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Whitecap Resources Inc.‘s first-quarter cash flow surged on higher production, though the light oil producer’s profit sharply fell due to a large accounting loss on hedging contracts.
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The Calgary-based producer on Wednesday kicked off reporting season in the oilpatch, and a late-quarter surge in oil prices tied to the Iran conflict is expected to lift quarterly results across the sector.
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Whitecap’s cash flow from operations topped $1 billion in the first quarter, beating analyst expectations and more than doubling from $446 million a year ago, driven by higher production following its acquisition of Veren Inc. last year.
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However, despite strong cash generation, the company said net income was $22 million, down from $163 million a year ago, as it booked a roughly $530-million non-cash loss on hedging contracts.
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Producers such as Whitecap regularly use fixed-price swaps or options-based contracts to lock in or cap prices for a portion of their oil and gas output. Hedging helps reduce risk and stabilize future cash flows, but it also limits upside when prices sharply rise.
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The company said it has been adding to its hedge positions as prices have risen and that around 34 per cent of its 2026 production and 23 per cent of of its 2027 production is hedged.
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“The ongoing conflict in the Middle East has introduced significant commodity price volatility,” Whitecap said in a release on Wednesday, adding that the United States benchmark West Texas Intermediate (WTI) traded between US$70 per barrel and US$115, while Edmonton light oil and condensate prices have strengthened to a premium to WTI.
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“These dynamics have materially improved our cash-flow outlook, although only one month of this benefit is reflected in our first quarter results,” the company said.
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Whitecap also stepped up drilling in the quarter, peaking at 18 active rigs, helping drive record production of 391,416 barrels of oil equivalent per day.
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It raised its 2026 production outlook to between 378,000 and 382,000 barrels of oil equivalent per day, an increase of about 7,500 barrels, but left its capital spending plans unchanged at between $2 billion and $2.1 billion.
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Whitecap is holding an earnings call later this morning.
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English (US)