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.

TSX:ARX - Post by User

ARC Resources Ltd

<< Previous

Bullboard Posts

Next >>

Post by retiredcfon Oct 04, 2024 9:23am

209 Views

Post# 36252991

More RBC

Their upside scenario target is $32.00. GLTA

October 3, 2024

ARC Resources Ltd.
Northern Reflections - Journey to Attachie

Outperform

TSX: ARX; CAD 24.49

Price Target CAD 28.00

Our view: Our recent tour of the Attachie prospect in NE BC supported our constructive view of the project (and stock), with all signs pointing to an on- time and on-budget commissioning later this year. The $750 million project is slated to add 40,000 boe/d (60% liquids) to corporate volumes in its first phase - fully ramped in early 2025.

Key points:

• Attachie tour - Highlights. We toured several facets of ARC's Attachie project including (1) the Attachie plant site at 03-09, (2) several well pads at 16-6, and (3) various pipeline junctures with highlights detailed within maps and photos on pages 3-8 of this report. We were impressed with the organization and alignment of field activities in what is positioned to remain a core development for the company for the next decade. Recent RBC publications relating to both ARC and the Attachie project can be found within the following publications: Imagining the Montney in 2030 (Oct 10, 2023), Spotlight NE BC 1,2,3,4, Condensate Quest, Attachie summary.

Multiple phases of Attachie In Focus. With Attachie Phase 1 now largely (90%) complete, we expect that investor focus will shift to subsequent phases of the development. We expect that Phase 2 could require an incremental investment of $800 million (Phase 1 - $750 million) and be positioned to come on stream in 2028, adding an additional 40,000 boe/ d and located slightly East of the core Phase 1 development. Ultimately, the team feels that Attachie could eventually support up to 180 mboe/d of production via the development of 4+ phases.
Focus on efficiencies and iteration. Existing well design at Attachie contemplates DCET capital of $9.7 million driving total per-well recoveries of roughly 1 mmboe. As Canada's leading Montney player, we expect ARC to work iteratively to optimize drilling, completion and production strategies through the life of the project.
Government Relations – Attachie. The Government of British Columbia and the Halfway River First Nation have an agreement that includes a Landscape Planning Pilot which encompasses Attachie's development; as a result ARX is not limited by the disturbance cap for oil and gas development outlined in the Blueberry River First Nations Implementation agreement.
Highlighting RBC financial expectations. We continue to forecast 2025 production volumes of 388 mboe/d on capital of $1.7 bn, with a sanctioning decision for Attachie Phase 2 expected late-year. Our outlook at the RBC price deck calls for roughly $1B in FCF during 2025, positioned to be allocated to base dividends and buybacks.
Updates to Estimates. Our 2024/25 CFPS estimates are updated (0%/ +2%), largely related to adjusted commodity price realizations and margin assumptions (see more here).