ARC Resources Ltd T.ARX

Dawson compared to Kakwa

[MyHoneyPot]

I am using this stip pricing, here is where i took the numbers from. 

Strip Pricing August 12

Condensate                       Gas                          Liquids
87 dollars condensate    2.93 AECO Gas,         21 dollar
                                           (17.53 boe)
 
Condy/Oil       Nat Gas    NGL’s         Total Boe/Q2   CF BOE      2021 Play Capex
11,533            71,250       8,439         91,219             26.67          240 million         Dawson
60319            72,933       39,633      172,855             42.58          525 million         Kakwa
 
 
So these are the numbers for Q2 for Dawson, every boe of production at Dawson on a annual bases gets $2,631 dollars of capex and those BOE’s generate 26.67 dollars in Cash Flow.
 
So these are the numbers for Q2 for Kakwa , every boe of production at Kakwa on an annual bases gets $3,037 dollars of capex and those BOE’s generate 42.58 dollars in Cash Flow.
 
So generate 100 million dollars in cash flow, at Dawson it would cost 27 million dollars based on this years budget of 240 million, the same 100 million could be generated at Kakwa for 19 million dollars. 
 
Dawson 100million/ (26.67 *365) = 10272 boe/day or  (27,025,632)  dollars
Kakwa    100million/(42.58*365) = 6,434  boe/day  or   (19,540,976)  dollars
 
So the full year returns at Kakwa are 38% higher than the returns at Dawson, which is suppose to be one of ARC to projects. Pursuing 2% declines objects and turning your back on 38% upside in returns is what ARC resources is doing. 

IMHO

[uncutgems]

could you provided your supporting calculations for cash flow? thanks....

[MyHoneyPot]

This is just gross CF, because there is so much accounting nonsense that goes on with ARC, and Kakwa is 1/2 cycle we know that it has plant and infastructure to likely produce 60,000 more boe a day.  I have included the current strip numbers in the link, so you know the commodity prices i am using. The production number for Q2 are copied from the Q2 report for Arc Resources.  This is

[alertmeipp]

few points: they are focus on integrating their assets in kakwa this year.  dawson's breakeven is like 30 cents, safe bet. when they put their plan together, liquid price was much better and priority #1 was to bring down debt and maximize cash flow. I suggest you talk to them, your understanding is off base, at least from my discussion with them. We are few months away from big changes

[MyHoneyPot]

They communiation to investors is off base, they tell us they are investing in the properties with the best returns, obviously that is not the case, the CF for a boe of dry gas compared  to Kakwa is less than half, we don't care how cheap the operating costs are. Its full cycle development, that is not cheaper, the returns are 40%  less.  Why say your bring down debt while at

[MyHoneyPot]

Few points: they are focus on integrating their assets in kakwa this year.  Kakwa does not integrate with any of ARC’s assets, and it does not look like dry gas. It is a contiguous land base that represents 78% of their liquids reserves. They can’t spend a year fooling around, poor capex int less economical dry gas postage stamps play that they have now collected together, and call the