Earnings call transcript: Whitecap Resources outlines Q3 2025 performance and 2026 goals

Whitecap Resources Inc. (WCP), a $9.2 billion market cap energy company trading at an attractive P/E ratio of 7.4x, reported its Q3 2025 earnings, highlighting a robust financial performance and strategic initiatives for future growth. The company detailed its financial metrics and operational updates, setting a clear path for 2026. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value model, suggesting potential upside for investors.

Key Takeaways

• Whitecap Resources achieved a Q3 2025 funds flow of nearly $900 million.
• The company plans significant production increases, targeting over 380,000 BOE per day by the end of 2026.
• A steady seven-rig program is set across Montney and Duvernay, with 129 wells expected in 2026.
• Whitecap announced a $300 million share repurchase program, targeting 2% of shares.

Company Performance

Whitecap Resources continues to build on its strong financial foundation, reporting nearly $900 million in funds flow for Q3 2025. The company is leveraging its diversified asset base to drive growth, maintaining a low 20% decline rate in its conventional assets. Whitecap’s strategic focus on infrastructure optimization and cost reduction has positioned it well against industry peers.

Financial Highlights

• Funds Flow: Nearly $900 million for Q3 2025.
• Free Funds Flow: $350 million.
• Net Debt: $3.3 billion.
• Dividend: $0.73 per share annually, reflecting a 7% yield.

Outlook & Guidance

Whitecap has laid out ambitious plans for 2026, with a capital budget of $2-$2.1 billion and a projected funds flow of $3.3 billion. The company aims for a free funds flow of $1.2 billion, with shareholder returns targeted at 10-15% annually. Analysts tracked by InvestingPro share this optimistic outlook, with consensus price targets suggesting up to 27% potential upside. The company maintains a "GOOD" Financial Health Score of 2.83, indicating solid operational stability. Production is expected to reach 370,000-375,000 BOE per day, with an exit rate of over 380,000 BOE per day.

Executive Commentary

"Our culture of continuous improvement positions us to further enhance these synergies," said Grant Fagerheim, CEO. He emphasized the company’s strong operational position and capital efficiency improvements, which are approximately 10% better than previous forecasts.

Risks and Challenges

• Commodity Price Fluctuations: Changes in WTI and natural gas prices could impact funds flow significantly.
• Infrastructure Development Delays: Potential delays in projects like the Latour facility could affect production targets.
• Market Volatility: Broader economic conditions and currency exchange rates present ongoing challenges.

Q&A

During the earnings call, analysts inquired about the implementation of plug-and-perf pilot programs and infrastructure spending strategies. Whitecap provided insights into its Latour asset development plans and the efficiency of its rig program, highlighting the realization of synergies 40% higher than initially estimated.

Full transcript - Whitecap Resources Inc (WCP) Q3 2025:

Sylvie, Conference Operator: Morning. My name is Sylvie, and I will be your conference operator today. At this time, I would like to welcome everyone to Whitecap Resources Q3 2025 Results and 2026 Budget Conference Call. Note that all lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question and answer session. If you would like to ask questions during this time, simply press star then number one on your telephone keypad. If you would like to withdraw your question, please press star then number two. I would like to turn the conference over to Whitecap Resources President and CEO, Mr. Grant Fagerheim. Please go ahead.

Grant Fagerheim, President and CEO, Whitecap Resources: Thanks very much, Sylvie. Good morning, everyone, and thank you for joining us. There are five members of our management team here with me today: our Senior Vice President and CFO, Thanh C. Kang; our Senior Vice President, Production and Operations, Joel M. Armstrong; our Senior Vice President, Business Development and Information Technology, David Mombourquette; our Vice President of the Unconventional Division, Joey Wong; and our Vice President, Conventional Division, Chris Bullin. Before we get started today, I would like to remind everybody that all statements made by the company during this call are subject to the same forward-looking disclaimer and advisory that we set forth in our news release that was issued yesterday afternoon. We are very pleased to provide our shareholders with this update this morning.

As evidenced by our third quarter operating results and the 2026 budget released yesterday, the first full quarter following the integration of the Varin assets into Whitecap Resources’ portfolio has been highly successful. The company’s assets and personnel are strategically aligned, driving operational efficiency and value creation. Our top-performing assets serve as key differentiators, reinforcing the company’s competitive advantage and supporting long-term growth well into the future. Third quarter production of 37,623 BOE per day, which included 227,419 BOE per day of total liquids and 883 million a day of natural gas. Strong operating performance has continued throughout the entire year, supported by the seamless integration of the Varin assets and field operating teams, which has enhanced overall operating efficiency.

