7/10 top Montney Wells - Condensate $70 U.S. ? With condensate trading around $70 dollars, you really don't need a future projection here, there is no requirement to forecast the weather, at roughly 85 dollars a boe canadian this is what condensate is trading for.
Kakwa is producing the 7 of the 10 top wells in the entire montney, wells that will pay out in 2-3 months at 85 dollars condensate. This is predictable, repeatable for ARC, and is the best resouce play in the Montney.
The number one revenue stream for ARC is not natural gas, it is oil/condensate by a country mile.
Referencing the top 10 montney wells, the best 6 of the top 10 were all ARC wells, Arc owns the leader board for top wells. With Oil/Condensate trading at 85 dollars Canadian, you can hedge all the way to December at an average of 68 dollars U.S. or about 82.50 canadian.
2021 Hedges https://www.cmegroup.com/trading/energy/crude-oil/light-sweet-crude_quotes_globex.html So how much cash do you think you add when the slide in the investor presentation that modeled 55 dollars WTI and we today can hedge at 68 dollars to the end of the year. 13 dollars U.S. difference or roughly 16 dollars canadian a boe, 100,000 boe/day oil and condensate = 1.6 million dollars a day or another (145 million - royalities) a quater.
Every new 1000 boe of liquids that Arc adds a quater is roughtly 7.5 million in increased CF for that quater, add an additional 10 thousand boe you added 75 million in quaterly CF. ARC has the plant and resouce capacity at Kakwa to do that right now, how would that impact the perception of ARC resources. This is 1/2 cycle economics it doesn't get better than this, ATTACHIE is full cycle investment, with no return for 2 years.
Arc should avoid depending on the summer weather to make a difference in its stock price, praying for people to get fried sunny side up, and take some of the gobs of extra cash flow they are generating in Kakwa and bring on an extra 10,000 boe a day right now. You don't need a weather forcaster for this one, you can hedge out and lock in the investment return, even the accountants and CFO's should understand this one.
IMHO