Earnings call transcript: Whitecap Resources reports Q2 2025 growth

Whitecap Resources (Market cap: $9.14 billion), Canada’s seventh-largest oil and gas producer, reported a 6% year-over-year increase in funds flow for the second quarter of 2025, reaching $713 million or $0.75 per share. According to InvestingPro data, the company maintains a healthy 6.94% dividend yield and trades at an attractive P/E ratio of 7.39x. The company also achieved a production level of 292,754 barrels of oil equivalent per day (boe/d), surpassing its internal forecasts. Despite challenging market conditions with WTI prices averaging below $65 per barrel, Whitecap maintained a robust performance, aided by strategic asset development and integration efforts.

Key Takeaways

• Whitecap’s Q2 funds flow increased by 6% year-over-year.
• Production exceeded internal forecasts, reaching 292,754 boe/d.
• Successful integration of Veron assets enhanced operational capabilities.
• Market conditions remained challenging with low oil and gas prices.
• Future production guidance targets the high end of 295,000-300,000 boe/d.

Company Performance

Whitecap Resources demonstrated resilience in Q2 2025, achieving significant growth in funds flow and production despite facing low commodity prices. The integration of Veron assets played a crucial role in enhancing the company’s technical capabilities and asset portfolio, contributing to its competitive position in the Canadian oil and gas sector.

Financial Highlights

• Funds flow: $713 million, a 6% increase year-over-year.
• Free funds flow: $304 million.
• Net debt: $3.3 billion, equating to 1x annualized funds flow.
• Tax recovery: $7.4 million.
• Shareholder returns: $191 million through dividends and share repurchases.

Outlook & Guidance

Whitecap has set its 2025 production guidance at the high end of 295,000-300,000 boe/d, with a capital budget remaining unchanged at $2 billion. Based on InvestingPro’s Fair Value analysis, the stock appears undervalued, with analysts maintaining a Strong Buy consensus recommendation. Discover 12+ exclusive ProTips and detailed valuation metrics with an InvestingPro subscription. The company aims to maintain a corporate decline rate of 1-2% and expects conventional assets to sustain flat production levels.

Executive Commentary

CEO Grant Fagerheim highlighted Whitecap’s position as Canada’s seventh-largest oil and natural gas producer, emphasizing the successful integration of Veron assets. He stated, "The integration of the Veron assets and staff has been successful in a remarkably short period of time."

Risks and Challenges

• Volatile commodity prices could impact future revenue.
• Integration of new assets may present operational challenges.
• Regulatory changes in the energy sector could affect operations.
• Market competition remains intense in the oil and gas industry.
• Geopolitical factors may influence global supply and demand dynamics.

Q&A

During the earnings call, analysts inquired about Whitecap’s egress capabilities and the progress of the Veron integration. The company detailed its unconventional development strategies and clarified its hedging and risk management approach, reinforcing its commitment to maintaining operational efficiency and growth.

Full transcript - Whitecap Resources Inc (WCP) Q2 2025:

Joanna, Conference Operator: Good morning. My name is Joanna and I will be your conference operator today. At this time I would like to welcome everyone to Whitecap Resources Second Quarter 2025 Results Conference Call. 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 a question during this time, simply press Star then the number one on your telephone keypad. If you would like to withdraw your question, please press Star then the number two. I would now like to turn the conference over to Whitecap’s President and CEO, Mr. Grant Fagerheim. You may begin your conference call.

Grant Fagerheim, President and CEO, Whitecap Resources: Thanks, Joanna, and good morning everyone, and thank you for joining us here today. There are four members of our management team here with me today: our Senior Vice President and CFO, Thanh Kang; our Senior Vice President, Production & Operations, Joel Armstrong; our Vice President, 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 issued yesterday afternoon. To begin, it would be remiss of me to not highlight the most significant development of the quarter, the completion of the Veron business combination on May 12, which has increased our production to approximately 365,000 boe/d and our enterprise value to over $15 billion.

I’m also pleased to report that we had a very successful operational second quarter, continuing to build on the momentum that we’ve developed year to date. Strong second quarter production of 292,754 boe/d was well above our internal forecast. At an asset level, performance exceeded expectations across our conventional and unconventional portfolios. Our production in the quarter benefited from strong new volumes across our Montney, Duvernay, and Southeast Saskatchewan assets, as well as production optimization through downtime avoidance within the Duvernay and the Glauconite formation. As referenced earlier, we successfully closed our strategic combination with Veron during the second quarter on May 12, representing a transformational milestone for the company. The newly expanded Whitecap Resources is now Canada’s seventh largest oil and natural gas producer and fifth largest natural gas producer, with an exceptionally deep portfolio of premium drilling inventory for advancing incremental growth and value added for our shareholders.

