designs to maximize Reservoir contact. Well productivity and the royalty benefits associated with Saskatchewan's multilateral oil, well program.

Speaker Change: We are excited to deploy White Caps brochure, development experience to the recently acquired inventory, and are continually evaluating additional synergies, to reduce costs and enhance future locations.

Speaker Change: Do conventional assets results from our recent cardium Wells at wity also continue to significantly exceed expectations.

Speaker Change: These Wells, utilize an optimized. Completion design establish using workflows from our unconventional assets.

Speaker Change: Our first 6 Wells have been on production for approximately 180 days, achieving rates that are on average 59% better than our expectations.

Speaker Change: By confirming that the longer-term value has also been increased. We plan to deploy this design on future wells in the Wy area and our evaluating recent results for read throughs on similar assets within a portfolio.

Speaker Change: In our Glock asset.

Speaker Change: Recent facility egress optimization efforts by our team enabled us to redirect turnaround volumes in central, Alberta and mitigate the production impact of planned downtime during the quarter.

Speaker Change: Along with continued strong results from our modern board drilling program. This drill production outperformance relative to our internal expectations in the area and is driving improved profit profitability since our entry into the play.

Speaker Change: The free cash flow generated by our conventional division is underpinned by over 50,000 barrels. A day of stabilizing, eor volumes across both Alberta and Saskatchewan. These assets are important to the long-term sustainability and profitability of White Cap. I will now pass it the time to further discuss our financial results.

Thanks, Chris. The second quarter of funds flow was strong at 713 million or 75 cents per share, which was up 6% per share. Compared to the second quarter last year and 2% compared to the first quarter of this year. Despite the volatility WTI prices, averaged just below us. 65 dollars per barrel in the quarter, which equated to over $88 per barrel. Canadian, driving, strong profitability for white cap.

Speaker Change: The positive impact of the startup of LNG Canada has yet to be reflected in Eco prices with the second quarter averaging less than 2 dollars per mcf and July even lower than that.

Speaker Change: We have reduced our Eco exposure through the combination with Baron and currently have approximately 30% of our natural gas production sold outside of ACO and a further 30% sold at fixed prices.

Speaker Change: White Cap generated strong. Free funds flow of 304 million of which at 191 million, was returned to shareholders through the base dividend and share repurchases.

Speaker Change: In the first 6 months of 2025, we returned almost 300 million to shareholders.

Speaker Change: We had a tax recovery of 7.4 million as commodity prices in Q2 were lower than in q1. And with the tax pools at the end of the quarter of approximately 10.3 billion. We anticipate taxes as a percentage of pre-tax funds flow to be 3 to 5% in the second half of the year.

Speaker Change: We were also able to take advantage of the commodity price volatility and the price spikes we experienced. During the second quarter by adding approximately 10,000, barrels per day to each of our second half 2025 and 2026 hedging positions through a combination of callers and swaps to lock in additional downside protection.

Speaker Change: Our balance sheet at the end of the second quarter was an excellent shape with net debt of 3.3 billion equating to a net debt to annualized funds flow of approximately 1 time.

Speaker Change: Following an upgrade of our public investment grade rating to Triple, B by DVS. We closed an issuance of investment grade, senior notes, in the quarter, the 3 year, 300 million notes care, an attractive, fixed coupon of 3.761% and lowers our average cost of debt.

Grant Fagerheim: With that, I'll turn it back over to grant for his closing remarks.

Speaker Change: Thanks Tom, Chris, Joey for your comments.

Grant Fagerheim: Since you're close with the verint combination.

My team has done a remarkable job of integrating assets people and processes all while delivering another outstanding, operational quarter based on our asset level performance. And the second quarter. We now expect to be at the high end of our 2025 average production, guidance range of 295,000 to 300,000 B per day on an unchanged, capital budget of 2 billion dollars for the year.

Grant Fagerheim: As we begin our 2026 budgeting process, our outstanding Suite of assets provides us with significant optionality across the commodity Spectrum from light oil to condensate Rich natural gas to Natural Gas opportunities. This allows us to tailor our future Capital program.

Grant Fagerheim: Uh, to commodity prices pricing, and maximize, our long-term value creation.

Grant Fagerheim: With our enhanced long-term sustainability and profitability. We are well, positioned to generate Superior returns for our shareholders and look forward to providing updates as we advance forward.

