2Q19 quiet on activity front, impressive on operational and financial performance

Despite a seasonally quiet quarter for drilling operations, Whitecap impressed on the operational front with production of 70,611 boe/d 4% ahead of the consensus estimate while spending of ~$27 mm came in 30% lower than the “street” at $38.6 mm. With AFFO of $176 mm or $0.42/sh overlaying analyst estimates, the company delivered $114 mm of FCF in the period through an all-in cash use to cash flow ratio of 56%. Activity levels are slated to pick up significantly with 66% (~$300 mm) of its 2019e c

Tidy 3Q18 performance yields FCF of ~$58 mm, rolling out 2019 guidance in early December

Production of 75,529 boe/d and cash flow of $206.8 mm or $0.49/sh were both marginally ahead of expectations by 1%-2%. Whitecap’s performance was generated from less E&D spending than expected at $115 mm (GMP FE - $146 mm) which led to FCF generation of ~$58 mm in the period, bringing its D/CF ratio down to 1.6x. NCIB activity continued in 3Q18 with 1.0 mm shares purchased at an average price of $8.17/sh, bringing its total to ~3.0 mm shares ytd. We believe the NCIB continues to be one of the ke

Quality available at deep discounts amidst overt sector pessimism

The stocks on the GMP FirstEnergy Best Ideas List represent our highest conviction BUY recommendations with an expected return of 20% or more over the next 12 months. The investment thesis for each name on the list is laid out in this report.

Whitecap Looks to Accelerate Growth Plans in 2017e

In the latest corporate presentation, Management has updated its preliminary 2017e outlook where anticipated capital spending has increased from $205 mm to $300 mm. Average annual volume guidance under this accelerated view increases by 6% to 57,000 boe/d. This move continues to be funded well inside of organic cash flow generation with a proforma cash use to cash flow ratio of 83% (82% under the forward strip) while the balance sheet remains solid at 1.5x D/CF (2017e trailing). We are reaffir

Posts Solid 2Q16 Results

Whitecap’s production topped FirstEnergy and Management guidance by 5%, and ideally spawn from capital spending that was 25% lower than anticipated. Commensurate cash flow was also 8% ahead of expectations with the help of production outperformance (particularly on the liquids front). While exit 2016e production guidance of 51,000 boe/d has been maintained, solid current volumes proforma the Husky asset deal and an active drilling campaign in 2H16e mean the Company appears on track to outperform

2Q16e Quarterly Preview

Some Recovery on Segmented Cash Flow Generation Over Q1 Though Still Down 56% Y/Y. In aggregate, the Intermediate, Mid, and Small Cap groups are expected to generate 2Q16e cash flow of $1,281 mm, $183 mm, and $53 mm, or $1.517 billion in total, that while depressed relative to the same period last year (~$2.647 billion combined), is up 17% sequentially from the prior quarter, largely on the strength of crude oil price recovery in the period. Severely weak natural gas pricing picture markedly rev

DAILY RESEARCH SUMMARY

WHITECAP RESOURCES INC (WCP CN)

1Q16 Results Match Expectations

Whitecap’s 1Q16 production of 43,000 boe/d was inline with our forecast and Company projections. Cash flow generation of $67.9 mm or $0.22 per share marginally outpaced FirstEnergy and consensus forecasts that were both $0.21 per share. Volumes and cash flow markers were achieved on spending that was 9% lower than anticipated. The Company continued its cost cutting initiatives with production expenses now ducking below the $10.00/boe level, which leaves it in the running for lowest cost operator

Intermediates, Mid Caps & Small Caps

With this publication we briefly summarize our projections for 1Q16e quarterly results for the Junior E&P (Intermediate, Mid & Small Cap) segments of our coverage universe

Announces Increased 2016 Guidance and Revised Dividend

Whitecap has increased its 2016e capital program to $148 mm (previously $70 mm) with the incremental spending coming in 2H16 and being funded by a 38% dividend reduction to $0.28 per share annually. The Company also offered a 2017e preliminary outlook that includes $150 mm of spending to achieve average production of 41,500 boe/d. While the net effect dividend cut and capex increase on 2016e total cash use to cash flow is negligible, the effect on 2017e valuation, sustainability and leverage cha

Domestic E&P Statistical Package and FD&A Review

With this publication we highlight various metrics and statistics forthcoming from yearend reserve books for our Domestic E&P coverage universe (Integrateds, Large Cap, Oilsands, Intermediate, Mid Cap, and Small Cap). Similar charts for YE2014 reserves can be found in our Statistical Package dated April 7, 2015.

