09:55 AM EDT, 10/08/2020 (MT Newswires) -- Tudor, Pickering & Holt on Thursday reiterated its buy rating on the shares of ARC Resources (ARX.TO) ahead of the Western Canadian oil producers third-quarter earnings report.
"Our reconciliation of the public data pegs ARX August production at ~157mboepd down from ~169mboepd the month prior driven by turnaround activity at Sunrise; turnaround activity is expected to hit September even harder, driving our Q3 estimate of 152mboepd, slightly above the Street at 150mboepd," the investment bank said in a note. "The turnarounds are expected to impact gas volumes disproportionately, driving our Q3 liquids forecast to 25%, up from 23% in Q2. Our cash flow estimate for the quarter sits at C$145MM, or C$0.41/shr, well ahead of the Street at C$0.34/shr. With the improvement in gas pricing, we are expecting a capex program in the C$400MM range for 2021 (Street C$388MM), supporting production of 162mboepd (Street 158mboepd), with Q4/Q4 growth of ~3%. On strip pricing, we see this program delivering C$775MM of cash flow and C$375MM of FCF, resulting in a 18% FCF yield and a 14% FCF/EV. ARX's FCF to EV ranks at the top of our North American gas coverage and comes with a relatively low risk-profile given 2021E leverage of 0.6x; the name remains one of our top picks for gas exposure."
(MT Newswires covers equity, commodity and economic research from major banks and research firms in North America, Asia and Europe. Research providers may contact us here: https://www.mtnewswires.com/contact-us)
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