With that I will now turn the call over to the operator, Joanna, for any questions you might have. Thank you.

Grant Fagerheim: Thank you.

Touch Tone phone. You will hear a prompt that your hand has been raised and should you wish to withdraw your question? Simply press star followed by 2. We do ask that, if you are using a speaker-phone to please lift your handset before pressing any keys. Please go ahead and press star 1. Now if you have a question

Speaker Change: The first question comes from Dennis Fong at CIBC World Markets. Please go ahead.

Dennis Fong: Hi, good morning and thanks for taking my question as well as congratulations on a really strong. Uh start to the integration and and quarter.

Dennis Fong: Um, my first question goes towards commodity risk, uh, or sorry, uh, commodity price risk management. Um, you've obviously, layered in a little bit more on the hedging.

Dennis Fong: Side of things, as you kind of look forward. Can you remind us as to kind of uh, what you're targeting? How that may be helps. Uh, both obviously dividend sustainability, as well as. Uh, we'll call it downside risk protection. Um, and, and how you think about things going forward, especially in terms of of management around that risk.

Dennis Fong: Yeah, thanks for that question. Dennis. It's uh Tom here. So the way that we look at risk management is really ensuring that we have the cash flows in a low commodity price environment to fund our maintenance Capital uh as well as our dividends. So we would Target somewhere between 25 to 35% on a 2-year rolling basis to ensure that we meet that objective. So when you look at our, uh, positions now both on the oil and the natural gas there, um, we're right within the range of what our expectation is.

Dennis Fong: We've got really strong positions uh, for 2026 um, in the back half of 2025 here, we're going to start layering on positions for for 2027 there. So again the objective here from the Hedge positions that we have is really, to provide that downside protection. And so, when you look at the positions that we have, um, they're typically just callers, uh, cost us callers as well as swaps. So, plain vanilla positions to uh, mitigate that downside risk.

Speaker Change: Great thanks. Really appreciate. Um, that that incremental caller. They're they're tan uh shifting a little bit more on the technical side and maybe directed uh towards Joey or or Grant there. Um, I was hoping you could highlight maybe some items that you're focused on in terms of some of the key takeaways.

I guess Beyond well productivity in both the wine rack style development, you're deploying a kbob as well as a triple bench strategy in in the Monty. Um what frankly drives you confidence obviously in the deployment, um, and and of these development techniques. And what would drive you to gain more Comfort, or confidence in Rolling that out, more broadly to to other regions as well?

Speaker Change: Hey, Dennis Joey here. So um, yeah. Maybe I'll, I'll touch on the key fob 1 because it's a good example there, where, like, like I had mentioned, we're at our, uh, third pad there. So, um, when when we look at uh,

Dennis: Pad development, we look at both rate and pressure directly as well as the interpreted interpreted versions of that data that, uh, our Reservoir engineering team, uh, looks at using established Reservoir engineering. Best practices. We look at observations of things, like, fract geometry, and Reservoir contact and, and of course, those are things that we can look at early time. And on all 3 of those paths they were looking great. Um, so that was, that was supportive of moving forward with further Pilots. But then, as we started to produce the wells, and we look at how not only do the individual Wells perform, but then how they interact with each other and and offsetting Wells, we were continuing to see supported indications from downhole, um, so that gave us then the confidence that okay, the these things are producing in line with uh, our expectations in the longer term. And in particular, um, with the first couple of pads, having quite a bit of time there. Um, being able to really now reinforced the models that we had in place, um, to give them that read through to the balance of the asset.

Dennis: So maybe that brings to brings it to the second part of your question is what gives us the confidence if we have an established, uh, geological model which we do throughout the do Renee, we have an estimate of how these wells should behave with this adjustment in development and it conforms to that. Or in this case actually quite honestly slightly exceeds that we then can say okay this this works and and that's where we came up with the the high confidence. Um, 3/4 of of the white cap and and roughly 1 quarter of the baron asset base, that would be applicable to that beyond that. We'll, we'll continue to see if we can we can push the limits of that of, okay? We we have high confidence, it works on those. And, and for context, you know what we're saying, somewhere, in in the range of 10 to 20% Improvement, we'll bake that into our type curves.

