ARC Resources Ltd T.ARX

2022 Forcast

[MyHoneyPot]

$74 dollar WTI - Gas $3.82 U.S. Mcf

ARX would have $1714 million in Adjusted Cash Flow.

That is roughly 30% less than TOU who is projected to have $2226 million in Adjusted Cash Flow

Adjusted Cash flow per share 

ARX = 1714/695       million share = $2.46          Share price $12.24    2.46/12.24 =  20.10%
TOU = 2226/330.7    million share = $6.73          Share price $43.23    6.73/43.23 = 15.56%


So really you do get more Adjusted CF on a dollar value per share basis, However TOU on an enterprise basis has essentially zero debt where ARC has 1.9 billion in debt.  

If you take the debt into account on an enterprise bases, ARC is still undervalued but since the debt is essentially equal to their adjusted funds flow i do not feel that debt is really a big issue. 


Adjusted CF Number I took off a "Peters" Spreadsheet that I reviewed. 

IMHO

[Gasmonkey]

What are your target prices  for ARX and TOU this year ? 

[uncutgems]

wow thanks to MHP. all you saying arx is a lot cheaper than tou just don't have a handle on the numbers. especially when you consider tou has the best management in the biz bar none, is debt free, and has TOPAZ optionality. arx not only has almost $1.9b of debt they also have almost $900m of capital leases and around $280m of deferred liabilites (contracts), both of which were assumed when

[Mtklip]

ARX makes about $ 2 billion per year in FCF so your obligations are gone in less than 2 years. And they're buying back shares.

[uncutgems]

my post was a representation of where we are today. in the future ymmv. for those who think arx is somehow WILDLY undervalued versus TOU you are terribly mistaken.

[Mtklip]

it has about 25% FCF at strip and is returning it mostly to shareholders and to deleverage. Has great quality assets and lots of inventory. I don't know much about tou, but i know that it had a bigger move in 2022 vs arc.

[uncutgems]

again I don't think you're connecting with what I am saying. I am saying there are a bunch of folks, perhaps even you, who have the MISTAKEN notion that ARX is trading way cheaper than TOU. it is not. this has nothing to do with whether arx is cheap now, or is worht buying. it is to point out that if you understand the NUMBERS you would also understand that tou is Ridiculously cheap as

[uncutgems]

tourmaline has a slide in their presentation that says they will have $4b of after tax cash flow.... granted N/A gas prices were higher when tou made that forecast....but not that much... can you imagine? $4b of cash flow and $2.8b of FREE cash flow in 2022?...FREE cash not needed to grow, buy anything, or pay down any debt.  and the truth shall set you FREE.