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by Stockwatch Business Reporter

West Texas Intermediate crude for May delivery added 64 cents to $40.36 on the New York Merc, while Brent for June added 89 cents to $42.83 (all figures in this para U.S.). Western Canadian Select traded at a discount of $14.30 to WTI ($26.06), up from a discount of $14.85. Natural gas for May lost 7.8 cents to $1.907. The TSX energy index added a fraction to close at 172.07.

Whitecap Resources Inc. (WCP) added 72 cents to $8.87 on 12.7 million shares, after lowering its dividend for the second time in three months, but also more than doubling its budget for 2016 and setting optimistic guidance for 2017. The company had been paying a 6.25-cent monthly dividend, but cut it to 3.75 cents in January and now to 2.33 cents, for a yield of 3.1 per cent. The new cut will save roughly $40-million. Between that and a $27-million increase in forecast funds flow (with that increase coming partly from new, higher oil price assumptions), Whitecap feels comfortable boosting this year's budget all the way to $148-million from $70-million. It will use the money to drill an extra 47 wells at its core Saskatchewan and Alberta assets over the second half of the year. As the effects of the increased spending will not be felt until later in the year, Whitecap's full-year production guidance has gone up only slightly, to 39,500 barrels of oil equivalent a day from 38,800. Its year-end production guidance, though, has gone up to 40,000 barrels a day from 35,000. The company thus expects to be in good shape for 2017, both operationally and financially; it forecasts a fourth quarter net-debt-to-funds-flow ratio of just 2.7 times, along with $450-million in availability on its $1.2-billion bank line. It has set preliminary 2017 production guidance of 41,500 barrels a day on a preliminary budget of $150-million. Investors seem thrilled. The dividend cut may have come as a surprise to some, given that it was seen as relatively safe -- just last week, in an on-line presentation, Whitecap itself pointed out that its total payout ratio was less than 100 per cent -- but investors seem happy to accept a lower dividend if the freed-up cash goes toward increasing production. Whitecap says it wants to benefit from an expected rally in oil prices and can always increase the dividend later. This attitude, if nothing else, makes a nice break from the austerity that has dominated the oil patch lately.

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