As a result, we are increasing our 2025 guidance to 305,000 BOE per day for the full year, which implies 370,000 BOE per day for the fourth quarter, while our full-year capital program of $2 billion remains unchanged. By leveraging the collective knowledge and technical understanding of the combined assets and operations, our 2026 budget is set to deliver robust free cash flow from a very efficient capital drilling program. Our 2026 budget has been set between $2 billion to $2.1 billion, which is forecast to deliver average production of between 370,000 to 375,000 BOE per day and an exit production rate in excess of 380,000 BOE per day to grow production per share by 3%. The capital program is down from initial capital projections to that $2 billion to $2.1 billion from what was $2.6 billion.

Our Unconventional Division will be allocated 75% of the capital budget to drill approximately 100 wells, while the Conventional Division will receive the remaining 25% to drill approximately 155 wells. We’re particularly excited for our Latour asset, where our 413 battery is on budget and ahead of schedule. Joey will provide more details on our plans for this asset in 2026, but needless to say, we’re looking forward to the development of this liquids-rich asset base in the near future. The capital efficiency embedded in our budget is approximately 10% better than the previous forecast, which can be attributed to recent operational performance, asset allocation, and the realization of synergies. In aggregate, we have included $300 million in forecasted synergies for 2026, or 40% higher than our original estimate of $210 million. Capital synergies of approximately $130 million were driven by enhanced procurement, operational efficiencies, and rig line optimization.

Operating cost synergies equate to $135 million, which is $60 million higher than our original estimate. We are seeing significant wins in areas with adjacent or overlapping operations, along with procurement success and operational best practices. Lastly, we have realized $35 million of corporate synergies through reductions in G&A, share-based compensation, and interest expense. These benefits are a direct result of the combination leveraging enhanced scale, integration, and the technical best practices that were previously divided between the two organizations. I want to thank our entire office and field teams for their technical rigor and dedication in achieving a significantly higher synergy realization and doing so much faster than initially anticipated. Our culture of continuous improvement positions us to further enhance these synergies through ongoing technical initiatives planned for 2026. I will now pass the mic on to Thanh C.

Kang to further discuss our third quarter financial results and provide more details to our 2026 budget. Thank you.

Thanh C. Kang, Senior Vice President and CFO, Whitecap Resources: Thanks, Grant. U.S. Dollar WTI remained relatively stable at $65 per barrel in Q3 compared to $64 per barrel in Q2, in contrast to a weaker ACO price of $0.63 per Mcf. Whitecap Resources was, however, able to achieve a significantly higher price realization of $1.31 per Mcf due to our price diversification efforts. Although natural gas accounted for 39% of our production, it only represented 6% of our revenues in the third quarter. From an upside perspective, a dollar change to ACO would increase our free funds flow by $200 million. Operating costs in the quarter decreased by 8% to $12.50 per BOE compared to the second quarter due to early synergy realizations. Current income tax of $25 million in the quarter represents a low pre-tax funds flow rate of 4%.

Tax pools at the end of the quarter were $9.8 billion, of which $4.4 billion were non-capital losses, providing us with strong tax coverage for 2026. Our light oil and condensate weighted portfolio, combined with a lower cost structure, generated funds flow of nearly $900 million in the third quarter, and after capital expenditures of approximately $550 million, free funds flow was $350 million. Returns to shareholders in the third quarter were approximately $400 million, as $221 million of base dividends were enhanced by approximately $180 million in share repurchases under our NCIB, reducing our share count by almost 2%. The company’s balance sheet remains strong, with net debt of $3.3 billion at the end of the quarter, including $1.7 billion in investment-grade senior notes.

Supported by the solid financial foundation and our prudent hedge positions for 2026, we are well positioned to manage commodity price volatility and maintain long-term financial stability. For 2026, based on $60 WTI and $3 ACO, we anticipate funds flow of $3.3 billion, and after capital investments of $2.1 billion, we generate free funds flow of $1.2 billion. This allows us to return $900 million in dividends to shareholders and the opportunity to repurchase $300 million worth of shares to reduce our share count by a further 2%, enhancing our per share metrics. Our commodity price sensitivity for 2026 are as follows: for every dollar U.S. change in WTI, our funds flow increases by $50 million. For every $0.10 per GJ change in ACO, our funds flow increases by $20 million, and for every penny change in the USD/CAD FX rate, our funds flow is impacted by $45 million.

I’ll now pass it off to Joey for more remarks on our unconventional third quarter results and 2026 budget.

