Whitecap Resources Inc (WCP.TO), which gained 4% to near year highs Wednesday, reported fourth quarter net income of $7.58 million or $0.06 per share basic and diluted versus $3.23 million or $0.04 per share basic and diluted a year before.
It had 40% per share growth in production, 36% per share growth in reserves, and 25% per share growth in cash flow, all on a fully diluted basis. It generated cash flow of $194 million in 2012 which was driven by its 68% light oil and NGL weighting and enviable cash flow netback of $37.69 per boe.
OUTLOOK: "We are optimistic about the upcoming year and with our transition to a dividend-growth energy company now complete we expect to continue to provide robust financial returns for our shareholders. Our strategy remains focused on the cost effective development and optimization of our assets and realizing the highest cash flow netback on our production. We remain financially disciplined in our approach while we strive to deliver meaningful dividends and per share growth in cash flow, production and reserves for our shareholders.
We believe the current economic environment is supportive of strong crude oil prices for the foreseeable future. Light oil-weighted energy producers in western Canada will continue to benefit from higher prices; however our diligence will remain high with respect to the Canadian crude oil price differential volatility that we have experienced over the past year. The options for transporting western Canadian crude oil are in the process of being expanded through pipeline alterations and expansions as well as with the rapidly expanding use of rail for transportation to refining and export points. This ultimately will assist to reduce the frequency and intensity of the pricing differentials in western Canada, thereby allowing us a higher realized price for our crude oil on a more stable basis.
At this time, the producing energy sector in general is experiencing higher than normal levels of debt relative to the cash flow being generated and as a result many assets have been put into the market for sale in the western Canadian basin. At Whitecap we have been able to assemble an enviable suite of high quality assets without being over-levered. We will look to expand in our core areas through acquisition only if it strengthens our company and we can demonstrate increased value for our shareholders including the potential to increase our dividend over time while maintaining a prudent level of debt.
Subsequent to the year-end we announced the acquisition of Invicta Energy Corp. ("Invicta") which has lands and production immediately offsetting those of Whitecap in the Viking light oil resource play at the Lucky Hills area of west central Saskatchewan. Through the acquisition, we continue to increase our low risk, high netback light oil drilling inventory and it further strengthens the sustainability of our dividend growth strategy.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