As a result of the significant effort and coordination among our various team members, the integration of the Veron assets and staff has been successful in a remarkably short period of time. We’ve seen plenty of early wins through the consolidation of corporate costs and our improved credit profile. By leveraging combined best practices and our enhanced scale, we are expecting to see capital efficiency improvements and operating cost reductions across the portfolio. We remain confident in our ability to unlock sustainable synergies and look forward to updating shareholders as our progress over the next 6 to 12 month period of time. Through the second half of 2025, we plan to allocate 75% of our capital program to our unconventional Montney and Duvernay assets where we currently have seven active rigs running and focused in areas where we have strong technical understanding with available infrastructure capacity.

The remaining 25% of our second half capital program will be invested in our conventional assets in Saskatchewan and central Alberta. We currently have 3 active rigs on our conventional assets, peaking at 8 rigs in the second half. Building off the strong momentum of the first half program, we will continue to stay on the course on strategic priorities that have underpinned our success to date, including maintaining our balance sheet strength, capital discipline, and providing sustainable returns to our shareholders. Our balance sheet is in excellent shape with low leverage and ample liquidity. Our flexible capital program and sustainable base dividend of $0.73 per share per annum remain well covered within funds flow at current commodity prices, supported by our best in class portfolio of assets. I will now pass off to Joey Wong for more remarks on our unconventional results.

Thanh Kang, Senior Vice President and CFO, Whitecap Resources: Thank you.

Joey Wong, Vice President, Unconventional Division, Whitecap Resources: Thanks Grant. We delivered strong operational performance across our unconventional portfolio during the second quarter while working diligently to integrate new assets and personnel across the combined Montney and Duvernay asset base. We’ve seen early operational wins from the integration of the combined assets through knowledge sharing of technical best practices, the optimization of rig lines, and initial procurement optimization efforts. Our Duvernay production at K Bob was a notable driver of unconventional outperformance during the quarter. Production was higher than forecast as strong operational execution accelerated new pad development into the quarter, and downtime optimization allowed us to mitigate the impact of turnaround activity at our operated 15-7 gas processing facility. We were also successful in mitigating the impact of an extended outage at a third-party facility in the area as adjustments were made in the field by our field operations team to limit our exposure.

We recently brought our third wine rack style pad on production through permanent facilities in K Bob with promising early results. Strong observed reservoir performance and positive production results across our first three wine rack pads support moving this design from pilot to development mode on applicable lands in our K Bob asset. This wine rack design has the potential to improve per well recoveries and associated well economics on over three quarters of the undeveloped legacy Whitecap acreage and just under a quarter of the Veron acreage. Our measured approach to delivering optimized and predictable results in the Duvernay demonstrates our commitment to enhancing returns and maximizing our high quality inventory in our unconventional asset base. We acquired our first Duvernay assets in the second half of 2022 and at that time underwent a rigorous technical review.

As our understanding of the assets grew and our development program matured, we outlined specific goals for our team which included the acceleration of and the full utilization of our 15-7 gas processing facility to maximize overall asset profitability. We are pleased to report that we are now at capacity at that facility as an example of the improved profitability of the asset. The second half operating costs on our legacy Whitecap acreage are forecasted to be 30% lower than what was realized in 2023. Further, to facilitate additional growth in the area, we have completed the construction of an offload connection to a nearby third-party project processing facility. The integration of Duvernay assets at KBOB has been quite seamless given the significant overlap and stage of development.

As the largest operator in the Duvernay, we now have the size, scale, and technical capabilities to further improve profitability on this well-understood asset base. Moving over to the Montney, 12 Montney wells at Gold Creek and Carr were brought on production during the first half of the year. Overall results in this area are performing in line with our internal expectations. We are in the process of assessing the impact of changes in development, planning, and well design in Gold Creek and Carr, leveraging recent and legacy pad results along with the significant technical expertise of our teams. Our focus remains on enhancing well economics and the long-term potential of the assets while balancing our risk exposure.