Dennis: Do Renee. That's kind of an anecdote that you can kind of Envision us going through on on the entirety of our asset base and we introduce something like that.

Speaker Change: Great. Thanks, Joey. Um, and, and if you'll allow me, just 1 quick, uh, incremental 1, um, just as and maybe, uh, to the corporate strategy side of things, as, as you shift away from kind of significant growth profile, as maybe outlined by Varan. And look towards kind of drill The Fill opportunities. Obviously, you filled, um, some of your, uh, gas plants and so forth. Now, looking at to bottlenecking off, uh, opportunities as well as optimization on the conventional side. Can you talk towards how you're thinking about decline rate and the managing of sustaining Capital, the management of sustaining Capital going forward? And how you think some of those inputs could drive uh better sustainability of the business model uh going forward. Thanks.

Dennis: Yeah. That's um.

Speaker Change: An important part of our sustainability, uh, their Dennis. And so as we think about the, you know, the conventional and the unconventional side as you know, the conventional side, what we're looking to do is really just maintain that production, right? And so, it's underpinned by, you know, 40%, uh, of that production being under some sort of, um, you know, secondary tertiary recovery there. So decline rate of less than 20% as we maintain that production, I'd expect that to be relatively flat, I would say. Um, and then on the unconventional side, the objective, there the 225,000 views per day,

Speaker Change: Is to grow that in that 8, to 12% again, depending on what the corporate objectives of Arizona annual basis, as well as commodity prices here. Um, but we see over the next 5 year period of time there the decline rate, um, you know, up somewhere in that, you know, 1 to, to 2% there, uh, on a corporate basis. And so as we look at that, um, you know, it's still very manageable um, especially with the 140,000 bees per day that we have as the base level, uh, that underpins the sustainability of our cash flows,

Thanks, Tom. All I'll turn it back.

Speaker Change: Thank you. The next question comes from Travis Wood at National Bank Financial. Please go ahead.

Travis Wood: Yeah, good morning guys. Um hey so appreciating the unconventional portfolio gets gets a lot of air time. It does feel like the conventional segment performed quite well through the quarter and maybe know, most notably there the the cardium wells that you flagged at Whoopi. Could you guys walk through, or share some insight around? What? Drove that outperformance on those IP rates that you flagged in the release and and what the Running Room and infrastructure capacity looks like in the region as well.

Travis Wood: Yeah, morning Travis. Um, Chris here, thanks for that question. So regards to the Whoopi cardium, um, you know, the team's pretty excited about some of the recent results, of course. And you know what this ties into in essence is really trying to maximize our Reservoir contact. Um, you know, drilling longer Wells, or we can common theme on our conventional assets um in in conjunction with, you know, using some of the established workflows from the unconventional side. So so what we've done by that is is really just optimizing, our Frac design with some tighter cluster spacing and some higher profit and intensity. And that's really been the key driver on some of those ip90 and ip1 180 early time results. So so obviously we're quite excited about that. And and you know, the teams are currently going through a bit of a workflow process right now to update our type curves, going forward. Now from a Running Room inventory perspective, we're feeling pretty good about that area. Um, we've got about 60 to 80 locations identified there. So, from our perspective, I mean, that provides, you know, more than 5 years of Running Room, um, and that's not even including some of the upside, the teams continue to work on. So, um, we're pretty excited about the area. Um, you know, at that pace of development,

Travis Wood: We don't see any egress concerns or or challenges there and and you know, in the theme of a lot of our conventional assets here. Um, you know, we're hoping to provide that that stabilizing and and steady free cash flow throughout. So um, yeah. Keep takeaways a lot of shared learnings and and again, just trying to maximize that Reservoir context. So our teams have done a great job there.

Speaker Change: Great. And Chris did you say at that Running Room? There's no, egress constraints. Is that what you said?

Travis Wood: You know, from from our perspective, we're not trying to, you know, pull the lever hard from a growth perspective. I mean, we do have growth optionality within those assets. But in general, we're looking at, you know, flat to call it 2 to 5% growth in that area. Um, we do have some additional options and and the teams are always working at ways to, to maximize, you know, egress options. Another example of that would be, you know, pivoting to our Glock portfolio, where we have a, a very advantageous position and, you know, um, infrastructure that's vastly interconnected. Um, we're always looking at those kind of options up there too, but at the current time, with our development pace and um, you know, kind of our our prelim 5 year plan, we're we're looking very confidently that. Yeah. That's not going to be a concern at that pace.

