ARC Resources Ltd T.ARX

Scotia Capital

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In a Thursday report titled Green Shoots on the Horizon for Natural Gas, Scotia’s Cameron Bean made housekeeping tweaks to our financial estimates, added several additional natural gas price hubs to our commodity price file, and revamped our NAV models,” he added. “We believe NYMEX prices have bottomed and will slowly trend up over the summer, before strengthening in Q4/24. We expect a rougher ride for AECO prices, with potential carnage during the summer, but see the startup of LNG Canada creating significant slack in the system in 2025 and 2026.

“Our stock selection process continues to favour companies with (1) track records of prudent capital allocation, (2) a high degree of financial flexibility, (3) deep high-return drilling inventories, (4) high cash flow margins, and (5) compelling ‘rate-of-change’ stories. Our best ideas are AAV, TOU, and PEY for Canadian natural gas exposure, EQT for U.S. natural gas exposure, TPZ for balanced / oil levered exposure, and LGN for growth and premium take-out potential.”

Mr. Bean made these target changes for Canadian companies:

• Advantage Energy Ltd. (“sector outperform”) to $19 (Street high) from $17. The average is $12.96.
• ARC Resources Ltd. ( “sector outperform”) to $33 (Street high) from $27. Average: $27.25.
• Kelt Exploration Ltd. ( “sector outperform”) to $9.50 (Street high) from $8. Average: $8.30.
• Spartan Delta Corp. ( “sector outperform”) to $6 from $5.50. Average: $4.79.
• Topaz Energy Corp. ( “sector outperform”) to $33 (Street high) from $30. Average: $26.96.