With that in mind, let’s take a look at the recent performance and growth prospects of Whitecap Resources (TSX:WCP) – a company that offers a dividend yield of over 6% – to assess whether the stock is an attractive buy at current levels.
Whitecap’s third quarter performance
The Calgary-based oil and natural gas producer delivered impressive third-quarter performance in October, with average production of 374,623 barrels of oil equivalent per day – above internal guidance. Production per share grew 5.7% year over year, supported by strong execution, incremental production additions and continued efficiency gains. The higher production increased sales to $1,660.3 million. However, revenue per share fell 8.9% as a 13.8% decline in the company’s average realized price more than offset production growth.
Whitecap is also making faster-than-expected progress in leveraging operational synergies from the Vener merger that closed in May. These include streamlined workflows, optimized manufacturing practices, improved infrastructure utilization and meaningful capital efficiencies through stronger purchasing practices and rig-line optimization.
Backed by strong operations and early realization of synergies, Whitecap generated cash flow of $897 million during the quarter. Meanwhile, adjusted cash flow per share was $0.73, up 7.4% year over year. After capital expenditures of $546 million, the company reported free cash flow of $350 million. Additionally, Whitecap ended the quarter with net debt of $3.3 billion and maintained a healthy annualized net debt to fund flow ratio of 1. With $1.6 billion of available liquidity, the company is well positioned to fund its continued growth initiatives.
Now let’s take a closer look at the growth prospects.
Whitecap’s growth prospects
Thanks to strong production in the first three quarters, Whitecap has raised its average production forecast for 2025 to 305,000 barrels of oil per day, up from the previous range of 295,000 to 300,000 barrels per day. This outlook implies fourth quarter production of 370,000 to 375,000 barrels of oil equivalent per day.
Looking ahead to 2026, the company plans to invest $2.0 billion to $2.1 billion, focusing on operational execution, disciplined capital allocation, moderate production growth and continued realization of synergies. Management expects average production of 370,000 to 375,000 barrels of oil equivalent per day by 2026 and forecasts an additional $300 million in annual capital, operational and business synergies.
With these strong growth drivers and continued efficiencies, I expect Whitecap to deliver healthy performance in the coming quarters.
Investor takeaway
Despite the merger with Vener and solid quarterly performance, Whitecap has delivered a total shareholder return of 21.6% this year, lagging the broader market. Furthermore, the stock continues to trade at attractive valuations, with forward twelve-month price-to-sales and price-to-earnings ratios of 2.3 and 13, respectively. It currently pays a monthly dividend of $0.0608 per share, which at current prices yields 6.3%.
Given its healthy growth prospects, improving profitability and solid financial position, I believe Whitecap is well positioned to maintain – and potentially increase – its dividend payments over time, making it an ideal buy for income-seeking investors.
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