Chris Bolan: For the the detailed rundown, I'll leave it there.

Speaker Change: Thank you. The next question.

Chris Bolan: Jeff.

Jeff: Hey, good morning, guys. Um, Grant, I wanted to get your thoughts on the uh, needs for any incremental, uh, crude address out of the Basin, um, especially just beyond, what's been floated by Umbridge already, and, uh, being cognizant that you're, you're not fully utilized on tnx or Keystone right now. So just curious what you thought. The, the needs might be.

Jeff: Yeah, thanks very much. And we're the, uh, again, this is Grant

Just on the incremental egress that we don't think specific to light oil. Uh, that there's challenges with light oil out of the Basin. I mean, we're not part of, we don't uh, ship West, um, on what TMX is and mainly at uh, we'll call the heavy oil pipeline.

As far as any challenges on on egress of moving, uh, into the us or east, um because of where our light oil is located and Southeast Saskatchewan. Um, um, for the most part, uh, we don't see egress challenges at this particular time and I want to back up even through, where we talked about in Canada, we had the um, where there was a portion. I can tell you through the entire time piece, um, that you would hear about a portion of of volumes we never restricted 1 barrel of the day of production through uh what was a very heavy portion of it. Uh, portion

Jeff: Period of time, uh, back in history. So I think we're very well set up from a, an egress incremental egress perspective or just even the current egress. And we think that with, uh, Enbridge and and uh, any of the, the pipeline providers looking to optimize whether it's TMX or Enbridge or, um, doing some optimization to their lines, um,

Jeff: We certainly don't see any challenges uh for the foreseeable future.

Speaker Change: Okay, great. That's what I got. Thanks.

Jeff: Thanks Sam.

Speaker Change: Thank you. The next question comes from Aaron bilkovsky at TV Cowen. Please go ahead.

Aaron Bilkovsky: Thanks. Good morning. I guess my question, I'll have to preface by saying that I understand the value comes from the integration of bearing with white caps Legacy assets. But, if you're able to segment the data, I'd be really curious to know what White Cap contributed to you and what Baron produced in Q2, if you had owned an entire period,

Speaker Change: The way that we look at the business quite frankly is on a Consolidated basis and so you know, all these Assets Now want to combined is is White Cap resources. I will I will comment that you know, when we look at the production outperformance

You have a 12,000 dose per day, relative to our internal forecast about 8,000 of that, uh, was attributed to White Cap performance on a standalone basis. And 4,000 of that was, uh, attributed to the VIN assets. Um, but certainly on a go forward basis. You know, we'll, you know, we're obviously reporting everything on a consolidated.

Speaker Change: And so, we'll talk to it on that basis.

Speaker Change: No, that's perfect. If I can ask 1 more follow-up question.

Speaker Change: I'd be curious if you get incremental free cash flow tail runs relative to what your budget is internally. How do you prioritize that between paying down debt faster relative to buying back stock as soon?

Well, I know what Grant would say. Um, certainly buying back, uh, shares would be a priority for us. I, I would say Aeron relative to, you know, where the stock price is, um, and our intrinsic value, when we look at the balance sheet today, at the end of the quarter, uh, we were 3.3 billion. Uh, I'd say that our Target at the end of the year would be somewhere. Between 3.3 to 3.5 billion, which is 1 times debt to cash flow. And even if we're stress testing that down to $50 oil, that'd be 1.2 to 1.3 times cash flow with more than sufficient liquidity. So the balance sheet is an excellent shape. Now, what I would say though is longer term, as we think about uh, the cyclical business that we're in here, we do want to continue to build up that dry powder. Uh, and continue to capture opportunities for our

Speaker Change: Shareholders. And so, you know, debt, Target longer term would be somewhere between 2.7 to 2.9 billion, which would be 1 times, depth, cash flow at $50 WTI, but certainly with the strength and the balance sheet that we have today, um, that doesn't preclude us from, uh, buying back shares.

Speaker Change: Very helpful. Thank you very much.

Speaker Change: Thanks.

Speaker Change: Thank you. The next question comes from Patrick or work at ATB Capital markets, please go ahead.