Consistent with how we’ve approached development across our unconventional assets over the years, we are now seeing improved infrastructure reliability and utilization across our Gold Creek and Carr assets as we reap the benefits of significant infrastructure optimization efforts in the first half of the year. Key upgrades included enhancements to support existing production, including improvement to gas lift capacity and several debottlenecking projects that have improved overall operability and consistency. The impressive results have continued at our Muzril Montney asset, giving us the confidence to begin drilling larger pads to further target capital efficiency improvements in the area. We are currently drilling a six-well pad which is expected to be on production in early 2026 when additional plant capacity becomes available. Our investigation of debottlenecking options to increase gas throughput at our 5 and 9 facility also remains underway at Cacwa.

We recently brought on our first triple bench pad on production at 16 of 17 in the northwest portion of our acreage. Initial rates on the test pad after 90 days are over 1,200 boe/d per well with 65% liquids, exceeding our internal expectations for the area by 14%. These results are encouraging and provide significant validation points for this pad configuration. Importantly, the triple bench design is behaving as expected based on our technical observations thus far. Further observation of bottom hole pressure trends will be collected in the coming months and will be informative as we continue to assess the development potential of this pad moving forward at Latour. Phase one of our 413 Latour facility remains firmly on schedule for commissioning in late 2026 to early 2027. We’ve now received all the required permits to begin construction, and as a result, have initiated earthworks on site.

All major equipment has now been procured for delivery in the first quarter of 2026. Strong performance from our two Littor delineation wells brought on production in 2024 has continued. Each of these wells has exceeded internal expectations by 20%, providing us with the confidence in the reservoir deliverability in the area and our long term development plans. We will continue to advance our technical delineation program by drilling a three well pad in the area late in the third quarter as the most analogous data in our modern well set. Our Latour wells also provide an important technical read through for our adjacent Rest Haven asset. With that, I will now pass over to Chris Bullin to talk about our conventional assets.

Chris Bullin, Vice President, Conventional Division, Whitecap Resources: Thanks Joey. Our conventional portfolio continued to build on strong momentum from our first quarter program, with results from our Frobisher, Wapiti Cardium, and Glauconite assets all continuing to outperform expectations. The newly integrated Viewfield Bakken assets also delivered strong production performance in the quarter, highlighting the immediate strategic fit of Veron’s Saskatchewan assets within our conventional portfolio. I’d echo Joey’s comments that we’ve seen some early operational wins from the integration of assets on the conventional side, largely through shared technical learnings between our teams and initial supply chain optimization efforts. We continue to advance open hole multilateral development across both our Viewfield Bakken and Frobisher assets in Southeast Saskatchewan during the second quarter, with results exceeding our expectations in both areas.

Based on the success of our open hole multilateral program in these regions, we continue to evaluate opportunities to enhance economics and expand drilling inventory by applying this technology elsewhere within our conventional portfolio. At Viewfield, our five most recent Bakken wells have exceeded our type curve expectations by 27%. As part of our focus on enhancement initiatives, our team has recently begun piloting longer laterals in the Bakken to increase reservoir contact and improve the already strong economics. Early time results from our first 2.5 mile open hole multilateral well are promising, and we just spud our first three mile pilot well in the area. In the Frobisher, our active first quarter open hole multilateral program is forecast to achieve a 25% capital efficiency improvement compared to the same period last year.

This is achieved through a combination of program efficiencies and optimization of individual well designs to maximize reservoir contact, well productivity, and the royalty benefits associated with Saskatchewan’s multilateral oil well program. We are excited to deploy Whitecap’s Frobisher development experience to the recently acquired inventory and are continually evaluating additional synergies to reduce costs and enhance future locations in our Alberta conventional assets. Results from our recent Cardium wells at Wapiti also continue to significantly exceed expectations. These wells utilize an optimized completion design established using workflows from our unconventional assets. Our first six wells have been on production for approximately 180 days, achieving rates that are on average 59% better than our expectations.

By confirming that the longer term value has also been increased, we plan to deploy this design on future wells in the Wapiti Cardium area and are evaluating recent results for read throughs on similar assets within the portfolio in our Glauconite assets. Recent facility egress optimization efforts by our team enabled us to redirect turnaround volumes in Central Alberta and mitigate the production impact of planned downtime during the quarter, along with continued strong results from our monoboard drilling program. This drove production outperformance relative to our internal expectations in the area and is driving improved profitability since our entry into the play. The free funds flow generated by our Conventional Division is underpinned by over 50,000 barrels a day of stabilizing EOR volumes across both Alberta and Saskatchewan. These assets are important to the long term sustainability and profitability of Whitecap Resources.

