On Fire Today! ARX having a great day today, wonder if this is why
11:28 AM EDT, 04/11/2023 (MT Newswires) -- Tudor, Pickering, Holt on Tuesday reiterated its buy rating on the shares of Arc Resources (ARX.TO) and its C$20.00 price target as it updated its estimates for the Western Canadian natural-gas producer ahead of its first-quarter results.
"Our updated model ahead of first quarter results has our estimates tracking lower after marking-to-market, with few incremental changes besides," analyst Matt Murphy wrote. "For the quarter, we model total production of 329mboepd vs. the prior 320-330mboepd guide, with liquids lower q/q to 126mbpd (38% liquids weight vs. Q4'22 39%), including 72mbpd of condensate before ramping towards the 80mbpd range into H2'23. Owing to infrastructure-related downtime, we model modest incremental headwinds via transport costs (C$6.40/boe vs. C$5.70/boe Q4'22), with realized hedging losses (est. ~C$100MM headwind) further factoring into our updated projections following a mark-to-market. Overall, we estimate cash flow of C$1.06/shr, with capital of C$625MM supporting free cash flow of ~C$30MM for the quarter. Quarter aside, we'll be watchful for the latest update on progress toward sanction of the company's Attachie project, with our model baking in incremental capital in 2023 over and above the company's C$1.8B budget, including C$275MM of Attachie capital ahead of sanction and our 2024 estimate including the remainder of the previously indicated ~C$700MM project on top of the guided C$1.5B range. Lastly, on returns, we model the company towards the higher-end of its 50-100% of free cash flow returns framework following the move lower in the natural gas forward curve, with a total return estimated in the 7% range between the base dividend and buybacks