Joey Wong, Vice President of Unconventional Division, Whitecap Resources: Thanks, Thanh. Our unconventional portfolio continued to deliver impressive results during the third quarter, asset-level performance exceeding internal forecasts. Base performance benefited from optimization efforts in the quarter, while capital efficiencies and cycle times on new drills continued to exceed expectations. Following the successful integration of Varin assets and teams, we shifted our focus to optimizing our expanded asset base during the third quarter. A key part of that optimization has been applying our unconventional workflow to tailor development in each area to the underlying geological and reservoir characteristics and to refine those designs in real time throughout the various phases of execution. This workflow, which leverages technical best practices to enhance repeatability and economic returns, has already yielded significant capital and operational efficiency improvements across the portfolio.

Initial optimization efforts have driven measurable efficiency gains in our Montney and Duvernay drilling and completions programs, shortening cycle times and improving key performance indicators. At KBob, meters per day drilling performance improved by roughly 20% year over year, including a new pacesetter pad drilled at approximately 600 meters per day. Real-time frac monitoring and optimization of completions practices also contributed to an 8% reduction in average completion times across the Duvernay. At Latour, we achieved a 20% decrease in drilling costs from an improvement in drilling performance on our most recent 6-well Montney pad compared to our first 16 wells in the play. Collectively, these results highlight the strength of our integrated in-house capabilities, bringing together geoscience, engineering, and operations to capture design efficiencies and enhance execution across development programs.

This collaboration, supported by our extensive proprietary dataset, allows for continuous improvement and the effective transfer of best practices throughout the unconventional portfolio. At Gold Creek and KBob, initial enhancement initiatives focused on improving base production through the optimization of artificial lift, gathering systems, and other best practices, along with targeted infrastructure improvements such as mitigating measures for high or low ambient temperatures. Across our operated asset base, we place a high priority on anticipating changes in production requirements through different phases of field life. This is particularly important as we introduce new volumes from our capital programs, where protecting base production remains a core focus. These optimization efforts have delivered measurable uplift in productivity on base wells, driving Montney volumes roughly 4,000 BOE a day above our internal forecasts in the third quarter.

Our 2026 capital program will continue to build on this operating momentum as we plan to run a steady seven-rig program to drill approximately 100 wells across our Montney and Duvernay assets, with 129 wells expected to be brought on production during the year. This program is expected to drive 8 to 10% growth from our unconventional assets as measured from exit to exit. At KBob, we plan to spud 45 Duvernay wells across a three-rig program in 2026, utilizing a wine rack design on approximately half of the planned pads. Development will be focused within our core areas to maximize the utilization of expanded infrastructure capacity and enhance overall asset profitability. We plan to spend approximately $55 million to modestly expand, debottleneck, and connect existing infrastructure in 2026, following up on the success of our expansion efforts at our 15 of 7 gas processing facility in 2025.

These infrastructure optimization projects will support growth in the play over the near term, with total capacity in the KBob region increasing to 115,000 BOE per day to 120,000 BOE per day by the second half of 2026. We expect to fully utilize our expanded capacity in the second half of 2027. Moving over to the Montney, we plan to spud 53 wells in 2026 across a four-rig program and bring 74 operated wells on production from our 2025 and 2026 programs. In Gold Creek and Carr, we plan to spud 29 wells and bring 48 wells on production in 2026, with development focused on well-understood areas with existing infrastructure capacity.

Following a detailed technical review of subsurface data, in addition to recent and legacy well results in the play, we commence drilling operations on our first of two plug-and-perf pilot pads in the Carr area in the fourth quarter of 2025. This four-well pad will be followed by a three-well pad, which has been strategically selected to test the application of this completion design with defined control parameters to evaluate performance. If designed and executed properly, plug-and-perf completions are expected to lower costs by $1 million to $1.5 million per well relative to a single-point entry design. Early results of this pilot activity in KBob are expected to be available in the first half of 2026. With success, we also plan to drill a plug-and-perf pilot pad in Gold Creek in the second half of 2026 with the same level of control parameters as the KBob pilots.

While meaningful in its potential impact, our rollout of this technology will remain measured, representing roughly one quarter of the total wells being brought on production in 2026 in Gold Creek and KBob. This reflects our deliberate, stepwise approach to improving capital efficiencies and fully recognizes and limits the potential risk to asset-level performance while pad design and execution are fine-tuned. Results from these pilot pads will inform future well designs as we seek to de-risk development and maximize long-term value of the assets. At Musreau, we plan to drill 11 Montney wells on the eastern portion of our acreage in 2026 as we continue to leverage multi-bench development and manage drawdown to optimize per well recoveries.

