ARC Resources Ltd T.ARX

Kakwa CF is likely 20% above budget forecast.

[MyHoneyPot]

Condensate is responsible for roughly 70 percent the the CF from Kakwa. 

The goal of restricting CF to your best economic play based solely on liquids decline rate, regardless of the price enviroment is not to smart, as i would put it. 

At 70 dollars, condensate is roughly 30% above a $55 dollar budgeting threshold. So that means that Kakwa is 20 percent ahead of any budget considerations, just based on the price of the commodity. 

ARC's rational for restricting investment at Kakwa was to pursue a 2% decline objective for the wells. Is that really valid if the play area is producing 20% more CF as a whole and 30% more cash flow from what you would of expected from your condensate production. Just based on price improvement in condensate?

Kakwa is likely out performing on all their commodity prices, and is doing a magnitude in terms of cash flow better than any 2% improvement in production declines would provide. (20%) 

Academic Exercise 

So are we here for academic exercises or our we here to make money. We already know that Kakwa is perfoming 20% head of budget, and exceeding the performance of all the other ARC assets, just like it did in Q1. 

So the 40,000 boe of less than 1/2 cycle production that only requires wells and does not require a 600 million 2 year capex spend with no retrun the the shareholders in on the table. 

The reason ARC is doing so poorly is that the managment team is not that smart and will not do the right thing. TOU management if they are wrong they will just fix it,

The ARC managment team will give you a projection with no numbers. They think the investment community is stupid, and grant it many of them are I have witnessed it myself. 

ARC management is the reason for the low share price, and i think it is time for a change. 

IMHO

[clamlinguine]

I wouldn't say the management team is not smart, but I have suspicions they are more interested in maintaining jobs for themselves and maybe their employees, than in maximizing shareholder value.