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by Stockwatch Business Reporter

West Texas Intermediate crude for June delivery added 54 cents to $44.32 on the New York Merc, while Brent for July added 39 cents to $45.01 (all figures in this para U.S.). Western Canadian Select traded at a discount of $12.84 to WTI ($31.48), up from a discount of $13.57. Natural gas for June lost 6.5 cents to $2.076. The TSX energy index lost a fraction to close at 175.81.

Whitecap Resources Inc. (WCP) added 44 cents to $9.44 on 3.61 million shares, after releasing the financial results of a busy first quarter. Production came to 43,024 barrels of oil equivalent a day, in line with analysts' predictions, while cash flow of 22 cents a share was higher than predictions of 21 cents a share. The company has been doing a good job of cutting costs. Its operating costs were just $9.08 a barrel, down from $9.53 a barrel in the previous quarter. Transportation costs of 89 cents a barrel were significantly improved from $1.57 in the previous quarter, mainly thanks to new pipeline connections in Saskatchewan, which is where Whitecap is doing most of its drilling this year. In the first quarter, it drilled 15 wells in the Saskatchewan Viking play, five in the Alberta Cardium play, and four elsewhere in Alberta and British Columbia. Its total development spending was $45-million. That would have taken up most of this year's $70-million budget, were it not for Whitecap's decision last month to more than double that budget to $148-million. It said it would spend the extra money to drill an additional 47 wells, most of which will be in the Viking and the Cardium. Investors did not get all this extra drilling for free. In order to help pay for the new program, Whitecap reduced its monthly dividend to 2.33 cents from 3.75 cents, for a new yield of 3 per cent. This will free up about $40-million in extra cash this year, which, along with a hoped-for increase in cash flow from rising oil prices, is expected to cover the higher budget and let Whitecap maintain its balance sheet. This is in fairly good shape, with a net debt load of about $800-million as of March 31 -- manageable, but Whitecap would apparently like to get it down. Peters & Co., in a new research note about Whitecap's financials, wrote that management says that "unless commodity prices improve materially, excess cash flow will be used to reduce debt or potentially [for] small tuck-in acquisitions."

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