We will also allocate approximately $5 million to enhance gas lift capabilities at our 5-9 facility in the second half of 2026, supporting further optimization of the strong condensate volumes being realized from this asset, which have exceeded expectations due to our development and production practices. We plan to spud a two-well delineation pad at Resthaven in 2026, which is a southeastern extension of our Latour Montney land base. The pad is expected to come on stream in the second half of the year. Results from this pad will provide us with important technical information as we evaluate the economic viability of this sizable and prolific natural gas-weighted acreage. Lastly, our Latour Montney asset will move toward development mode in 2026. Following a successful engineering and design and permitting process, construction on the 4-13 Latour facility has been progressing ahead of schedule and within budgeted capital expectations.

This has allowed us to advance expected commissioning and startup to the fourth quarter of 2026 from our initial target of late 2026 to early 2027. Continued technical work and strong well results are reaffirming our expectations in the deliverability and long-term development potential of this area. We plan to drill 11 wells in the area and spend approximately $180 million of capital in 2026, including $60 million on supporting infrastructure projects such as water disposal and gathering lines to support the ramp-up of the 4 of 13 facility. Production is expected to ramp towards the design facility capacity of 35,000 to 40,000 BW per day throughout 2027 at a measured pace, allowing for continued optimization of development plans where warranted. With that, I will now pass it over to Chris Bullin to talk about our conventional assets.

Chris Bullin, Vice President of Conventional Division, Whitecap Resources: Thanks, Joey. Our Conventional Division delivered another strong quarter, benefiting from consistent operational execution across our Alberta and Saskatchewan assets, along with efficiency improvements following the successful integration of our expanded portfolio. In 2026, we plan to drill 156 wells across our Conventional Division, focusing on plays with short cycle times, quick payouts, and high net backs. This activity is expected to maintain conventional production in the range of 135,000 to 140,000 BOE per day, while generating $900 million of asset-level free cash flow, highlighting the outsized profitability of our conventional assets and the underlying strength of our diversified and complementary portfolio. Our 2026 capital program is structured to maximize optionality, providing flexibility to adjust capital allocation and activity levels in response to changes in commodity prices. Our teams will continue to maintain a state of readiness, ensuring we can act quickly as market conditions evolve.

This disciplined approach ensures we can protect free cash flow, sustain returns, and capture upside when market fundamentals improve. We will continue to look for opportunities to incorporate shared learnings from our unconventional workflow within our conventional assets in 2026, including optimizations to our well design and targeted technical enhancements. These initiatives are expected to drive further efficiencies and improve performance across our conventional portfolio. In East Saskatchewan, we plan to spud 79 wells in 2026, building on the recent success of our Bakken and Frobisher programs. At Viewfield, we will continue to advance our open-hole multilateral program to maximize capital efficiencies and improve the economics of our drilling inventory.

Our recently completed three-mile Bakken pilot well in the area set multiple records within Saskatchewan, including the longest lateral leg drilled to date at over 6,400 meters and the longest total lateral length on a single well at over 34,600 meters. This well was drilled and completed on a dollars-per-meter basis in line with prior two-mile open-hole multilateral wells in the area, reinforcing our confidence that lateral lengths exceeding two miles can achieve improved capital efficiencies. This supports the inclusion of additional extended lateral length wells into the 2026 program. Our 2026 Frobisher development will kick off with an active first quarter drilling program with three rigs, building on strong momentum from 2025 results, which have consistently exceeded expectations. We plan to drill triple-leg wells on 15 of 49 planned Frobisher locations, allowing us to increase reservoir contact and maximize the royalty benefits associated with Saskatchewan’s multilateral oil well program.

Across our Alberta conventional assets, we plan to spud 30 wells in 2026 with activity focused in the Glauconite at Westward Ho and the Cardium Formations at Wapiti and Pamina. In the Glauconite, we will use a monoboard design on all of our 2026 locations, following strong production performance and repeatable cost reductions realized from our 2025 monoboard program. In the Cardium, we will continue to utilize our optimized completion design at Wapiti, derived from our unconventional workflow. Our 2026 development in the area will push to the south and the northwest, expanding from our successful 2025 program. In West Saskatchewan, we have 47 wells planned for next year, targeting the Viking, Atlas, and Success Formations. Our 2026 program has been level set with a moderation in activity compared to prior years, aligning with our strategy to focus on capital discipline, free cash flow generation, and sustainability.

Our conventional assets are a strong contributor to our ability to sustain production at lower commodity prices and provide significant torque to increases in crude oil prices. The low 20% decline asset base allows us to shift capital without materially degrading the short and long-term profitability of these assets and provides the necessary flexibility to enhance the economics of our capital programs. With that, I will turn it back over to Grant for his closing remarks.

