ARC Resources Is Increasing Production At Rock Bottom Natural Gas Pricing

seekingalpha08-28

ARC Resources is defying weak natural gas prices by bringing the Attachie project online.The company is shutting in dry gas production until prices recover.Despite the challenging market, ARC ...

Source Link

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap

Leave a comment

{"i18n":{"language":"en_US"},"isChannel":false,"data":{"share":"https://ttm.financial/m/news/2462466555?lang=en_US&edition=fundamental","thumbnail":"https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1327982065/image_1327982065.jpg","is_english":true,"pubTime":"2024-08-28 21:41","share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","id":"2462466555","market":"sh","top_or_hot":-1,"title":"ARC Resources Is Increasing Production At Rock Bottom Natural Gas Pricing","media":"seekingalpha","content":"<div>\n<p>ARC Resources is defying weak natural gas prices by bringing the Attachie project online.The company is shutting in dry gas production until prices recover.Despite the challenging market, ARC ...</p>\n\n<a href=\"https://seekingalpha.com/article/4717594-arc-resources-is-increasing-production-at-rock-bottom-natural-gas-pricing\">Source Link</a>\n\n</div>\n","source":"seekingalpha","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>ARC Resources Is Increasing Production At Rock Bottom Natural Gas Pricing</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nARC Resources Is Increasing Production At Rock Bottom Natural Gas Pricing\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-08-28 21:41 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4717594-arc-resources-is-increasing-production-at-rock-bottom-natural-gas-pricing><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>ARC Resources is defying weak natural gas prices by bringing the Attachie project online.The company is shutting in dry gas production until prices recover.Despite the challenging market, ARC ...</p>\n\n<a href=\"https://seekingalpha.com/article/4717594-arc-resources-is-increasing-production-at-rock-bottom-natural-gas-pricing\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4179","symbol_name":"石油天然气设备与服务","start_time":0,"source_url":"https://seekingalpha.com/article/4717594-arc-resources-is-increasing-production-at-rock-bottom-natural-gas-pricing","article_id":"2462466555","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1327982065/image_1327982065.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2462466555","pubTimestamp":1724852500,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"ARC Resources is defying weak natural gas prices by bringing the Attachie project online.The company is shutting in dry gas production until prices recover.Despite the challenging market, ARC Resource","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4179":"石油天然气设备与服务","NGS":"Natural Gas Services Group Inc","ARC":"美国图文公司","BK4143":"办公服务与用品","BK4213":"石油与天然气的勘探与生产","AETUF":"Arc Resources Ltd."},"translate_title":"ARC Resources正在以最低的天然气价格增加产量","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"AETUF":1,"ARC":1,"NGS":1},"content_text":"ARC Resources is defying weak natural gas prices by bringing the Attachie project online.The company is shutting in dry gas production until prices recover.Despite the challenging market, ARC Resources is investing in growth projects, paying dividends, and maintaining financial strength.This investment grade idea is profitable at a time when much of the industry is losing money.When natural gas prices recover, this company will be far more profitable.bjdlzx Probably one of the hardest things to do in a cyclical industry is to go counter to the business cycle. Yet, ARC Resources Ltd. (OTCPK:AETUF) is doing exactly that by bringing on the Attachie project online (as the last article noted) during a period of weak natural gas prices (NG1:COM). ARC is further going against the industry by intending to make money on this project during those same hostile industry conditions. When natural gas prices recover, this company will definitely gain from such an event. But that will be in addition to the money it is making now. Unlike many in the industry, this natural gas producer is earning decent money right now. Production Shut-Ins Some dry gas production is being shut-in until prices recover.  \"Subsequent to quarter-end, in response to record low natural gas prices in Western Canada, ARC has elected to curtail approximately 250 MMCF per day of natural gas production at its sole dry gas asset, Sunrise. ARC will resume full production when natural gas prices recover to levels that support ARC's return requirements.\" \"On a per well basis, the well design change in the Upper Montney is expected to yield a 40 per cent increase in natural gas production over the initial twelve months, with only a 25 per cent increase in well costs due to higher intensity completions. As a result, annual sustaining capital at Sunrise in developing both the Upper and Lower Montney is expected to decrease by 10 per cent relative to the previous development plan.\"  This quote from the second quarter earnings press release continues a trend throughout the industry of withholding higher cost dry gas production from the market while natural gas pricing remains weak. Meanwhile, costs per MCF are coming down. One thing to remember is that costs are lowest when the well begins producing. Some costs do rise as production declines over time. Therefore, what began as low-cost production could be higher cost or outright high-cost production a few years later. Often, just getting to the fall heating season is all that is needed for many of these wells to come back to production to contribute to profits. However, this company, unlike many, has plenty of profitable options in the current environment. Therefore, if the production needs to be shut in indefinitely, there are enough other ways to bring in sufficient cash flow for the company. As far as bad news goes, many companies have much worse to report. Earnings The big difference for this natural gas producer (a Canadian producer that reports earnings in Canadian dollars unless otherwise stated) is that this company is making a decent profit in this environment due to its condensate production that is produced along with the natural gas.  