RE:How is this possibleDo you think it could have anything to do with ARC cutting it capex from 2020 Kakwa budget levels.
In 2020 old ARC or VII Generation had initially set a budget for Kakwa of 1.1 billion and it was going to produce around 205,000 boe a day for 2020. That budget was later reduced to 900 million and it ended up lower, but last year was really a survival year for everyone.
This year the budget for Kakwa is 525 million, for the resource area that represents 78.3 percent of ARC PDP liquids reserves and 2/3 of its cash flow. So maybe there is a wait and see attitude from the market, and my guess is all eyes with be on Kakwa's performance.
The Capex that is going to be spent on an asset that potentially would generate 2/3 of their CF in 2021 budget that represents half of what the original budget was in 2020. In 2021 its production expection has been reduced more than 10% compared to what the original forecast for 2020.
So maybe we all should not be wearing rose colored glasses when we think about ARC resouces and there is a little bit of wait and see in terms of results, especiall Kakwa results as they will represent 2/3 of the companies performance and in 2021 and it will been restricted to a historically low level of investment, half of what was put forward in the plan in 2020.
IMHO
IMHO
So maybe the market wants to see is this really acheivable.