Grant Fagerheim, President and CEO, Whitecap Resources: Thanks very much, Thanh, Chris, and Joey for your comments. As we move through the remainder of 2025 and into 2026, as you all note, we are operating from a position of strength. Operationally, performance remains exceptional, with faster cycle times across our assets, optimized rig lines and drilling programs capturing additional efficiencies, and the maximization of existing infrastructure to further enhance our profitability. Financially, our 2026 budget is expected to generate substantial free funds flow, enabling meaningful returns of capital to shareholders while maintaining balance sheet strength and long-term resiliency. The top-tier asset base we have assembled, supported by the long-dated drilling inventory of approximately 11,000 high-quality locations, provides shareholders with decades of profitable and sustainable growth potential. This strong foundation positions us to continue improving capital efficiency and expanding profit margins over time.

Furthermore, our technical initiatives planned for 2026 create additional opportunities to outperform our base plan and drive continued value creation. As we complete our 2025 initiatives, our focus remains on delivering strong shareholder returns in 2026, guided by disciplined execution, operational excellence, and prudent financial management. Our total shareholder return target is between 10% to 15% per year, and our 2026 budget will deliver on this target through our $0.73 per share dividend annually, which equates to 7% yield at this time, 3% production growth to 380,000 BOE per day, and the option to repurchase over 2% of our shares outstanding with excess free funds flow generated at $60 WTI. This equates to a 12% total returns to shareholders, which further increases to over 15% at $70 WTI with additional $500 million of free funds flow.

With that, I’ll now turn the call over to the operator, Sylvie, for any questions you might have. Thank you.

Sylvie, Conference Operator: Thank you, Mr. Fagerheim. Ladies and gentlemen, as stated, if you do have any questions, please press star followed by one on your touch-tone phone. You will then hear a prompt that your hand has been raised. Should you wish to withdraw from the question queue, simply press star followed by two. We do ask that if you’re using a speakerphone, please lift your handset before pressing any keys. Please go ahead and press star one now if you do have any questions. Your first question will come from Sam Burwell at Jefferies. Please go ahead.

Hey, good morning, guys. I wanted to ask about the seven-rig program across the Montney and Duvernay. Is that fewer rigs than you’re running now, fewer rigs than you were originally planning to run in 2026? Is this effectively a Varin synergy manifesting itself?

Joey Wong, Vice President of Unconventional Division, Whitecap Resources: Yeah, I guess, sorry, Joey Wong here to answer the question. I’m here for you, Sam. The seven rigs we’re running in 2026 actually match what we’re running in the back part of this year in Q4. There have been periods of time in 2025 where we had more running. There’s a bit of overlap, and if you recall some of the discussions we had with respect to the combination was cleaning up a little bit of that where we had fragmented rig lines where you’ll have portions of these rig lines stacking up on each other and a concentration of activity at times.

I guess answering the last part of your question there, Sam, yeah, the reason we use the adjective steady there is definitely one of the synergies that we saw early on when we look at not just the underlying capital efficiencies of just getting things running without, like I say, overlap or gaps, but in addition to that, some of the outperformance we’re seeing on the drilling side, we can draw back to the consistent use of some of our stronger performing rigs, which the seven that we have retained are going to fall into that category, and we’ll look to then continue to build on those efficiencies through that steady program.

Okay, got it. You talked a lot about share repurchases both in the release and in the opening remarks. Can we expect those to be more ratable over time, or should those remain something that’s deployed in opportunistic situations? Just curious, if you don’t see any dislocations, let’s say, should we expect most of that free cash flow after the dividend next year to go towards the balance sheet?

Thanh C. Kang, Senior Vice President and CFO, Whitecap Resources: Yeah, hey, Sam, it’s Thanh here. As it relates to the NCIB, we are targeting the $300 million that we’ve outlined in the press release. The way that we’re viewing it, Sam, is looking at it from a countercyclical perspective. Generally, in a low commodity price environment, what we want to be doing is focusing on maximizing our free cash flow and repurchasing our shares as much as we can, especially when we see quite a bit of a disconnect between where the share price is and where our intrinsic value is. In terms of the execution of it, we’re going to be more opportunistic. I would say that, number one, when there’s large blocks that are available to us, we’ll try to clear those with our NCIB, or if we’re underperforming, then we’ll step in and support the stock from that perspective.

Ultimately, our focus is to reduce the number of shares that are out, which improves the long-term sustainability of our dividend, and it’s a permanent improvement to our capital structure. That’s the way that we would look at it. I think that, given the volatility here, Sam, what we want to make sure is we’re able to realize this free cash flow before we spend it. We’ll continue to monitor that very closely as we walk through 2026.

Okay, understood. Thanks, guys.

