RE:RE:RE:RE:Dawson compared to KakwaThey communiation to investors is off base, they tell us they are investing in the properties with the best returns, obviously that is not the case, the CF for a boe of dry gas compared to Kakwa is less than half, we don't care how cheap the operating costs are. Its full cycle development, that is not cheaper, the returns are 40% less.
Why say your bring down debt while at the same time be pumping hundreds of millions of dollars into full cycle projects that will not pay out for years.(4 plus is my guess) They are introducing significat risk to share holders, regulatory, treaty 8, fiscal, execution, resource risk that does not need to be there.
Dawson is really several postage stamp plays, with economics that don't compete with Kawka. Why did they group several postage stamp size plays together and call it Dawson, and say it produces 90,000 boe/day all at the time of the merger, is it because they didn't have a meaningful or competative play to Kakwa. Dawson does not have the capital efficiency that exists in Kakwa with oil over 60 dollars, management needs to wake up.
Kakwa is 1/2 cycle and i think ARC management are to attached to this small play approach, and can't give up on their less economic strategy and don't know how to make money. In fact their plan is flawed, and they are squandering opportunity, and are not confident in them selves, and all their plans are set in stone.
DISCIPLINE - They view their internally generated low return, high capex ARC projects with rose colored glasses.
Arc's fiscal disipline is all around not paying their share holders, and the dividend slasher management does not how to deploy capital in a way they will provide the best share holder returns, in the current price enviroment, with the best immediate returns.
Dawson represent more then 56% of original ARC assets (2nd quater production) and Kakwa has a 38% upside in terms of CF per boe at current strip prices. ARC assets are not competative with Kakwa. Pursuing 2% decline rate objectives, is junior high thinking and has nothing to do with getting the best returns for shareholders.
IMHO