I will now pass it to Thanh to further discuss our financial results.

Thanh Kang, Senior Vice President and CFO, Whitecap Resources: Thanks Chris. The second quarter funds flow was strong at $713 million or $0.75 per share, which was up 6% per share compared to the second quarter last year and 2% compared to the first quarter of this year. Despite the volatility, WTI prices averaged just below US$65 per barrel in the quarter, which equated to over $88 per barrel Canadian, driving strong profitability for Whitecap. The positive impact of the startup of LNG Canada has yet to be reflected in AECO prices, with the second quarter averaging less than $2 per Mcf and July even lower than that. We have reduced our AECO exposure through the combination with Veron and currently have approximately 30% of our natural gas production sold outside of AECO and a further 30% sold at fixed prices.

Whitecap generated strong free funds flow of $304 million, of which $191 million was returned to shareholders through the base dividend and share repurchases. In the first six months of 2025, we returned almost $300 million to shareholders. We had a tax recovery of $7.4 million as commodity prices in Q2 were lower than in Q1, and with the tax pools at the end of the quarter of approximately $10.3 billion, we anticipate taxes as a percentage of pre-tax funds flow to be 3% to 5% in the second half of the year. We were also able to take advantage of the commodity price volatility and the price spikes we experienced during the second quarter by adding approximately 10,000 barrels per day to each of our second half 2025 and 2026 hedging positions through a combination of collars and swaps to lock in additional downside protection.

Our balance sheet at the end of the second quarter was in excellent shape with net debt of $3.3 billion, equating to a net debt to annualized funds flow of approximately one times. Following an upgrade of our public investment grade rating to BBB by DBRS, we closed an issuance of investment grade senior notes in the quarter. The three-year $300 million notes carry an attractive fixed coupon of 3.761% and lowers our average cost of debt. With that, I’ll turn it back over to Grant for his closing remarks.

Grant Fagerheim, President and CEO, Whitecap Resources: Thanks Tom, Chris, Joey for your comments. Since the close of the Veron combination, our combined team has done a remarkable job of integrating assets, people, and processes, all while delivering another outstanding operational quarter. Based on our asset level performance in the second quarter, we now expect to be at the high end of our 2025 average production guidance range of 295,000 to 300,000 boe/d on an unchanged capital budget of $2 billion for the year. As we begin our 2026 budgeting process, our outstanding suite of assets provides us with significant optionality across the commodity spectrum from light oil to condensate-rich natural gas to natural gas opportunities. This allows us to tailor our future capital program to commodity prices and maximize our long-term value creation.

With our enhanced long-term sustainability and profitability, we are well positioned to generate superior returns for our shareholders and look forward to providing updates as we advance forward. With that, I will now turn the call over to the operator Joanna for any questions you might have. Thank you.

Joanna, Conference Operator: Thank you, ladies and gentlemen. As stated, if you do have a question, please press star followed by 1. On your touchtone phone, you will hear a prompt that your hand has been raised, and should you wish to withdraw your question, simply press star followed by 2. We do ask that if you are using a speakerphone, to please lift your handset before pressing any keys. Please go ahead and press star 1 now if you have a question. The first question comes from Dennis Fong at CIBC Global Markets. Please go ahead.

Hi, good morning and thanks for taking my question as well as congratulations on a really strong start to the integration and quarter. My first question goes towards commodity price risk management. You’ve obviously layered in a little bit more on the hedging side of things. As you kind of look forward, can you remind us as to kind of what you’re targeting, how that maybe helps both obviously dividend sustainability as well as we’ll call it downside risk protection, and how you think about things going forward, especially in terms of management around that risk.

Thanh Kang, Senior Vice President and CFO, Whitecap Resources: Yeah, thanks for that question, Dennis. It’s Thanh here. The way that we look at risk management is really ensuring that we have the cash flows in a low commodity price environment to fund our maintenance capital as well as our dividends. We would target somewhere between 25% to 35% on a two-year rolling basis to ensure that we meet that objective. When you look at our positions now, both on the oil and the natural gas, we’re right within the range of what our expectation is. We’ve got really strong positions for 2026 and in the back half of 2025. We’re going to start layering on positions for 2027. The objective from the hedge positions that we have is really to provide that downside protection. When you look at the positions that we have, they’re typically just collars, costless collars as well as swaps.