Sylvie, Conference Operator: Thank you. Next question will be from Patrick O’Rourke at ATB Capital Markets. Please go ahead.

Patrick O’Rourke, Analyst, ATB Capital Markets: Hey, guys, good morning, and thanks for taking my question this morning. The budget came in at certainly what I think six months ago, a one plus one budget of Whitecap Resources and Varin, much lower than that would have looked here. I’m just wondering, you know, sort of what the levers you’ve pulled to be able to achieve that is. In the updated deck, you talk about free cash flow at a $70 crude price and allocating the incremental free cash flow to share purchases and debt reduction. I wonder what sort of crude environment or macro conditions Whitecap Resources would need to see out there to sort of have a little bit of a more aggressive capital program going forward.

Grant Fagerheim, President and CEO, Whitecap Resources: Yeah, thanks, Patrick. I mean, from a budget being lower, yes, our capital is lower, but our production, we didn’t really lower. You’re right on the capital. That was a lot of the work that the teams had done. Our operating individuals had focused on the synergies that we talk about. We were previously estimating $210 million of synergies. Now we’re projecting $300 million and potentially more into the future. We’re not projecting that at this time. As we, I think we talked quite a bit about it through, you know, where these improvements came is when we talk about rig lines and all of our best practices and really utilizing the infrastructure more appropriately. I think that, you know, combined with our workflows that we do have within the organization, that’s where you’re, you know, where we talk about driving these capital programs down lower.

The operating teams have been busy on our operating group under Joel’s guidance, have been busy on procurement and understanding what we’re going to look like from a capital cost moving forward. It certainly is dropping capital. It really meant more of what we entered into as more of a defensive style budget for 2026 with a lower commodity price deck, with the expectation that, as we know, living in a cyclical commodity price environment, there will be an opportunity to uplift it and we’ll be ready to advance capital in the right environment, pricing environment. As far as specific triggers on, we want to make sure that our leverage stays reasonable and we’re very much measured on that as we advance forward. It’s allowed us to get to this point, and we’ll continue to have that. It isn’t formulaic, but you’ll look to see us buy back more shares.

Trigger for more capital, we’ll look at, we’re pretty much set for the first quarter, and we can analyze it after the first quarter period of time as to whether or not we increase capital at that time when commodity prices will know further what they’re at at that time.

Patrick O’Rourke, Analyst, ATB Capital Markets: Okay, thanks. Maybe a bit more of a technical question here. In terms of the plug-and-perf pilots that you’re looking at here, I think it’s two well pads. What are the, how are you going to benchmark the KPIs in terms of what you would measure a success at? If it is successful there, if you’re able to sort of scale that up from two wells to pad scopes that are much larger than that, what would that mean going forward?

Joey Wong, Vice President of Unconventional Division, Whitecap Resources: Yeah, hey, Patrick, Joey here. The first question there on how do we benchmark it, there’s quite a few criteria that we look at, both through the execution phase of the completion itself. As we’re watching how efficient the clusters are treating, making sure that the rock is conforming to our designed expectations. Like I mentioned in the prepared notes there, we do have a series of expected criteria through that phase. What we also have, and this is important, is the ability to react. We have contingency plans if things do start to veer from expected frac behavior, which implies a different frac geometry than we designed. We have the ability to steer that ship. That’s been one of the things that has been a differentiating factor for us anyways with respect to the execution of our plug-and-perf programs to date throughout the legacy Whitecap Resources asset base.

That’s on the execution side. The benchmarking on the then subsequent on-production side will be, as we do with really, again, any of our development, we look at initial on-production, we look at how the wells themselves interact between each other and between adjacent wells, which give us indications of what that frac geometry is actually behaving like. Then what we do is we look at the long-term trends of, again, those new wells and the existing ones. It’s important to note there that when we talk about trends, it’s not just production. There’s downhole pressure, there’s temperature, and then there’s interpreted versions of all of those that go into our systems, and we allow ourselves to benchmark through those.

It’s a lot of words to describe that there’s quite a bit of eyes on this and quite a bit of criteria that we’re going to be looking for in terms of calling that a technical success. In terms of scale, Patrick, you know what we’ve spoken to before is the KBob asset, the KBob portion of the asset base, which would be the kind of the south portion of the legacy Varin assets. There is quite a bit of precedent plug-and-perf application in those lands. We’ve looked quite closely at those, gone back and seen what has worked and what hasn’t worked. Up in the Gold Creek portion of the asset base, it’s, we’ll say, less proven.

