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.
Want two more of our TOP energy stock picks?
If so, check out our special FREE report “2 Canadian Energy Stocks on the Cusp of a Powerful Long-Term Trend.” In this report, you’ll find that Canada is rich in other energy sources that are poised to take off. Click here now to get the full story.
Fool contributor Joseph Solitro has no position in any stocks mentioned.