Scotia target: Sector Outperform and $27First of all, before I post Scotia's report, what am I missing, no MyHoneyPot?? So refreshing to read the feed without all of his nonsense.
In any event, here is the updated report:
Strong Q4/23 Cash Flows and Year-End 23 Reserves Efficiencies
OUR TAKE: Positive. ARX delivered strong Q4/23 results, with a slight production beat and Adjusted Funds Flow (AFF) and Free Cash Flow (FCF) well ahead of expectations on lower-than-expected cash costs and taxes. The company reiterated its full year 2024 guidance and provided Q1/24 production guidance that is in line with expectations. ARX also released strong YE23 reserves results, with PDP bookings up ~13% per share on >2x corporate recycle ratio and 2P reserves up ~14% per share on growth from Attachie, Kakwa and Sunrise. The Attachie project remains on track and on budget, with first volumes expected in late 2024. We continue to see ARX as a materially undervalued large-cap growth story with a clear catalyst on the horizon at Attachie.
KEY POINTS
Lower cash costs and taxes boost Q4/23 cash flows. Production of ~365.2 mboe/d was ~2% ahead of consensus, while AFF of $699M ($1.16/sh) came in ~8% ahead on lower cash costs (~6% better per unit of production, with opex and transport >12% better) and cash taxes (~60% better). Capex of $545M was ~5% below the Street, resulting in free cash flow of ~$155M (~101% ahead of the Street). During Q4/23, ARX disposed of assets for $66.3M and acquired assets for ~$22M ($44.3M net gain). See Exhibit 1 for detailed results versus consensus expectations (positive).