Stock price when the opinion was issued
Has looked at this for a long time. Started a new position due to selloff on the merger with VRN. Really likes Canadian oil & gas long term, tariffs notwithstanding.
Fly in the ointment is our new prime minister, Mr. Carney, who continues to be anti-oil and -gas. Paradoxical to him, given Canada's absolutely superb endowment of oil & gas resources and related technology. Perplexing that political leadership of Canada doesn't understand the energy patch business case when we have lots to sell to lots of willing partners.
He likes the WCP-Veren deal. Both were already decent companies, but together will enjoy synergy from cost savings. It will become the 4th-largest light oil producer in Canada. Management knows what it's doing, valuation good. Bigger companies here tend to enjoy a multiple increase. Veren shareholder will receive the WCP dividend, a big increase for them. The combined company will do pretty well.
Broke below the March low, an indication that it's going lower. Barring a dramatic reversal in the price of natural gas, which it's tilted more towards, it's probing lower. Going back on a 3-year chart, no place to hang your hat yet.
Lots of damage in last 2 days. There's a lot of value there, but you have to wait to see where to step in. All of energy will be wait and see.
Profitable around $51, so you have about $6 of margin right now. Growing 3-5% per year. Paying down debt, balance sheet extremely strong. Dividends are sustainable down to $52. Wouldn't be surprised if they dialed down capex, which makes the dividend even more secure. Montney assets are significantly better than the market appreciates. Good natural gas weight. Yield is 9.3%.
Production of 179,051 b/d rose 5.5% and beat estimates of 174,000. Crude production rose 5.6%; NG liquids production rose 14%; gas production rose 2.7%. EPS of 27c did miss estimates of 39c; Revenue of $942M beat estimates of $876M. Guidance will be provided when the VRN merger closes. Even though they missed estimates, per share earnings still more than doubled. Payout ratio (12 months) is less than 25%. The dividend looks secure even with a drop in commodity prices.
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All oil has been hit recently, but long run energy is key to future growth. So, WCP is buy, can expand their reserves and a good low-cost producer.