Good points, Quint and thanks for sharing. With debt reduction targets being met and an FCF bonanza around the corner as the hedges roll off, I know will get to a much better dividend. I only hope we see an interim increase before the end of 2022, ideally when they announce Q3 earnings. The story only gets better for ARX but it's definitley time for a raise. Cheers and GLTA longs.

Quintessential1 wrote:

From Stockwatch Energy courtesy of loonietunes

"Here in Canada, energy stocks fell with prices, despite some determined efforts to prop some of those stocks up. Montney giant ARC Resources Ltd. (ARX) lost 46 cents to $18.02 on 5.08 million shares, even as it enjoyed a lovely mention this morning from RBC analyst Michael Harvey. He reiterated his "constructive outlook" on ARC and put it on "a shortlist of heavyweights for strategic LNG [liquefied natural gas liquids] supply."

By Mr. Harvey's estimate, ARC's reserves could already support a 1.8-billion-cubic-foot-a-day LNG megaproject for over 10 years, "and when adding future drilling could increase to 40 to 50 years." (For context, Shell's $40-billion LNG Canada terminal being built in Kitimat, B.C., will have a phase 1 capacity of about 1.8 billion cubic feet a day, although the eventual goal is to double this to 3.4 billion.) LNG companies should thus view ARC as a "key supplier or alternatively as a strategic asset for operators looking for vertical integration," said Mr. Harvey. In the meantime, shareholders can reap the benefits of "strong organic FCF [free cash flow]." The analyst predicted that ARC will double its quarterly dividend (currently 12 cents, for a yield of 2.7 per cent) by the end of next year, while gobbling up shares through buybacks.

Mr. Harvey reiterated his "outperform" rating on ARC and hiked his price target to $27 from $26. The target would be a 50-per-cent gain over today's close of $18.02, which in turn would be wonderful news for Mr. Harvey's employer, RBC. Investors may wish to note the bank's mandatory disclosure that it owns 1 per cent or more of ARC's shares (the disclosure does not have to be more specific than that). It also "makes a market" in ARC's securities and receives compensation from ARC for various banking and non-banking services.

As it happens, RBC has been making other headlines this week, after two executives made clear that the bank has no intention of shunning oil and gas companies. This has been a bit of a trend for some banks and insurers in recent years, such as HSBC (which vowed this year to "phase down" fossil fuel financing), Societe Generale (which said in 2017 that it would not finance oil sands projects) and Royal Bank of Scotland (which made the same anti-oil-sands claim in 2018). RBC disagrees. Indeed, the sector needs more investment, not less, if companies are to reduce emissions and help Canada meet its climate goals, argued the executives.

Derek Neldner (RBC Capital Markets' chief executive officer) and Lindsay Patrick (RBC's head of ESG -- environmental, social and government -- and strategic initiatives) made the comments at an energy conference yesterday in Calgary. Mr. Neldner predicted that it will cost Canada $2-trillion to get to net zero emissions by 2050. Pouring money into "green" companies will not do the trick by itself, added Ms. Patrick, saying banks are increasingly recognizing that oil and gas companies should get support in their efforts to clean up their operations (particularly while their end-products continue to be used daily by consumers).

In other words, oil and gas financing is not going anywhere at RBC. This likely means that the howls of eco-activists are not going anywhere either. They have certainly had a busy few months: News junkies may recall the protest outside RBC's annual meeting in Toronto in April, or the fake oil derrick that blocked the road outside an RBC branch in Nanaimo in June, or the "Rave Against RBC" held at an RBC-sponsored golf tournament in Toronto in July (complete with dancing, DJs and a 15-foot inflatable bust of RBC CEO Dave McKay covered in fake flames, because "RBC is Burning Our Future"). These are just a smattering of the stunts. No doubt there will be many more to come."

A doubling of the dividend by 2023 would suit me fine especially with the predicted share price rise.

GLTA Longs