The lack of gas processing capacity is a blessing for Kelt as it essentially limits how much natural gas they can produce and sell. If possible, they need to choke/stop all older gassy wells and if they're able, replace the natgas production with new oilier wells -
get that oil mix to 40% if at all possible (would be great). The Oak drillling wasn't the best use of capex dollars in hindsight.
(From the ARX Q3 report:ARC delivered quarterly production of 360,177 boe(1) per day (63 per cent natural gas and 37 per cent crude oil and liquids) In the overall scheme of things, all new natural gas wells are unhedged
for all intensive purposes, will take a very long time to payback when the 12 month strip is so low (and possibly going lower) and therefore should not be brought on line at this time. Will they? Nope. Past behaviour is the best indicator of future behaviour and those natgas producers will continue to bring those wells online despite low prices.
For all intents and purposes ARX is doing this but richard I and II thinks not doubling production like KEL is an issue...why richard? From ARX Q3 report: - The 2024 budget represents an approximate $200 million decrease in capital spending from what was presented at ARC's June 2023 Investor Update. The decrease reflects operational decisions to minimize non-productive capital and realized cost savings.
Canadian producers should really use their head, let production slide by NOT bringing new natgas wells on line. While Canadian producers have access to the US market, US producers don't have access to the Western Canadian market and therefore, there is no reason for AECO to correlate with HH and go down what is becoming a very slippery slope.
From ARX 2024 budget
Development in 2024 will focus primarily in the condensate-rich areas of the asset, following 2023 activity where ARC planned and executed development in areas where condensate gas ratios were lower. When natgas prices fully recover ($5+ HH), Kelt needs to hedge. This is the behaviour of US producers and is what leads to lower prices (without hedges in place, they would have cut back a long time ago) and when you don't hedge, you are left holding the bag.
I wonder if ARC hedged? IMHO.
Stay in your own lanes richards or you might get run over.
GLTA ARX BULLS