ARC Resources Ltd T.ARX

Alternate Symbol(s): AETUF

Energy Oil & Gas E&P

ARC Resources Ltd. is a Canadian energy company. It is focused on the exploration, development, and production of unconventional natural gas, condensate, natural gas liquids (NGLs), and crude oil in western Canada. Its operations are focused in the Montney region in Alberta and northeast British Columbia. Its operations in Alberta are located near Grande Prairie and the region includes Kakwa and Ante Creek. Kakwa is a condensate-rich and high-deliverability natural gas play with top-tier development opportunities. Its operations in northeast British Columbia are located near Dawson Creek and the region includes Greater Dawson, Sunrise, Attachie, and Septimus and Sundown. The Greater Dawson operating area includes Dawson Phases I, II, III and IV and Parkland. The Attachie is a condensate-rich, natural gas play primed for large-scale development. Sunrise is a dry natural gas play with a low-cost structure, well deliverability and direct connectivity to liquefied natural gas Canada.

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ARC Resources Ltd > Targets Raised

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Comment by Westcoastenergyon Nov 06, 2023 10:52am

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Post# 35719357

RE:Targets Raised

Scotia seems to be the highest on the street with a target now at $32. Loving it.

E&P

ARC Resources Ltd.

ARX-T: C$22.98
Target: C$32.00
Old: C$30.00
Rating: Sector Outperform

Solid Q3/23 Results; 2024 Guidance Looks Great

OUR TAKE: Positive. ARX delivered solid Q3/23 results, with production and Adjusted Funds Flow (AFF) in line and Free Cash Flow (FCF) ahead of expectations on lower-than-expected capex. The company reiterated its full year 2023 guidance and released better-than-expected 2024 guidance, with capex ~10% below the previous indication and the balance of metrics essentially in line. The Attachie project remains on track and on budget, with first volumes expected in late 2024 or early 2025. ARX’s preliminary expectations for 2025 line up with expectations and point to a materially undervalued large-cap energy story. We maintain our Sector Outperform rating and have increased our Target Price to $32 on our updated forecasts.

Q3/23 FCF well ahead. Production of ~360.2 mboe/d (63% gas) was in line with expectations, while post-hedging realizations of $38.81/boe were slightly behind. Cash costs of $19.28/boe beat consensus by ~5%, with royalties, transport, and cash taxes better than expected and G&A (including cash settled SBC) and financing costs higher than expected. AFF of $662 ($1.09/sh) was in line with expectations, while capex of $401M was ~17% lower than expected (leaving ARX ~$500M to ~$600M for Q4/23). As a restult, FCF of $261M beat the Street by ~45%. See Exhibit 1 for detailed results versus consensus expectations (Slight Positive).