Speaker Change: 200 million dollars there. Now that you've had a chance to integrate the teams here? Are you able to better triangulate for us, sort of the, the pace that you anticipate achieving that? And then, um, obviously you talked before about, you know, very high level management being involved in the deal now that you have these teams integrated, um, what sort of the scope of The Upside above, that $200 million, that you're, you're starting to think about

Yeah, thanks for that question, Patrick. It's it's con here. Um, you know, as you know, this was a, you know, a transformational uh acquisition for us and you know, a lot of people process the systems to really integrate and bring forth. I mean we close it on May 12th here. I think as we look at the Synergy number there. Uh the corporate savings 35 million that we've outlined here with the reduction in uh, you know, the staff that we brought over as well as our uh, Improvement to our credit profile with the Triple B rating from dbrs. I think that 1 um you know, we're pretty much achieved here. I think the remaining 1 that you're referencing with respect to the capital as well as the operating there. Um again 1 to make sure that we really involved the teams uh in terms of building that out, I would say that again, the realization of them will be over the next 6 to 12 months and where we really will look to incorporate that would be in our 2000.

Speaker Change: In in 26, uh, budget there. So looking to release that uh early in November. So that would be the expectation. I I think that given the magnitude of the acquisition here, it's still really too early to say, uh, what the upside is uh, over and above the uh, 175 million that we've outlined.

Speaker Change: Okay, great. And then you guys gave a, a very detailed sort of rundown on the the wine racking and the do Renee. But I was just wondering if you could give us a little update with respect to what's going on at Gold Creek. I know it's a that you're sort of assessing the technical data there. Um, sort of what's the the time frame. Uh, you think before you can start achieving optimization on that asset?

Joey: Hey, Patrick Joey here. Um, so the concept of of optimizing him I'd say is is going to be a progression.

Um,

Joey: so early things that we've been able to do to optimize um on the uh on the uh incoming asset base things like adjusting. Um, so maybe think about the duet for a quick second here. We're plugging perk was still being employed by Varon. Um,

Adjusting things like the, the perforation and cluster design. Um, that's that's something we can kind of do early time, and that'll have a certain amount of, of marginal gains. We'll, we'll also be looking at early time here as well, and this applies to both gold.

Joey: Creek car and and as well as the do Renee um, doing the uh Frac operations by utilizing our, our Frac room and and calling those fracks from Calgary. Hoping to see some some incremental gains from that, from there, then what we'll expect to then do is make some more structural changes to the program things like well, spacing benching overall allocation of capital throughout the fields, um, to, to balance uh activity and infrastructure. Those ones will come uh, with a bit more time. And again, that that's more on that 6 to 12 months month, time frame, that that tan referenced there. Um, but early signs are are looking encouraging that we will be able to uh to to start to realize. A lot of the things we were hoping to do

Okay, thank you very much, guys.

Speaker Change: Thank you as a reminder. Ladies and gentlemen, if you do have any questions, please press the star followed by the 1 on your touchtone phone.

Speaker Change: The next question comes from Michael Spiker at at HTM. Please go ahead.

Michael Spiker: Good morning, guys. Congrats on some folks are calling the greatest quarter and Upstream history. Uh, I have 1 small question and 1, big picture question. Uh my smaller picture question is on the Rest Haven 13 of 35. Well, uh, that has produced flat at 9 million a day. Now for, I don't know, 10 months.

Michael Spiker: Uh, last quarter, you guys said, uh, condensate yield that was something like 260 barrels a day just relative to your guys' expectations house. That uh, how's that? Well looking and and what are that key learnings for that 60 to 3 townships into into Rest Haven there?

Michael Spiker: Hey, Michael Joey. Uh, I can take this 1 as well. Um, so yeah, definitely. Uh,

Michael Spiker: Was doing and and quite honestly, it it has been exceeding our expectations uh, by a certain amount. So what we've looked to do there is we're going to start to Stage up the production, um, in a couple of of deliberate steps there, just to see how much, uh, how much more room does exist on that? Um, so I I guess the, the, the thought there is that, you know, we'll, we'll use that as a, uh, as a essentially, a proxy for what the southern portion of that lore land base would do. And then, of course, use, uh, the reference there it is. Uh, on the, uh, board border of our of our Rest Haven asset there as well. Again, we've spoken to, uh, to how Rest Haven is not currently uh, uh going to be featured in in our 5 year plan, but still important to understand from a subsurface point of view. Um, how that will behave with with a modern completion. And and uh, with with our eyes on, on the bottom hole um with respect to the condensate your your question there and and the gas and everything. Um the rates they are still holding uh well above our expectations there.

