Whitecap Resources reported record second-quarter funds flow and free funds flow, according to the company's quarterly results presentation.
Funds flow reached C$1.4 billion, or C$1.11 per share, while free funds flow totaled a record C$925 million, according to President and CEO Grant Fagerheim.
Record second-quarter free funds flow for Whitecap Resources.
The company reported an operating netback of C$43.84 per barrel of oil equivalent, up 48% from the prior-year quarter. Stronger commodity pricing was attributed in part to disruptions to Middle East crude oil and condensate supply, which tightened global availability of light barrels and increased demand for North American light oil and condensate.
Petroleum and natural gas revenue rose 93% year over year to C$2.6 billion, according to Senior Vice President and CFO Thanh Kang. The increase was attributed to higher crude oil and condensate prices and a full quarter of production from the Veren assets. Second-quarter WTI averaged US$92.79 per barrel, and the company realized a crude oil and condensate price of C$127.82 per barrel, aided by premiums for light oil and condensate volumes and a weaker Canadian dollar.
Liquids represented approximately 61% of production but accounted for about 93% of revenue during the quarter. AECO averaged C$1.63 per Mcf, remaining weak amid unplanned NGTL maintenance. The realized natural gas price was C$2.29 per Mcf, or C$0.66 per Mcf above AECO, which the company stated demonstrated the benefit of its price-diversification strategy.
Operating costs declined 13% from a year earlier to C$11.88 per BOE. The company lowered its full-year operating cost forecast to a midpoint of C$12 per BOE, a C$0.50-per-BOE reduction from its original budget. CFO Thanh Kang said the lower cost outlook is expected to increase free cash flow by approximately C$70 million.
Net income increased 186% from the prior-year quarter to C$890 million, or C$0.73 per share. The result included a C$282 million unrealized gain on commodity contracts, compared with an unrealized loss of C$509.1 million in the first quarter.
Net debt was reduced by C$900 million over the past six months to C$2.5 billion, equivalent to 0.5 times debt to cash flow.
Quarterly production averaged 388,894 BOE per day, including 239,083 barrels per day of liquids and just under 900 million cubic feet per day of natural gas. Production exceeded internal forecast by roughly 8,000 BOE per day, led by performance at Kaybob and base-production optimization in Central Alberta. The company raised its 2026 production guidance by 5,000 BOE per day to 385,000 BOE per day, the second increase this year, bringing guidance 12,500 BOE per day, or 3%, above original budget.
Capital spending guidance was maintained at C$2.0 billion to C$2.1 billion. President and CEO Grant Fagerheim said the company expects to spend at the high end of the range due to shorter cycle times. During the quarter, Whitecap drilled 47 wells across the Montney, Duvernay and conventional portfolio using approximately seven rigs, and expects to use about 12 rigs through the third and fourth quarters.
CFO Thanh Kang told analysts that approximately 55% of the production outperformance came from new well performance, while 45% came from base optimization. President Joey Wong said the unconventional division continued to see above-forecast aggregate performance from wells brought online this year. Drilling meters per day were 31% above historical levels, while proppant placed per day was 13% above historical levels.
The Kaybob Duvernay asset reached its productive capacity range of 115,000 to 120,000 BOE per day during the second quarter. Whitecap expects it to average within that range through the third and fourth quarters, supported by stronger well results, shorter cycle times, debottlenecking and base optimization. President Joey Wong said Kaybob is shifting from growth toward sustaining capacity and generating free cash flow. Under the updated forecast, the asset could generate C$800 million to C$900 million of annual operating free cash flow at WTI prices between US$70 and US$80 per barrel.
At Lator, construction of the 413 facility was approximately 90% complete, with startup expected in the fourth quarter. Whitecap said the project remains on budget and on schedule.
Vice President Chris Bullin said the conventional division, which is 80% liquids weighted, contributed nearly 45% of operating cash flow during the first six months of the year while accounting for 22% of capital spending. The company cited production optimization and infrastructure flexibility in Alberta, along with waterflood management and field surveillance in Saskatchewan, as contributors to results.
CFO Thanh Kang said the company's base case is for 3% production growth next year, with a long-term objective of 3% to 5% production growth per share. President and CEO Grant Fagerheim said the company currently produces about 60,000 BOE per day of condensate and could potentially increase that volume by 25,000 to 50,000 BOE per day over time, depending on development conditions and market demand.
