Gas is $8.40 a mcf, Condensate is almost $150 dollars a Boe, and every BOE at Kawka is over $100 dollars in value. ($108 as of today)
Clearly the approach ARX has taken adds little in shareholder value, buying back 1% of the stock today would cost about 122 million dollars to buy back 6,800,000 shares, at 18 dollars, and based on Q1 numbers would generate an additional 4 million dollars in FCF a quarter (60 cents a share/quarter), and with that payback in mind would take 10 years to pay back. The cash will not be returned to the balance sheet for 10 Years.
110 million dollars invest in Kakwa would return all the capital within 3 month and return 10X the capital investment in the next few years. The cash would still be restored to the balance sheet within 90 days, and you would also be adding resource, reserves, cashflow and NAV.
Not to mention this is all half cycle and you would be reducing operating costs and gaining operational efficiency as well, and making sure the capital investment made buy investors are getting the best returns.
Does that not make sense? We are in the oil and gas business i thought and our best returns should be through the drill bit. Plant utilization at Kakwa is low.
IMHO