We do think that we have a pretty good indication of, again, what was working and what didn’t go quite according to plan there with, again, some ability to try to tailor our designs to that. Ultimately, in a perfect world, you’d start to see these capital efficiency savings throughout the asset base. Like we said there, we’ve probably used the word quite a few times throughout this process that the approach is going to be measured. We feel like 25% of the Gold Creek and Carr activity is appropriate at this stage, given where we’re at, and we’ll look to march it up from there. Avoiding trying to put too firm a target on it, you know, you go from 25% to 50% to 75% over a certain period of time, we try to let the results dictate that instead of putting that target out there.

Patrick O’Rourke, Analyst, ATB Capital Markets: Okay, thank you very much.

Sylvie, Conference Operator: Thank you. Next question will be from Dennis Fong at CIBC Global Markets. Please go ahead.

Dennis Fong, Analyst, CIBC Global Markets: Hi, good morning, and thanks for taking my questions. The first one, I want to focus a little bit on the gas lift side. You’ve optimized part of Gold Creek and KBob, really, frankly, driving some volume outperformance and, frankly, more to do at Musreau next year. Can you talk towards a little bit of the stage of optimization across the asset base, especially the legacy one, and how should we think about the cadence of working through kind of the upcoming backlog to kind of deploy gas lifting and optimize bases across the entire asset base?

Joey Wong, Vice President of Unconventional Division, Whitecap Resources: Hey, Dennis. In terms of the gas lift that we’ve done so far, and I guess maybe I can jump to the second part of your question there with respect to what you’re calling a backlog of other stuff, we’re largely there, Dennis. It was a lot of the efforts that went into the infrastructure build-out that was done for that supporting gas lift in both Gold Creek and KBob, and then also just the adjustment, or I’ll call it tweaking, of the parameters done by the collective field staff to get it done. That was one of the larger driving factors behind the 4,000 BOE per day beat to expectations there internally on the Montney side, really getting all of that done in quite short order. Maybe I’ll draw back to the comment there about the field teams.

We look at these assets and we say, okay, there probably is, I’ll use your word there, the backlog there of stuff to do, and they did take it upon themselves to hustle through quite a bit of that. Like I say, there’s not a lot of low-hanging fruit left. What we now see, though, and we built into our forward-looking forecasts, is the anticipation of getting ahead of this a little bit better. It’s been part of our standard operating practice that we get out and we either adjust gas lift or whatever the artificial lift technology is, adjust those parameters in advance of the need of those things so that you don’t have a sag in production followed by a restoration of it. We actually get in front of that to shorten that time. Like I say, that’s been built in.

Our intent is to not have a backlog, I guess, is the short way of answering it there, Dennis.

Dennis Fong, Analyst, CIBC Global Markets: Great, thanks for that context there. My second question relates to infrastructure spending. It looks like you have a couple hundred million dollars of that in 2026. Can you talk towards the cadence of, we’ll call it facility build-out and so forth? Obviously, you have the, that’s kind of the near wellbore infrastructure build-out versus the actual facility build-out, which is done by your infrastructure partner. Can you talk towards the cadence of infrastructure spending over the next couple of years? I think capital efficiency becomes that much more impressive if you kind of X out some of the mid-cycle spending requirements.

Joey Wong, Vice President of Unconventional Division, Whitecap Resources: Yeah, I can speak to that one there again, Dennis. Within the year, I guess, answering the first bit there, within the year, the infrastructure spend that we have planned in both Latour and KBob is relatively front-end loaded, like we mentioned there with KBob being available for that expanded capacity in the second half. That would imply that we’re doing the work in the first half. Same thing for Latour, getting ready for that Q4 on production date. With respect to future infrastructure build-out, it’s not something that we’ve put a fine number out there at this time. When you look at the infrastructure portfolio that we now have the benefit of working with, we look at a big chunk coming available to us in Latour there. Like I mentioned there, a decent amount coming in KBob and some targeted debottlenecking throughout.

On top of that, we then also have some available capacity in Gold Creek and Carr because that area was being built out for a pretty good capital program. When we look at the actual amount that needs to be spent in the out years, without putting a number to it, Dennis, it’s going to be lower than we would have expected going into this pre-acquisition just on the basis of, again, being able to utilize the available stuff and move around and fill that white space more effectively.

Dennis Fong, Analyst, CIBC Global Markets: Great. Really appreciate that color. I’ll turn it back. Thanks.

Sylvie, Conference Operator: Thank you. As a reminder, ladies and gentlemen, if you do have any questions, please press star followed by one on your touch-tone phone. Your next question will be from Travis Wood at National Bank Financial. Please go ahead.

Dennis Fong, Analyst, CIBC Global Markets: Yeah, good morning, guys. I wanted to hear your thoughts on Latour. Maybe you could kind of walk us through the critical path as you’re looking out through the tail end of this year, what type of lead time items you need to work with the partner, additional approvals as you kind of step into Q4 of next year. On top of that, what do you think the ultimate productive capacity of that region would be over and above the initial 35 to 40 a day?

