Lost Opportunity - Shareholders cost 1.450 billion dollars Lost Opportunity Costs to Shareholders, sorry some of you may take offense to the use of actual spot prices, and the 2019 actual costs from the anual report describing Kakwa operations. I have avoid swearing in here so this may cause a few of you difficulty in my communicaiton style, get over it buttercup.
These are the real facts and this is why your stock is performing in a dismal manner, management needs to smell the roses.
Cost of Attachie 600 million
Lost Kakwa returns 850 million (Lost operating netback no investing in Kakwa)
Net Loss to Shareholder = 1.45 billion dollars or 2 dollars a share.
How long will be before pay you back of the 2 dollars a share management squandered -(8 years current divvy rate). Kakwa has the plant and capacity to produce 40,000 half cycle boe a day of liquids rich production.
36% condensate, 22% NGL’s, 42% gas (Production Ratio 2019 full year)
AECO SPOT 3.29 Canadian Dollars Current Prices
Condensate 84.81 Canadian Dollars
NGLS 20.00 Canadian Dollars
BOE Equivalent = .36*84.81 + .22 * 20 + .42*(3.29*6) = $43.22 boe of Kakwa produciton
That is what is boe of production is worth at Kakwa base on spot prices.
https://www.psac.ca/business/marketstats/ In 2019 the latest full year results I can access.
https://www.annualreports.com/HostedData/AnnualReportArchive/s/TSX_VII_2019.pdf 2019 Royalties 2.62
2019 Operation 4.43
2019 Transportation 7.07
Operating Netback $29.10
(will be higher with todays actual costs) (Op costs and Transportaion are a lot cheaper now 2019 numbers used here) Yearly cost to share holder not taking advantage of Kakwa ½ Cycle capacity
40,000 *29.10*365 = 425 million dollars
(not counting efficiency of scale) 425 million is the current operating Netback you would get from Kakwa unhedged at current prices for an incrementatal 40,000 boe.
At 180,000 boe/day Kakwa at unhedge daily spot price could generate 1.912 billion dollars anually + 40,000 (extra capacity) = 2.337 billion dollars in operating netback. Or roughly $3.23 a share just from Kakwa.
If Attachie produces 20,000 boe/day you will be lucky to get 200 million in operating netback. (600 million build cost), add ongoing exploration costs, 2028 before it contributes anything?
Putting Kakwa on hold while building out attachie will cost the shareholder 850 million dollars (2 years) in operating netback or about $1.17 a share in operating netback (Lost Opportunity Cost 850 million dollars). That is what the company is letting sit idle.
If Kakwa is working properly, and fully utilized, the rest of the play what happens at ARC does not matter.
IMHO