Kakwa represents 78 percent of Arc’s liquids reserves and has infrastructure in place TODAY for 45,000 additional boe of production.
Todays Prices https://www.psac.ca/business/marketstats/ Condensate 73.41 = 90.50 Canadian
Gas 3.70 AECO
NGL's 20.00 boe
= .(37*90.5) + .41 *(3.70*6) + .22*20
= 33.45 + 9.102 + 4.40 = 46.952
46.952*45,000 = 2.112 million Day 771 million a year in CF
Adding 45,000 boe a kakwa would add 45,000 of the highest netback boe to ARC production base.
Management Issue If kakwa was to produce 225,000 boe/day, it would like produce 2/3 of all the CF that ARC currently produces and that would be to much for ARC's management to stomach. It is a pride issue, not a business issue.
Management is not doing the right thing for shareholders, they are married to the arc asset base, and turning their back on a very quick 15% ramp up of production filling infrastructure that currently exists today.
When will attach recoupe the losses of management turning this back on 45,000 boe of daily production at Kakwa.
The answer is NEVER, the plan for attachie is small and will require more capex in the near future. Attachie will be less than 30,000 boe is my guess, around there. Never make up for the lost opportunity at Kakwa.
In stead of ARC having a immediate upside of almost 15%, they have a capex drag on the company to the tune of 600 million dollars, that will last a number of years.
The investment community is not as dumb as management thinks.
IMHO