ARC Resources Financial Summary Of Second Quarter 2024, Results (ARC Resources Second Quarter 2024 Earnings Press Release) Even at the market bottom for natural gas, this company is spending on growth projects and paying a dividend while maintaining excellent financial strength. Companies that tend to return long-term above-average results are companies that are doing exactly what this company is doing. Capital costs tend to be lower when much of the industry is waiting for a recovery. Therefore, this company often has its pick of low-cost services that will produce yet another low-cost (and long-lived) asset. Execution like this is as good as a competitive moat. Dividends The assets have a low enough reinvestment rate that the company can pay a dividend, repurchase shares, and still invest in growth projects. ARC Resources Shareholder Returns Program While Growing Production (ARC Resources Second Quarter 2024, Earnings Conference Call Slides) The Attachie project is due to be producing in the next fiscal year. So, the capital expenditures are almost complete for that project. That should grow production by roughly 10% when it is fully up and running, on top of what the company is capable of producing now. The dividend of C$.17 per share is already well covered as shown above because the share repurchase program would be the first thing that would be scaled back if industry conditions worsen. Furthermore, this is an investment grade idea. Therefore, the debt market is nearly always open to more debt should the company management decide to take on more debt rather than cut back either the growth projects or the dividend. Return Of Capital Idea The major idea of this management is to essentially buy back the capital used to acquire Seven Generations (which was an all-stock deal). Therefore, management at least initially intends to get the number of shares outstanding to a number that existed before the combination. This differs from many buyback programs. ARC Resources Share Repurchase Progress (ARC Resources Second Quarter 2024, Earnings Conference Call Slides) According to management, the shares outstanding are almost back to where they were before the merger. Yet, the shares outstanding enjoy the benefits of the additional production that Seven Generations added to the company. The production included a lot of condensate production that largely enables the company to comfortably outperform the industry during times of weak natural gas production. Realized Pricing And Netback Before the combination with Seven Generations, this company was largely a dry gas producer with some liquids-rich production. Seven Generations added a lot of condensate (and oil) to the production mix. ARC Resources Realized Prices And Netback (ARC Resources Earnings Press Release Second Quarter 2024) What has clearly mitigated the effect of much lower natural gas prices compared to a year ago is the strong condensate and oil prices. While some key measures are lower than a year ago, the results here compare very favorably with much of the natural gas industry that is shutting in production and idling rigs while praying for higher natural gas prices. With this company, activities largely remain at normal levels even though production is now at the lower end of guidance. That shut-in production can quickly come back online. When combined with the beginning of production at Attachie in the next fiscal year, this company should produce some eye-popping production growth comparisons for such a large company. Summary ARC Resources posted an earnings decline that was a far better performance than much of the natural gas industry. The combination of very low production costs combined with the amount of oil and condensates produced have made for a rather easy route through this period of lower natural gas prices. Probably the biggest consideration is that the company is still profitable and making a decent (even if low) return on assets for what is widely regarded as a market bottom for natural gas prices. The diversification brought on by the Seven Generations acquisition has clearly made a positive impact. This company remains a strong buy for its continued industry outperformance. It is difficult to overpay for an investment idea during an industry downturn because the stock will most certainly trade much higher when natural gas prices recover. The investment grade rating and dividend are essentially \"icing on the cake\" compared to the appreciation available when natural gas prices recover. Risks Any upstream company is subject to the volatility and low visibility of future commodity prices. Any severe and sustained downturn could materially change the company's outlook. Mitigating that risk is the fact that the company produces oil and condensate in large enough amounts to diversify away from some natural gas pricing volatility. For this company to do poorly, all the products would have to suffer a downturn at the same time. The risk of that is far reduced from any one commodity product suffering a cyclical downturn. Also mitigating the price risk is the exceptionally low production costs that this company has. The major risk here is that the company runs out of low-cost locations at some point in the future. But that would mean that the technological advances that periodically sweep the industry would stop. That is a likewise unlikely scenario. While there are always risks when investing in a company that sells to the fast-moving commodity industry, ARC Resources Ltd. is in one of the better positions to do that. The investment grade rating shows that.  Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2462466555"}