How does Birchcliff's capital program for 2025 compare to prior years and to peers in the Canadian oil and gas sector?
Birchcliff’s 2025 capital program is being positioned as the most ambitious yet for the company. After spending roughly C$350 million in 2023 and C$400 million in 2024, Birchcliff now plans to allocate about C$425‑C$450 million in 2025 – roughly a 10‑12 % lift over the prior year and the highest dollar spend since the 2022‑23 expansion cycle. The extra spend is directed largely toward additional light‑oil well completions in the Peace River and Lloydminster basins, with a modest increase in drilling inventory (≈ 120‑130 wells versus ~ 100 in 2024) and a focus on higher‑return, low‑cost projects that should drive per‑share earnings upside if oil prices stay in the current $80‑$85 USD range.
Relative to peers, Birchcliff’s capex is small in absolute terms—C$1‑2 billion is typical for integrated names such as Suncor, Canadian Natural, and Cenovus—but it is sizable when measured against its market‑cap‑adjusted production base (≈ 100 kboe/d). In other words, Birchcliff is allocating a larger share of its balance sheet to growth than most pure‑play light‑oil producers (e.g., Whitecap, Vermilion) and is out‑spending them on a per‑barrel‑of‑production basis. This aggressive stance signals confidence in its low‑cost asset base and suggests a push to close the production gap with mid‑size peers, while still maintaining a disciplined debt profile.
Trading implication: The higher‑than‑historical capex, combined with the company’s strong Q2 well performance and a dividend continuation, supports a short‑to‑mid‑term bullish case on BIR. The stock is trading near its 50‑day moving average and above the 200‑day trend line, with relative strength outpacing the S&P/TSX Energy Index. Traders could consider buying on pull‑backs (e.g., a 2‑3 % dip below the 20‑day EMA) with a target of the recent high around C$27‑C$28, while keeping an eye on cash‑flow coverage (free cash flow > C$300 M) and any oil‑price shock that would pressure the capital‑intensive expansion plan. A stop‑loss around the 20‑day EMA (~C$24.5) would limit downside if the higher capex fails to translate into the expected production upside.