RE:RE:RE:Management is not Pursuing Shareholders best InterestsI don't think so, Attachie comes with a lot of risk (Treaty8) and would require a lot more than 700 million dollars ultimately, that just to get started, unoptimized. Kakwa has 4 gas plants and 1010 MMcf of processing (10X the processing of Attachie phase 1), 80,000 boe of condensate stabilization, super pads. There is likely a lot more than 2 billion of infastructure there.
When they did the deal with are the commodity prices were low, and the plan they come up with in January 2021, was put together when oil was 40 dollars, is really different world today and the plan the plan should change we have at 85 U.S. WTI.
Terry the CEO was the COO and lead ARC for many years and had dreams about Sunrise and Attachie in his sleep. He is simply to attached to those projects on a personnel basis.
Spending 200 million (1/2 cycle) at Kakwa would return Kakwa to historical production levels of 2020 boe a day and would result in ARX having almost 2 billion in FCF a year.
The increase in FCF would reduce their debt to FCF ratio to less than 1, and their debt to CF ratio would be less than .5 would be my guess. It would add 2 dollars a share.
Kakwa is in Alberta, no first nations issues, they could drill it as fast as they wanted, and the plants have previouly processed those volumes, no plant ramp up, no plant optimization, or debottle necking, etc.
Their current pathway has not accomplished anything in terms of improved CF, and add 15,000 boe of dry gas for 115 million dollars does not seem like a bargin, whey you could add 35,000 boe of liquids rich production for 200 million and generate twice the cash flow.
IMHO