Plain vanilla positions to mitigate that downside risk.

Great, thanks. Really appreciate that incremental color there. Thanh, shifting a little bit more on the technical side and maybe directed towards Joey or Grant there. I was hoping you could highlight maybe some items that you’re focused on in terms of some of the key takeaways, I guess, beyond well productivity in both the wine rack style development you’re deploying at Kaybob, as well as the triple bench strategy in the Montney. What frankly drives your confidence obviously in the deployment of these development techniques, and what would drive you to gain more comfort or confidence in rolling that out more broadly to other regions as well?

Joey Wong, Vice President, Unconventional Division, Whitecap Resources: Hey Dennis, Joey here. Maybe I’ll touch on the K Bob one because it’s a good example there. Like I had mentioned, we’re at our third pad there. When we look at pad development, we look at both rate and pressure directly as well as the interpreted versions of that data that our reservoir engineering team looks at using established reservoir engineering best practices. We look at observations of things like frac geometry and reservoir contact. Of course, those are things that we can look at early time. On all three of those pads they were looking great. That was supportive of moving forward with further pilots. As we started to produce the wells and we look at how not only do the individual wells perform, but then how they interact with each other and offsetting wells, we were continuing to see supportive indications from downhole.

That gave us the confidence that, okay, these things are producing in line with our expectations. Expectations in the longer term and in particular with the first couple of pads having quite a bit of time there, being able to really now reinforce the models that we had in place to give them that read through to the balance of the asset base. Maybe that brings us to the second part of your question, what gives us the confidence? If we have an established geological model, which we do throughout the Duvernay, we have an estimate of how these wells should behave with this adjustment in development, and it conforms to that, or in this case actually quite honestly slightly exceeds that, we then can say, okay, this works. That’s where we came up with the high confidence.

Three quarters of the Whitecap and roughly one quarter of the Veron asset base that would be applicable to that. Beyond that, we’ll continue to see if we can push the limits of that, okay, we have high confidence, it works on those. For context, we’re saying somewhere in the range of 10% to 20% improvement, we’ll bake that into our type curves. We’ll then look to step beyond that and say, okay, are there marginal lands beyond that that can see subsequent improvement or adjustments to their design? In keeping with that and that whole theme that I spoke to there just on the Duvernay, that’s kind of an anecdote that you can kind of envision us going through on the entirety of our asset base when we introduce something like that.

Great, thanks, Joey. If you’ll allow me, just one quick incremental one, just as maybe to the corporate strategy side of things as you shift away from kind of significant growth profile as maybe outlined by Veron, and look towards kind of drill to fill opportunities, obviously filled some of your gas plants and so forth. Now looking at debottlenecking opportunities as well as optimization on the conventional side, can you talk towards how you’re thinking about decline rate and the managing of sustaining capital, the management of sustaining capital going forward, and how you think some of those inputs could drive better sustainability of the business model going forward?

Joanna, Conference Operator: Thanks.

Thanh Kang, Senior Vice President and CFO, Whitecap Resources: Yeah, that’s an important part of our sustainability there, Dennis. As we think about the conventional and the unconventional side, as you know, the conventional side, what we’re looking to do is really just maintain that production rate. It’s underpinned by 40% of that production being under some sort of secondary or tertiary recovery there, so a decline rate of less than 20% as we maintain that production. I’d expect that to be relatively flat, I would say. On the unconventional side, the objective there, the 225,000 per day, is to grow that in that 8 to 12% again depending on what the corporate objectives are on an annual basis as well as commodity prices here. We see over the next five year period of time there, the decline rate up somewhere in that 1 to 2% there on a corporate basis.

As we look at that, it’s still very manageable, especially with the 140,000 boe/d that we have as the base level that underpins the sustainability of our cash flows.

Thanks, Thanh. I’ll turn it back.

Joanna, Conference Operator: Thank you. The next question comes from Travis Wood at National Bank Financial. Please go ahead.

Joey Wong, Vice President, Unconventional Division, Whitecap Resources: Yeah, good morning, guys. Hey.

