Change in Asset Base verses a Change in ManagementEric Nuttal can't understand why ARX is performing in such a dismal manner, maybe it is the message to share holders?
ARX Primary asset Kakwa, that is around 80 percent of their liquids production and 70% of you CF has significant decline rates, coupled with the best economics in the entire Montney. Does this sound like any other major basin? I am sure you have all heard of the Permian Basin, the decline rates there are huge in the Permian.
70% of ARX's cashflow comes from the Kakwa assets, they have 1010 MMcf of processing capacity working currently at about 40% utilization, sounds like a great half cycle investment opportunity does it not? These assets are resident to more than 80% of ARX liquids reserves.
The best thing about these assets is this, the plants and the kakwa production is tied directly into not one but two major transportation systems, yes, this is already built.
Most important of all is that Kakwa has some of the highest per boe returns in the Entire Montney.
Delima Regarding Kakwa
Should we change the Asset or Change the Management
If management are to busy destroying the Kakwa value, and talking down the virtues of the play, should we dispose of the play or should we dispose of management, that is the real question.
Shareholders have lost a lot of money because of ARX's management inability to grasp the virtues of Kakwa, even those they see is spewing off 70% of their FCF.
Delima
Divest the asset or Divest the management team that is the question before us.
Like it or not, all the other play areas ARX has are small and insignificant, ARX share will go in the direction that Management takes Kakwa. Time for a dose of reality.
Your thoughts
It is a lot easier and cheaper to change the management then the Asset Base and it will ultimately be a lot better for the share holders.
IMHO