Together with good cash flows since Q3-22, we should just be a few hundred million Canadian Dollars above the C$1.3B net debt target. The transaction is expected to close in Q1-23. The net debt was in Q3-22 at C$2.2B, but due to the disposal of the non-core assets mentioned above, which will upon closing bring in about C$400M in cash.
WHITECAP DISTRIBUTION FREE
The company has continuously been doing buybacks as well, while much of the free cash flow has recently been used to pay back a portion of the debt that was used in the XTO acquisition. That equates to an annual dividend yield of 5.2% using the latest share price. Whitecap pays a healthy monthly base dividend, which has now in January 2023 been raised to C$0.0483 per month.
That is likely to provide a nice tailwind for the stock price. Now that the company has integrated XTO Energy Canada, and recently disposed of some non-core assets, we are likely only months from reaching the net debt target, from which point 75% of FCF will be distributed to shareholders. However, it did delay the higher shareholder distributions by a few quarters. The acquisition provided impressive per share growth in funds flow, free cash flow, and production numbers. If I were to speculate on the underperformance over the last year, it was likely due to the XTO Energy Canada acquisition, which was in my view very accretive to the company. I wrote my last article on the stock here on Seeking Alpha in September of 2022, which I would recommend reading for a more detailed overview of the company. Whitecap Resources ( OTCPK:SPGYF) has outperformed many oil & natural gas producers over the last 3 or 5 years, but the stock has lagged slightly over the last year, even if it has started to recover some over the last few months.
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