Appreciating the unconventional portfolio gets a lot of airtime, it does feel like the conventional segment performed quite well through the quarter and maybe most notably there the Cardium wells that you flagged at Wapiti. Could you guys walk through or share some insight around what drove that outperformance on those IP rates that you flagged in the release, and what the running room and infrastructure capacity looks like in the region as well?

Yeah.

Chris Bullin, Vice President, Conventional Division, Whitecap Resources: Morning Travis, Chris here. Thanks for that question. In regards to the Wapiti Cardium, the team’s pretty excited about some of the recent results, of course. What this ties into, in essence, is really trying to maximize our reservoir contact, drilling longer wells where we can, a common theme on our conventional assets in conjunction with using some of the established workflows from the unconventional side. What we’ve done by that is really just optimizing our frac design with some tighter cluster spacing and some higher proppant intensity. That’s really been the key driver on some of those IP90 and IP180 early time results. Obviously, we’re quite excited about that. The teams are currently going through a bit of a workflow process right now to update our type curves going forward. From a running room inventory perspective, we’re feeling pretty good about that area.

We’ve got about 60 to 80 locations identified there. From our perspective, that provides more than five years of running room, and that’s not even including some of the upside the teams continue to work on. We’re pretty excited about the area. At that pace of development, we don’t see any egress concerns or challenges there. In the theme of a lot of our conventional assets here, we’re hoping to provide that stabilizing and steady free cash flow throughout. Key takeaways: a lot of shared learnings and again, just trying to maximize that reservoir contact. Our teams have done a great job there.

Great. Chris, did you say at that running room there’s no egress constraints? Is that what you said?

From our perspective, we’re not trying to pull the lever hard from a growth perspective. We do have growth optionality within those assets, but in general we’re looking at flat to, call it, 2 to 5% growth in that area. We do have some additional options and the teams are always working at ways to maximize egress options. Another example of that would be pivoting to our Glauconite portfolio where we have a very advantageous position and infrastructure that’s vastly interconnected. We’re always looking at those kind of options up there too. At the current time, with our development pace and our prelim five-year plan, we’re looking very confidently that’s not going to be a concern at that pace.

Okay, that’s perfect. Really, thanks for the detailed rundown. Leave it there.

Joanna, Conference Operator: Thank you. The next question comes from Sam Burwell at Jefferies, please go ahead.

Hey, good morning, guys. Grant, I wanted to get your thoughts on the need for any incremental crude egress out of the basin, especially just beyond what’s been floated by Enbridge already and being cognizant that you’re not fully utilized on TMX or Keystone right now. I’m just curious what you thought the needs might be.

Grant Fagerheim, President and CEO, Whitecap Resources: Yes. Thanks very much, Sam. Again, this is Grant. Just on the incremental egress, we don’t think specific to light oil, that there’s challenges with light oil out of the basin. I mean, we’re not part of, we don’t ship west on what TMX is and mainly what we’ll call a heavy oil pipeline. As far as any challenges on egress of moving into the U.S. or east because of where our light oil is located in Southeast Saskatchewan, for the most part, we don’t see egress challenges at this particular time. I want to back up, even through what we talked about in Canada we had where there was apportionment, I can tell you through the entire timepiece that you would hear about apportionment of volumes. We never restricted one barrel a day of production through what was a very heavy apportionment period of time back in history.

I think we’re very well set up from an egress, incremental egress perspective or just even the current egress. We think that with Enbridge and any of the pipeline providers looking to optimize, whether it’s TMX or Enbridge or doing some optimization to their lines, we certainly don’t see any challenges for the foreseeable future.

Okay, great. That’s corner, guys.

Thanks.

Thanks, Sam.

Joanna, Conference Operator: Thank you. The next question comes from Aaron Bolkovsky at CIBC Global Markets. Please, go ahead.

Thanks. Good morning. I guess my question I’ll have to preface by saying that I understand the value comes from the integration of Veron with Whitecap’s legacy assets. If you’re able to segment the data, I’d be really curious to know what Whitecap contributed to Q2 and what Veron produced in Q2 if you had owned it the entire period.

Thanh Kang, Senior Vice President and CFO, Whitecap Resources: Yeah, it’s Thanh here, Aaron. I mean, the way that we look at the business, quite frankly, is on a consolidated basis. All these assets now combined is Whitecap Resources. I will comment that when we look at the production outperformance, 12,000 boe/d relative to our internal forecast, about 8,000 of that was attributed to Whitecap performance on a standalone basis, and 4,000 of that was attributed to the Veron assets. Certainly on a go forward basis, we’re obviously reporting everything on a consolidated and we’ll talk to it on that basis.

