ARC Resources Ltd T.ARX

Kakwa at 200,000 boe/day

[MyHoneyPot]

In the 2023 plan they say that Kakwa will produce between 190-200  thousand boe/day

Q3 Kakwa
In Q3 Kakwa increased production from 173,656 in Q2 to 179424 in Q3.

It increased condensate production 6466 boe/day in Q3. The average price for condensate in the third quarter was $110.35 a boe in a quarter with 92 days. 

This increase added 6466 * 110.35 * 91days = 64.9 million dollars in CF in Q3 compare to Q2

Kakwa at 200,000 boe/day  (80WTI or 107 condensate)

14481 increase in condensate from Q2/2022   = 107*14481*92 = 142.5 million Quarter
   8000 boe/day of gas (5 dollars)                      = 8000*30*92     =   22.1 million Quarter
   3807 boe/day of NGL's (34.16)                       =34.16*3807*92 =   12    million Quarter

                                                                                              Total    176.6 million quarterly
                                                                                              Yearly  706    million (200,000 boe)
  
Q3 -> Q4 200,000 boe/day  
A 8015 boe increase in condensate from Q3/2022  = 107*  8015*92 =   78.9 million Quarter

Q2 was when condensate prices were 137 dollars a boe, and  kakwa was at a production low. Last quarter Q3 Kakwa condensate production increased a lot at Kakwa (6466 boe/day)  but the prices had come off a lot. This looks really strange?

In any case an increase Kakwa production from Q2 levels to 200,000 boe/day at (80 oil, $5 gas, $34 NGLs) add 706 million in cashflow on an anualized basis. Going to 200,000 boe/day will add more than 100 million in CF from Q3 production numbers for Kakwa on a quaterly basis. 

So i am sorry to be beating this dead horse, but Kakwa producing 200,000 boe/day is worth 10 billion all bye itself, especially since it owns all the infastructure, and has about a $5 dollar a boe cost advantage to any other montney player who does not own facilities. Not to mention the best resource in the entire montney (470,000 acres). (Infastructure alone worth 2-3 billion dollars)

Now that the hedges are off on 34000, boe of condensate production and the ones left are not quite as bad, Kakwa is going to be spewing out cash at an accelerated rate. especially once it hits 200,000 boe. The encouraging thing in all this is that by accelerating the drilling the way ARX did this year is that at the end of Sept they had drilled 78 wells and completed 72 wells. So it looks like we are set up for big production gains. 

IMHO

[Squint1]

Incremental revenue is not the same as cash flow.  Cash flow is revenue minus operating cots and royalties and other expenses.  Cash flow is much less than revenue. 

[MyHoneyPot]

I  am talking about Revenue, I find every company uses these terms a little differently, but i hope you got the idea. Sorry if i made it confusing.  IMHO