RE:It's all about green ....Green is good, I want more myself.
ARC has room for at least an addition 40,000 boe a day of production at Kakwa with no additional investment in infrastructure, and by simply drilling more wells.
The economics are even better than half cycle because ARC has 3 zones to exploit and can reuse pipe and surface infrastructure and super pad infrastructure, so it is better than 1/2 cycle economics. (They can resuse existing field infastructure)
78.2 percent of ARC's liquids reserves reside in Kakwa already DE-risked with diversified processing using 4 different gas plants, production facilities, with transportation in place, as well as a network of super pad field infrastructure for dehydration, and preprocessing optimization enhancing production. Kakwa it likely the most reliable asset in ARC protfolio with built in redundancy.
Kakwa Production at todays prices will CF.= 44.50 a boe and have Funds Flow of roughly 34.50 a boe, the best returns in the entire ARC portfolio.
The Green looks like this 40,000 boe/day * 34.50 Funds Flow * 365 days
Ramping up Kakwa could play for a dividend increase to 5 cents a month, it could also pay for the entire dividend, it would add 503 million in Funds Flow to ARC's balance sheet with no large capital outlays.
So if ARC was to increase the divided to 60 cents a year a 36 cent increase ( 261 million dollars)
That leaves another 242 million dollars that could be put forward to other projects. (Attachie)
So Kakwa is a low-risk play, diverse play with in place processing infrastructure with multiple super pads (field processing), 4 separate gas plans over 500,000 acres of resource play, and proven production capacity exceed 220,000 boe/day.
So, if you want to see the green and see it quickly with the highest netback play, with the best results, and best net backs in the Montney, it is Kakwa. Nothing else will compete with it especially considering all the infrastructure is in place and this is less than half cycle economics.
7 million dollars wells with 35 dollars a boe in funds flow pay back in (4-6) months. If not sooner.
That means a lot more green a lot sooner.
IMHO