No, that’s perfect. If I could ask one more follow up question, I’d be curious if you get incremental free funds flow tailwinds relative to what you’re budgeting internally, how do you prioritize that between paying down debt faster relative to buying back stock sooner?

I know what Grant would say. Certainly buying back shares would be a priority for us. I would say, Aaron, relative to where the stock price is and our intrinsic value, when we look at the balance sheet today at the end of the quarter we were $3.3 billion. I’d say that our target at the end of the year would be somewhere between $3.3 to $3.5 billion, which is 1 times debt to cash flow. Even if we’re stress testing that down to $50 oil, that would be 1.2 to 1.3 times cash flow with more than sufficient liquidity. The balance sheet is in excellent shape. What I would say though is longer term, as we think about the cyclical business that we’re in here, we do want to continue to build up that dry powder and continue to capture opportunities for our shareholders.

Debt target longer term would be somewhere between $2.7 to $2.9 billion, which would be 1 times debt to cash flow at $50 WTI. Certainly with the strength in the balance sheet that we have today, that doesn’t preclude us from buying back shares.

Very helpful. Thank you very much.

Thanks, Eric.

Joanna, Conference Operator: Thank you. The next question comes from Patrick O’Rourke at ATB Capital Markets. Please go ahead.

Good morning and thank you for taking my question. I guess just first question here. In terms of the synergies that were announced with the deal, in the range of $200 million, now that you’ve had a chance to integrate the teams here, are you able to better triangulate for us the pace that you anticipate achieving that? Obviously, you talked before about very high level management being involved in the deal. Now that you have these teams integrated, what’s the scope of the upside above that $200 million that you’re starting to think about?

Thanh Kang, Senior Vice President and CFO, Whitecap Resources: Yeah, thanks for that question, Patrick. It’s Thanh here. As you know, this was a transformational acquisition for us. A lot of people process the systems to really integrate and bring forth. We closed on May 12 here. I think as we look at the synergy number there, the corporate savings $35 million that we’ve outlined here with the reduction in the staff that we brought over as well as our improvement to our credit profile with the BBB rating from DBRS, I think that one we’ve pretty much achieved here. I think the remaining one that you’re referencing with respect to the capital as well as the operating there, again want to make sure that we really involve the teams in terms of building that out.

I would say that again the realization of them will be over the next six to twelve months and where we really will look to incorporate that would be in our 2026 budget there. Looking to release that early in November. That would be the expectation, I think that given the magnitude of the acquisition here, it’s still really too early to say what the upside is over and above the $175 million that we’ve outlined.

Okay, great. You guys gave a very detailed sort of rundown on the wine rack style and Duvernay. I was just wondering if you could give us a little update with respect to what’s gone on at Gold Creek. I know it says that you’re sort of assessing the technical data there. What’s the time frame you think before you can start achieving optimization on that asset?

Joey Wong, Vice President, Unconventional Division, Whitecap Resources: Hey Patrick, Joey here. The concept of optimizing I might say is going to be a progression. Early things that we’ve been able to do to optimize on the incoming asset base, things like adjusting. Actually, maybe think about the Duvernay for a quick second here where plug and perf was still being employed by Veron, adjusting things like the perforation and cluster design. That’s something we can kind of do early time and that’ll have a certain amount of marginal gains. We’ll also be looking at early time here as well, and this applies to both Cold Creek CAR as well as the Duvernay, doing the frac operations by utilizing our frac room and calling those fracs from Calgary, hoping to see some incremental gains from that.

From there, what we’ll expect to then do is make some more structural changes to the program, things like well spacing, benching, overall allocation of capital throughout the fields to balance activity and infrastructure. Those ones will come with a bit more time, and again that’s more in that six to 12 month time frame that Thanh referenced there. Early signs are looking encouraging that we will be able to start to realize a lot of the things we were hoping to do.

Okay, thank you very much, guys.

Joanna, Conference Operator: Thank you. As a reminder, ladies and gentlemen, if you do have any questions, please press the star followed by the one on your touch tone phone. The next question comes from Michael Spieker at HTM. Please go ahead.

