Whitecap Resources Inc. (TSX:WCP), one of the largest producers of crude oil and natural gas in Canada, announced fourth-quarter earnings results after the market closed on March 17, and its stock has responded by rising over 4% in the trading sessions since. Let’s take a closer look at the quarterly results to determine if we should consider initiating long-term positions today, or if we should wait for a better entry point in the days ahead.
Breaking down the strong fourth-quarter results
In the fourth quarter of fiscal 2014, Whitecap Resources reported a net profit of $166.12 million, or $0.65 per diluted share, compared to a net loss of $1.47 million, or $0.01 per diluted share, in the same quarter a year ago, as its petroleum and natural gas sales increased 62.5% to $194.99 million. These very strong results can be attributed to the company’s total production increasing 70.7% to a record 37,661 barrels of oil equivalents per day, which more than offset the negative impact of lower commodity prices.
Here’s a quick breakdown of 12 other notable statistics and updates from the report compared to the year-ago period:
- Production of crude oil increased 96.7% to 24,752 barrels per day
- Production of natural gas liquids increased 38% to 2,979 barrels per day
- Production of natural gas increased 35.7% to 59.58 million cubic feet per day
- Average realized price of crude oil decreased 11% to $72.45 per barrel
- Average realized price of natural gas liquids decreased 36.3% to $34.17 per barrel
- Average realized price of natural gas increased 1.3% to $3.77 per thousand cubic feet
- Funds from operations increased 108.7% to $139.09 million
- Funds from operations increased 38.5% to $0.54 per diluted share
- Cash flow from operating activities increased 98.7% to $157.54 million
- Development capital expenditures increased 119% to $48.14 million
- Paid out dividends totaling $47.53 million during the quarter, compared to dividends totaling $26.85 million in the year-ago period
- Net debt increased 99% to $798.29 million
Should you buy shares of Whitecap Resources today?
Even after the post-earnings pop in Whitecap’s stock, I think it represents an attractive long-term investment opportunity, because it still trades at very low valuations and because it has a very high dividend yield.
First, Whitecap’s stock trades at a mere 7.2 times fiscal 2014’s diluted earnings per share of $1.94, which is extremely inexpensive compared to its five-year average price-to-earnings multiple of 29.3.
Second, the company pays a monthly dividend of $0.0625 per share, or $0.75 annually, which gives its stock a 5.4% yield at current levels. I think this makes it qualify as both a value and dividend play today.
Foolish investors should take a closer look and consider establishing positions.