Um, at at this time.

Speaker Change: Awesome. Thanks Joey. Uh, and the kind of bigger picture question, is the conventional portfolio? Like, you guys have had some wins? Charlie lake at valhall, the Monte at Valhalla.

Speaker Change: When you're thinking through the, the portfolio, kind of over the next 10 years, right? Uh, White Cap has changed quite a bit.

Pulling forward. Some of the conventional value. Do you see that through the Investments or accelerating?

Speaker Change: Kind of opportunities that you have when the cache becomes available. So because this is a conventional portfolio, become a, a playground or a or more of a, the investment pipeline kind of thing.

Grant Fagerheim: Yeah, thank thanks. Michael. It's Grant. We we think that the, uh, the conventional portion of our assets is a stabilizing and very important to the organization long term. So, when we talk about stabilization, we're talking about production stabilization, as well as cash flow. Uh, the net backs are so, ugh, are very, very high there, um, because of the light oil component or the high level of of, of condensate. So, from our perspective, um, I don't know if what from my vantage point, if I call it a playground, but it will be an area where we put, uh, incremental Capital to work as we advance forward. So, and a lot of this, um, you know, we we talked about it earlier references earlier, you know, with the spectrum of assets, we do have from light oil to liquids, Rich natural gas to to higher component of natural gas. We've got the optionality on on any of these particular areas. So, um, having the optionality on these assets longer term, um, you know, the conventional portion of our business is

Grant Fagerheim: Not, we're not looking to digest of that. Um, that region, uh, we think it's very important for the ongoing stabilization of our our uh, production and cash flow, as we advance forward. Uh, we talked about the decline rate in that area being, you know, sub 20%. Um, and 40% of that production is under some form of secondary or tertiary recovery. So we'll continue to advance those programs as we as well. Which are very technical in nature.

Awesome. And just 1 more, if you'll if you'll tickle me here,

Grant Fagerheim: I see that the vested the Belle Plaine carbon hub.

Glad this quarter to entropy. So does this change your view on, uh, secondary or tertiary recovery and in in Saskatchewan, or has there been kind of a change with that, the North Dakota import pipeline, where you were able to secure carbon dioxide for Weyburn over a longer period or or what what, what catalyzed, um, that shift away from CC us and, and the Wolf, uh, and the Rolling Hills de investment kind of that happened. Few few weeks, sure. I mean,

Yeah, uh, quite frankly, the the way we're thinking about the business ignition reduction programs, uh, in our organization are very important as as longer term. Um, when we find specific to the new, uh, we'll call new carbon capture hubs or CO2 hubs that we we've been um,

Grant Fagerheim: Advancing and uh, the the return characteristics are so small relative to what we can get in, uh, commissioner oil and natural gas production. So when we talk about not advancing those projects for any further, um, um, other than the waiver asset, and the waiver asset will continue on for many, many years to come and if we can attract more CO2 into that. Um, the voyagers, um, Voyage to replace the voyage, uh, there and advanced that project we're going to continue to do so, um, for a much longer period of time, but developing new, you know, Carbon capture hubs that that won't be part of our strategy going forward.

Speaker Change: Okay, awesome. Sounds like a good spot to be in. I appreciate it. Grant and and everybody else.

Speaker Change: And at this time gentlemen, we have no other questions registered, please proceed.

Speaker Change: Well, thank you very much, Joanna, and thanks to each of you aligned today and who continue to support us on our journey. Uh, we are excited about the opportunities that facing our the the opportunities that facing our company at this particular time and look forward to updating you on our progress through the balance of 2025 and well into the future.

Speaker Change: Wish you all the best and enjoy the rest of your summer. Um sunny summer, thanks very much.

Speaker Change: Thank you, sir. Ladies and gentlemen, this does include concludes your conference call for today. Once again, thank you for attending. And at this time we do ask that you please disconnect your lines