Joey Wong, Vice President of Unconventional Division, Whitecap Resources: Hey, Travis, Joey Wong one more time. In terms of required approvals and stuff, everything’s in hand. That was kind of part of what set us up for the beat on timing there. It’s important to know that they’re in hand early as a result of getting in front of, at the very start, getting in front of our design basis very early. That started with a strong understanding of both the technical, like the subsurface of the asset base itself, and then some familiarity with building some similar facilities. Whether we look at the Musreau facility or some other very similar projects that have been done, we’ve got the same facility team working on it.

They could draw on a lot of that experience and really compress that initial planning and engineering time so that when we went out for permits, which we, again, to repeat myself, we have all of them now, but we got those early and that allowed us to start construction early, had a very productive past few months, and find ourselves where we’re at right now. In terms of what we’re looking for for critical path, it’s just execution now. Procurement is all long leads are placed and deliveries are on track. Really not looking for any other check marks except for just following through. Your other question on the ultimate productive capability of the asset base. Latour phase one is what we’re speaking about here right now, 35,000 to 40,000 BOE per day in that 40% to 50% liquids range.

When we look at the entirety of the asset base, the way that we envision it is a likely phase two at some point to bring us up to somewhere in that 85,000 BOE per day range. Recognizing, again, that when we first envisioned that, it was outside of the context of having the combined assets that we have, again, the benefit of working with. What we intend to do going into the back part of this year and continually refresh that, of course, is evaluate where that next leg of growth comes from. Is it a Latour phase two? It’s very compelling. We like Latour phase one and we’ll definitely like a phase two. Again, having a bit of a wealth of opportunities to look at there, we’ll put them all against each other and see what makes sense to grow into at the right period of time.

Is it more up in the northern part of our acreage? Is it looking into, depending on what commodity prices look like in the long term, is it something down in Resthaven? We’ll look to make that determination into the future.

Dennis Fong, Analyst, CIBC Global Markets: Okay, perfect. I appreciate the color.

Sylvie, Conference Operator: Thank you. Next is a follow-up from Dennis Fong at CIBC Global Markets. Please go ahead.

Dennis Fong, Analyst, CIBC Global Markets: Hey, sorry, I just had one more question. Maybe as a follow-up to Travis’s on Latour there. Just wanted to ask if you could kind of highlight any of the either engineering work or the geology or the facility design that really kind of provides incremental confidence in showcasing an on-plan ramp-up for that region in that facility.

Joey Wong, Vice President of Unconventional Division, Whitecap Resources: Yeah, what I draw back to, Dennis, is the results that we’ve had to date. We’ve called those delineation paths and that’s intentional because we were testing different portions of the acreage base there as it pertained to both geological characteristics, like how the rock behaves, how it behaves when drilling, how it behaves when fracked, and of course, subsequent production. What we’ve also looked to do is craft some of our development program around both the drawdown, assessing what the optimal drawdown rate is, and got a team of reservoir engineers that assess what the push and pull between strong initial production compared to ultimately looking at higher ultimate recoveries are and kind of looking to find a balance there. Also, crafting this year’s program around being near existing horizontals to make sure that we’ve accounted for parent-child interaction appropriately in our plan.

Without pointing at anything specific there, Dennis, I would definitely say that when you look at the amount of work that’s been done, be that through actual drilling, through modeling, I should also mention as well, by the way, we cored a well, drilled and cored a well there in the past few quarters there as well. When you look at the amount of work that’s gone in, it is quite a high level of rigor. The good news for us anyways, and should give, has given us anyways, quite a bit of confidence is with every either technical evaluation that’s been done or observation of physical behavior of the assets, everything has either met or slightly exceeded expectations. That’s really what’s given us the confidence to stand behind the forecast there.

Dennis Fong, Analyst, CIBC Global Markets: Great, thanks. I’ll turn it back.

Sylvie, Conference Operator: Thank you. At this time, gentlemen, we have no other questions registered. Please proceed.

Grant Fagerheim, President and CEO, Whitecap Resources: Thank you, Sylvie, and thanks to each of you on the line today and who continue to support us on our journey. I do want to once again thank our entire Whitecap Resources team for your dedication and efforts over the past five-month period of time, as well as for the full year. We are excited about the opportunity facing us with our company and look forward to updating you on the progress through the balance of 2025 and into the future. All the best to each of you, signing off for now. Cheers.

Sylvie, Conference Operator: Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. At this time, we ask that you please disconnect.

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