BC Discount - Investment UncertainityThe BC discount all evolves around uncertainity!
Stranded infastructure with no well licenses, look at the budget ARX put forward, they need to do extra drilling to fill up the infastructure because production is in decline in NE BC, and you can't maintain 160,000 boe of production with 1 drilling rig and handful (5) well licenses.
ARX has moved all its drilling to Kakwa except 1 measly rig, and that is where they are drilling at least 90% of their wells because they can't get a well licenses in NE BC, and there is no certainity in the regulatory framework.
The do not know when the new regulatory framework will be put in place, or the requriements of the new well licensing process or if there is a royality impact in the works. They are sitting on their hands watching their wells decline.
Investment Thesis
What is Terry's investment thesis when you don't know the future economics of these plays and play areas? How can you commit capital to projects that you don't know the returns or the regulatory burden that is going to be put upon ARX?
Time for management to wakeup, and smell the roses, they have been forced now to drill more at Kakwa and increase production, because 160,000 boe of their production has no certainity around it anymore.
IMHO