Natural Gas high $7.25 U.S.Natural Gas Spot Prices With natural gas prices at $7.25 U.S. that is roughly = $43.4 U.S. /boe
That is actually about $55 dollars a boe Can for Natural gas, which is really high and this is going to switch the market place that has been focused on OIL to Natural Gas weighted company as they have under peformed.
The shocker for ARX will be TOU paying out $6 dollars a share in dividends, and getting tremendous share price appreciation, while ARX holding production flat and putting all their capital towards share buy backs and debt reduction, NOT DIVIDENDS. Kicking the shareholders down the road.
I predict a shareholders revolt soon, as the company is being run by a group of Accountants and thats is why they need everything predictable, Arc Management (Bibby) is not really oil and gas person, they want revenue certainity and destory over 2 billion dollars in capital, industry leading, with the dumbest hedging strategy ever. They are holding back capital on Kakwa until they build a spread sheet that aways works for the play, but the energy buisness is not like that, their are natrual suprizes and disapointments, so far all the dissapointments have been with ARX management.
Seriouly it as simply at this, adding 10% to kakwa will likely add 15% to ARX FCF, and to the value of the company.
So you can buy back 1.2 billion in stock, based on a market cap of 8 billion.
Or spend 250-300 million half cycle at Kakwa and get the same impact in terms of FCF.
The only difference is you will get a lot more share price appreciation investing in Kakwa then buying back shares.
IMHO