Good morning, guys. Congrats on some folks are calling the greatest quarter in upstream history. I have one small question and one big picture question. My smaller picture question is on the Resthaven 13-35 well that has produced flat at 9 million a day now for, I don’t know, 10 months. Last quarter you guys said condensate yield. That was something like 260 barrels a day just relative to your guys’ expectations. How’s that well looking, and what are the key learnings for that 63rd township and moving south into Resthaven there’s.

Joey Wong, Vice President, Unconventional Division, Whitecap Resources: Hey Michael, Joey, take this one as well. Yeah, definitely clear in the public data there that that well has been quite flat. Actually, we’re going through a staged increase to production there. Given that that was a delineation well, it was something we wanted to very intentionally hold that rate flat and use that quiet production period to observe what the pressure was doing. Quite honestly, it has been exceeding our expectations by a certain amount. What we’ve looked to do there is we’re going to start to stage up the production in a couple of deliberate steps there just to see how much more room does exist on that. I guess the thought there is that we’ll use that as a sense of essentially a proxy for what the southern portion of that Latour land base would do.

Of course, use the reference there it is on the border of our Rest Haven asset there as well. We’ve spoken to how Rest Haven is not currently going to be featured in our five year plan. Still important to understand from a subsurface point of view how that will behave with a modern completion and with our highs on the bottom hole with respect to the condensate, your question there and the gas and everything, the rates they are still holding well above our expectations there at this time.

Awesome. Thanks, Joey. Kind of bigger picture question is the conventional portfolio. You guys have had some wins. Charlie Lake at Valhalla, the Montney at Valhalla, when you’re thinking through the portfolio over the next 10 years, right, Whitecap Resources has changed quite a bit pulling forward some of the conventional value. Do you see that through divestments or accelerating opportunities that you have when the cash becomes available? Does the conventional portfolio become a playground or more of a divestment pipeline kind of thing?

Grant Fagerheim, President and CEO, Whitecap Resources: Yeah, thanks Michael. It’s Grant. We think that the conventional portion of our assets is stabilizing and very important to the organization long term. When we talk about stabilization, we’re talking about production stabilization as well as cash flow. The netbacks are very, very high there because of the light oil component or the high level of condensate. From our perspective, I don’t know if from my vantage point, if I call it a playground, but it will be an area where we put incremental capital to work as we advance forward. A lot of this, we talked about it earlier, referenced it earlier, with the spectrum of assets we do have, from light oil to liquid rich natural gas to higher component of natural gas, we’ve got the optionality on any of these particular areas.

Having the optionality on these assets longer term, the conventional portion of our business is not, we’re not looking to divest of that region. We think it’s very important for the ongoing stabilization of our production and cash flows as we advance forward. We talked about the decline rate in that area being sub 20% and 40% of that production is under some form of secondary or tertiary recovery. We’ll continue to advance those programs as we will, which are very technical in nature.

Awesome. Just one more if you’ll tickle me here. You guys divested the Belle Plaine carbon hub this quarter to Entropy. Does this change your view on secondary or tertiary recovery in Saskatchewan? Has there been kind of a change with the North Dakota import pipeline where you were able to secure carbon dioxide for Weyburn over a longer period, or what catalyzed that shift away from CCUS and the Wolf and the Rolling Hills divestment that happened?

Sure. I mean, quite frankly, the way we’re thinking about the business emission reduction programs in our organization are very important longer term when we find specific to the new, we’ll call new carbon capture hubs or CO2 hubs that we’ve been advancing, and the return characteristics are so small relative to what we can get in commercial oil and natural gas production. When we talk about not advancing those projects further, other than the Weyburn asset, the Weyburn asset will continue on for many, many years to come, and if we can attract more CO2 into that voyage to replace the voyage there and advance that project, we’re going to continue to do so for a much longer period of time. Developing new carbon capture hubs, that won’t be part of our strategy going forward.

Okay, awesome. Sounds like a good spot to be in. I appreciate it, Grant and everybody else. Thanks, Michael.

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

Grant Fagerheim, President and CEO, Whitecap Resources: Thank you very much, Joanna, and thanks to each of you on the line today who continue to support us on our journey. We are excited about the opportunities facing our company at this particular time and look forward to updating you on our progress through the balance of 2025 and well into the future. Wish you all the best and enjoy the rest of your sunny summer. Thanks very much.

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

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