Whitecap Resources Inc. (WCP) Earnings Call Transcript & Summary

Good morning. And welcome to Whitecap Resources' Annual Meeting of Shareholders, being held this morning by audio webcast on the Lumi meeting platform. I would now like to turn it over to Whitecap's Chairman of the Board, Mr. Ken Stickland.

Good morning. And thank you, Sylvie. Welcome to the Annual Meeting of Shareholders of Whitecap Resources Inc. The meeting will now come to order. As Sylvie mentioned, I'm Ken Stickland. And I'm Chairman of the Board of Directors of Whitecap, and I will act as Chair of the meeting. Our meeting today is being hosted on the Lumi virtual shareholder meeting platform. This allows registered shareholders and duly appointed proxy holders to vote and to submit questions and comments to the moderator, to be read and addressed at the meeting. [Operator Instructions] Following the formal portion of our meeting today, Grant Fagerheim, our President and Chief Executive Officer, will make some brief remarks. After his remarks, we will address any questions to the meeting. I will ask [ Jeff Oak ] to act as our Secretary of the meeting; and Jacquie Fisher and Nazim Nathoo, representatives of Odyssey Trust Company, to act as scrutineers. Regarding the meeting, I have received confirmation from Odyssey as to the due mailing of the meeting materials and the financial statements for the year ended December 31, 2024. I direct that this confirmation, together with copies of these documents, be kept by the Secretary with the minutes of the meeting. Business may be transacted at this meeting if 2 or more persons are present holding or representing by proxy not less than 25% of the shares entitled to vote at the meeting. We have confirmation that we have quorum for this meeting. The scrutineers' report has now been received, and it shows that there are -- is a quorum. I will direct that the scrutineers' report be kept by the Secretary with the minutes of this meeting. I now declare that the meeting is regularly called and properly constituted for the transaction of business. With respect to voting, we will conduct each vote by way of vote cast on the Lumi platform and those submitted by proxy. I understand that the scrutineers have tabulated all of the votes received prior to voting cutoff. If you have previously voted, you do not need to vote again when prompted. By voting again, you will revoke previous -- any previous vote made prior to voting cutoff. We will now open voting for all of the resolutions. Particulars of the votes cast on all matters will be available on SEDAR+ after the meeting. I direct that the scrutineers' report on all matters be annexed to the minutes of this meeting as a schedule. Financial statements. I'd first like to present the financial statements for the year ended December 31, 2024, to the meeting. These are located on the Lumi dashboard page. The next item of business is to fix the number of directors.

My name is Thanh Kang. And I move that number of directors to be elected at this meeting to be fixed at 9.

My name is [ Janice Wood ], and I second the motion.

Is there any discussion or questions submitted from any registered shareholder or proxy holder on that motion?

Mr. Chairman, there are no questions on that motion.

Thank you, Tim. The next item of business is the election of directors of Whitecap. The advance notice date for the nomination of directors having passed under Whitecap's advance notice bylaw, the only individuals entitled to be nominated at -- as directors at this meeting, are the persons named as nominees in Whitecap's information circular. Therefore, as directed by the Board and in accordance with the information circular, the following individuals, Mary-Jo E. Case; Grant B. Fagerheim; Chandra A. Henry; Glenn A. McNamara; Vineeta Maguire; Stephen C. Nikiforuk; myself, Kenneth S. Stickland; Bradley J. Wall; and Grant A. Zawalsky, are nominated as directors of Whitecap to hold office until the next annual general election of directors or until their successors are elected or appointed, subject to the provisions of the Business Corporations Act of Alberta and the bylaws of Whitecap. The next item of business is the appointment of auditors.

I move that PricewaterhouseCoopers LLP be appointed auditors of Whitecap until the next Annual General Meeting or until their successor is appointed, and that their remuneration as such be fixed by the Board of Directors.

I second the motion.

Thank you, [ Janice ]. The next item of business is the consideration of an ordinary resolution to approve an amendment to our award incentive plan and to approve the common shares issuable pursuant to unallocated awards under the plan until April 29, 2028.

I move that the ordinary resolution on Pages 25 and 26 of the information circular, proxy statement, of Whitecap dated March 13, 2025, be approved.

I second the motion.

Thank you, [ Janice ]. Is there any discussion or questions submitted from any registered shareholder or proxy holder on that motion?

Mr. Chairman, there are no questions on that motion.

Thank you, Tim. The next item of business is to approve a nonbinding advisory resolution concerning Whitecap's approach to executive compensation.

I move that the nonbinding advisory resolution on Page 27 of the information circular of Whitecap dated March 13, 2025, be approved.

I second the motion.

Thank you again, [ Janice ]. Is there any discussion or questions submitted to any registered -- from any registered shareholder or proxy holder?

No questions on that motion.

We're being very efficient this morning.

[indiscernible]

As all voting has been enabled for all previous motions, if a shareholder has not voted yet, please do so now. [Voting]

I think we can take it that voting is now closed. And we'll just wait for the -- Odyssey to confirm that we've got those motions passed. Yes, thank you. We've got that. So I've been advised by the scrutineers that all resolutions have been approved by more than the requisite majority and that those nominated have been duly elected as directors of Whitecap. I declare the motions carried and the nominees for the Board of Directors elected. Thank you, everybody. We're now going to go on to other business. Are there any questions submitted on the formal business of the meeting?

Mr. Chairman, there are no questions on the formal business...

Thank you. I will then entertain a motion that the meeting be terminated.

I move that this meeting be terminated.

I second the motion.

