Whitecap Resources Inc. reported a surge in first-quarter cash flow driven by higher production, but the light oil producer's profit fell sharply due to a large accounting loss on hedging contracts.
Cash Flow and Production Highlights
The Calgary-based company kicked off oilpatch earnings season on Wednesday, with cash flow from operations exceeding $1 billion in the first quarter. This beat analyst expectations and more than doubled from $446 million a year ago, fueled by increased production following its acquisition of Veren Inc. last year.
Whitecap stepped up drilling in the quarter, peaking at 18 active rigs, which helped drive record production of 391,416 barrels of oil equivalent per day (boe/d). The company raised its 2026 production outlook to between 378,000 and 382,000 boe/d, an increase of about 7,500 boe/d, while keeping capital spending plans unchanged at between $2 billion and $2.1 billion.
Profit and Hedging Impact
Despite strong cash generation, net income was $22 million, down from $163 million a year ago, as the company booked a roughly $530-million non-cash loss on hedging contracts. Producers like 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.
The company said it has been adding to its hedge positions as prices have risen, with around 34% of its 2026 production and 23% of its 2027 production hedged.
Market Conditions and Outlook
“The ongoing conflict in the Middle East has introduced significant commodity price volatility,” Whitecap said in a release, adding that the U.S. 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. “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 noted.
A late-quarter surge in oil prices tied to the Iran conflict is expected to lift quarterly results across the sector. Whitecap is holding an earnings call later this morning.
