Lower gas prices offset their drilling success

Article Excerpt

ARC RESOURCES $8.30 (Toronto symbol ARX; Shares outstanding: 352.1 million; Market cap: $2.9 billion; TSINetwork Rating: Speculative; Dividend yield: 7.2%; www.arcresources.com) produces oil and natural gas in Western Canada. Its average output of 136,502 barrels of oil equivalent per day is 74% natural gas and 26% oil. In the quarter ended December 31, 2018, cash flow per share fell 6.3%, to $0.59 from $0.63 a year earlier. ARC’s output rose 2.3%. However, lower oil prices offset higher natural gas prices. The company’s long-term debt stands at $828.7 million, or a manageable 28% of its market cap. ARC also holds cash of $259.6 million. The strong balance sheet results from the December 2016 sale of all of the company’s properties in southeastern Saskatchewan for $700 million. ARC plans to spend $775 million on exploration and development in 2019. That’s up 14.0% from the $680 million it spend in 2018. The company’s focus on its high-return Montney properties in Northeastern B.C. should continue to spur production. The…

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