TP&H 09:44 AM EST, 12/10/2021 (MT Newswires) -- Tudor, Pickering and Holt on Friday reiterated its buy rating on the shares of ARC Resources (ARX.TO) and its C$15.00 target price as it fine-tuned its estimates for the Western Canadian oil and gas producer's fourth-quarter results.
"A late-quarter mark-to-market has our Q4'21 cash flow estimate at C$1.08/shr, below the Street at C$1.15/shr, with few moving pieces other than lower pricing relative to our prior update," analyst Matt Murphy said in a note. "In addition, public filings show buybacks totaling C$180MM quarter-to-date, with our Q4'21 estimate baking in a further C$50MM in December based on the recent pace. On returns, we model the 10% NCIB wrapping up roughly in-line with the 12-month duration at the end of August'22, with a 7.5% NCIB estimated to be put in place subsequently, equating to C$750MM in buybacks in 2022 at the current share price. Combined with an estimated 11% mid-year dividend increase, we model a total capital return yield of 14% in 2022, or 64% of estimated free cash flow on strip (vs. the 50-80% framework range) ... On strip pricing (and even in a downside case), even if the company proceeds with incremental Attachie capital in 2022, we see limited downside to our modeled capital return yield of 14% which stands out as compelling across North American gas and energy broadly."
(MT Newswires covers equity, commodity and economic research from major banks and research firms in North America, Asia and Europe. Research providers may contact us here: https://www.mtnewswires.com/contact-us)
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