Consolidates Boundary Lake Assets, Increased 2016e Guidance, posts Solid 4Q16e Results

A Boundary Lake consolidating acquisition was finalized before the end of 2015, adding ~1,700 boe/d and 11.5 mmboe of 2P reserves. The $93.4 mm purchase price was funded through the recently announced, and successfully closed, $95 mm equity financing. 2016e guidance was revised higher to 38,800 boe/d on an unchanged capital program of $70 mm. Current production is well ahead of this at 44,000 boe/d. 4Q15 results reveal zero surprises with production, cash flow and spending all in line with both

Whitecap Posts Perennially Solid Reserve Growth Performance

Reserves grew 2%, 8%, and 7% per share on a PDP, 1P and 2P basis, respectively. While FD&A costs were largely attached to its acquisition of Beaumont Energy, organic F&D additions this year came in at an impressive $12.57/boe PDP or $6.97/boe 2P. Our updated CNAV analysis shows normalized y/y growth of 23%. Our RENAV methodology continues to support a compelling return profile well in excess of current trading levels, particularly when evaluating the underpinning assets on a risk-adjusted basis

Intermediate/Mid/Small Cap Commodity Price Update Impact

With this publication we highlight forecast revisions associated with our crude oil commodity price update. Concurrent within a dynamic time for E&Ps, some of which have already begun the process of 2016 capital budget downdrafts, revised estimates attempt to directionally capture a shift towards capital conservation, though severely weakened futures curves have influenced our thinking for the better part of 6 months anyway. We expect further capital investment reductions forthcoming from E&Ps i

Survival of the Fittest

This publication serves to recap the chaotic changes that have happened since original 2016e budgets were disseminated, plus provide clarity on the names we believe will thrive, survive, or those that will be challenged to remain in this group for much longer.

Chariot Limited (AIM: CHAR): Anchois-3 disappoints. All eyes on South Africa power, Morocco onshore & Namibia.

• The North Flank prospect at Anchois-3 is water wet (ReNAV: £0.03/sh), This has a negative impact on Anchois South (ReNAV: £0.07/sh). • The B sands that were the main appraisal targets were thinner than expected and the deeper C & M sands were water wet, however these were drilled down-dip from the Anchois-2 well where the sands were found gas-bearing. The B sands will not be tested and the main hole will be plugged an abandoned. This has a negative impact on the size of the contingent resource

Jersey Oil & Gas (JOG LN) - H1 2024 results

JOG has released its H1 2024 results, re-confirming the company’s significant cash holding, alongside providing an operational update reporting the progress made in 2024 on Buchan engineering work.

Morning Note – 16 September 2024

Cadence Minerals (KDNC LN) - Licensing update for the Amapá iron ore project, Brazil

Cadence today provides an update on its licencing and project test work for the plan to produce a single 67% iron product from the Amapá iron ore brownfield restart in Brazil. Licences are all underway following an agreement with the local environment agency to expedite the process as Amapá is a former operating mine; Amapá needs a Mine Extraction and Processing Permit for which it needs an Installation License to begin construction and, when constructed, an Operational License. It also requires

Morning Note – 19 September 2024

Strong 1H cash flow, soft services

Union Jack Oil (UJO LN) - Wressle planning permission received for planned programme

Union Jack has announced that it has received planning permission for the next phase of its Wressle development project in the UK. This is the key consent for this work programme, and should allow the company to add important new production volumes from this existing producing asset going forward.

Union Jack Oil+ (UJO, House Stock at 16p) - Planning consent for Wressle expansion

Morning Note – 18 September 2024

Zeus Industrials Round-Up - 13 September 2024

The UK industrial sector continues to show promising signs of recovery, with manufacturing PMI reaching a 26-month high of 52.5 in August as all survey indicators but one expanded. Economic data has also been encouraging, with UK pay growth cooling to a two-year low and inflation rising only slightly in July – supporting the case for further interest rate cuts this year by the BoE.

Oil & Gas - Cavendish sector note

Chariot, Hartshead Resources, Sunda Energy, Afentra, Energean, Serica Energy, Petro Matad, Cadogan Energy Solutions, Bowleven Source: FactSet, weekly change 09/09/2024-13/09/2024 Oil slipped as producers started reviving output after Storm Francine passed, though futures still posted their first weekly gain in a month as the disruptions and risk-on sentiment in wider markets helped ease a previously oversold crude market. West Texas Intermediate slid about 0.5% to settle below $69 a barrel, givi

Sound Energy (SOU LN) - H1 2024 results

Sound has announced its H1 2024 results, alongside providing an operational update on its ongoing Tendrara development project in Morocco. The company recently announced a farm out of Tendrara, which should close in the coming weeks and which we expect to leave Sound fully funded for Tendrara Phase 1 and 2 development.

PANMURE LIBERUM: Commodity snapSHOT: Russia's latest threats, quantified

Pharos Energy Plc (LSE: PHAR): Very strong financials. Busy drilling programme in 2H24. Dividend up by 10%

• 1H24 production of 5,851 boe/d had been reported previously. • Pharos has re-iterated its FY24 production guidance of 5.2-6.5 mboe/d. The company expects to spend US$26 mm (net) capex in 2024 (US$27 mm previously). • The highlight of this announcement is the strong financials. While the net cash of US$17.5 mm at the end of June is in line with what had been reported previously, the 1H24 operating cashflow had been negatively impacted by an inventory build of ~US$12 mm. This implies that the ne

88 Energy - Multi Hundred Million Barrel Oil Resource Confirmed

Assessments carried out by two independent reserve and resource auditors have confirmed a multi-reservoir discovered resource at Project Phoenix, with combined gross 2C resources of 378mmboe (including 251mmbbls of marketable liquids). The result provides 88E with 159mmbbls of net oil and NGL resources, strategically located next to the Trans Alaska Pipeline System (TAPS), with significant development potential. Upside potential comes from 247mmbbls of gross 2U unrisked prospective resources, br