Thank you. The meeting operator is activating a poll to vote on the termination of the meeting. We've received that, so that is -- motion is now carried. I declare that the meeting is terminated. And I'll invite Mr. Fagerheim to deliver his remarks on behalf of Whitecap management, but before we do that, I'd like to thank our valued and dedicated employees and contractors: for all that you've accomplished this past year. Your contributions have put Whitecap in a great position moving forward. I'd also like to thank Grant and our management team. Our industry and Whitecap face many challenges each year and we are also presented with many opportunities. Your leadership and execution continued to deliver solid results for our shareholders; and allow us to pursue the best opportunities available to us, such as the current business combination that we're pursuing with Veren. Lastly, I'd like to acknowledge the guidance and oversight of our fellow directors. I know our management team values your insight. And lastly, I'd like to thank you, our shareholders, for your ongoing support. It's your best interests that all of us work hard to foster and protect. Thank you. Grant, over to you.

Thanks very much, Ken. And thanks, for everyone online today. And firstly, I would like to thank, as Ken did, our entire Whitecap team for their efforts over this past 2024 year; and congratulate everyone for the exceptionally strong operational and financial results over the past year. To talk about our operational achievements, what I can say is we upwardly revised our guidance 4 times throughout the year, of -- achieving average production of 174,255 BOE per day, 65% liquids, compared to our budget of 165,000 BOE per day, 63% liquids, an increase of 6%. Our production included 92,450 BOE per day of oil, 20,400 BOE per day of natural gas liquids and 368 million a day -- 368 million cubic feet a day of natural gas. We drilled 246 successful wells, yes, in 2024, including 38 unconventional Montney and Duvernay wells; and 208 conventional wells, including Frobisher, Shaunavon, Viking, Cardium and Glauconite wells: strong reserves per share growth of 4% to 5% on proved developed producing, total proven and total proved plus probable reserves. On a debt-adjusted basis, reserves per share growth was 12% to 13%. We entered into a strategic partnership with Pembina Gas Infrastructure, PGI, to fund 100% of Phase 1 of the Lator infrastructure to unlock 35,000 to 40,000 BOE per day of Montney production in Whitecap's highly economic Lator area. Whitecap will design, construct and operate the facility scheduled to be completed in late 2026, early 2027. Phase 2 pace of development to the 80,000 to 85,000 BOE per day will be made once we have Phase 1 up and fully operational. In early 2024, we also completed the commissioning and start-up of our owned and operated Musreau 05-09 battery. The battery was completed 2 weeks ahead of schedule and 10% below budget. We brought 16 wells on production at Musreau during 2024, with performance exceeding our expectations on both a total and condensate production basis. Current production is in excess of 17,000 BOE per day from this facility. Throughout the year, we continued to advance our inventory enhancement initiatives across our asset base, including open-hole multilateral pilots in Saskatchewan, monobore drilling design in Glauconite in Central Alberta, along with inter-well spacing and longer-lateral-length pilots in both our unconventional and conventional assets. On our unconventional Montney and Duvernay assets, we continued to advance numerous technologies and process to drive greatest reserve recovery and economics. From a financial perspective, we generated a full year funds flow of $1.6 billion, $2.73 per share; after capital expenditures of $1.1 billion, free funds flow of $501 million or $0.84 per share for the full year, respectively. We monetized a 50% working interest in our Musreau facility and Kaybob complex for proceeds of $520 million, representing an attractive EBITDA disposition multiple of 14x. Whitecap retained 50% working interest and operatorship in both facilities. We secured additional infrastructure access, enhanced contract terms and highly competitive fees on processing, transportation, fractionation and marketing on our current and future Montney development, with net present value of approximately $190 million that will enhance our future funds flow netback; successful inaugural investment-grade issuance of 5-year senior notes for gross proceeds of $400 million at an attractive fixed rate of 4.382% per annum. And we reduced our debt by $452 million, resulting in year-end debt of $933 million. Return of capital to shareholders provided a sustainable base dividend of $0.73 per share, equating to $433.3 million returned to shareholders. Total dividends paid since 2013 are $2.2 billion. We continued to enhance our capital structure by repurchasing 12.7 million common shares for $130 million of cost. To undertake this very active year, we were pleased to add 70 new employees to our staff to ensure that we can and will further our successful value creation well into the future. For this 2025 year and announced on March 10 of this year, we are very excited to bring a strategic combination of Whitecap and Veren together to create an industry-leading light oil, condensate producer while being the fifth largest natural gas producer in Canada. The combined company will be the largest Alberta Montney and Duvernay landholder, a prominent light oil producer in Saskatchewan; and will leverage the combined asset base and technical expertise to drive incremental improvements to profitability and superior returns to shareholders. The combination has received approval from the Competition Bureau. And shareholder votes for the -- both companies will occur on May 6, upcoming May 6. And upon receipt of approval, the Court of King’s Bench of Alberta -- of the combination. The combination is expected to close on May 12 this year. Upon closing of the business combination or shortly thereafter, Whitecap will provide updated operational and financial guidance for the full year 2025. We look forward to bringing together the strength of the Veren staff with our high-performing staff at Whitecap to provide the strongest returns possible to shareholders. I would like to -- in closing. I would like to thank our Board of Directors for their continued guidance and support; and also for our valued shareholders, for your continued support to our company as we march forward to provide best returns possible. With that, I'll close off; and answer any questions, if there is any. Thanks very much, everyone. Seeing no particular questions, we'll close off today. And again, I want to thank everyone, for your time today; again to our Board, Ken, for undertaking the mic today. And we look forward to reporting back to you with continued success as we move forward. Thank you.

That concludes today's webcast. Thank you.