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ARC Resources (AETUF)
OTHER OTC:AETUF
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Positive Factors
Financial Performance
ARC's Q4/24 production set a new record, driven by the strong ramp-up at Attachie and growth at Kakwa.
Market Position
ARC remains one of the top recommendations due to its mispriced shares reflecting a higher free cash flow yield compared to peers.
Share Buybacks
ARC is well-positioned to accelerate buybacks after bankrolling considerable free cash flow.
Negative Factors
Oil Market Volatility
Recent oil market volatility could push the timeline for Attachie Phase II back, particularly in the event of a sharper deterioration in WTI prices below the US$50/bbl level.
Revenue Projections
Revenue growth guidance for the fiscal year is reduced, affecting future projections.
ARC Resources (AETUF) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$12.65B
Dividend Yield2.39%
Average Volume (3M)21.67K
Price to Earnings (P/E)13.3
Beta (1Y)0.58
Revenue GrowthN/A
EPS GrowthN/A
CountryUS
Employees438
SectorEnergy
Sector Strength44
IndustryOil & Gas Exploration & Production
Share Statistics
EPS (TTM)0.50
Shares Outstanding584,970,000
10 Day Avg. Volume15,483
30 Day Avg. Volume21,673
Financial Highlights & Ratios
PEG Ratio0.59
Price to Book (P/B)1.98
Price to Sales (P/S)0.00
P/FCF Ratio16.75
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$24.81Price Target Upside14.70% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering9
ARC Resources Business Overview & Revenue Model
Company DescriptionARC Resources Ltd. explores, develops, and produces crude oil, natural gas, and natural gas liquids in Canada. The company holds interests in the Montney properties located in northeast British Columbia and northern Alberta; and Pembina Cardium properties in central Alberta. As of December 31, 2020, it had proved plus probable reserves of 929 millions of barrels of oil equivalent. ARC Resources Ltd. was founded in 1996 and is headquartered in Calgary, Canada.
How the Company Makes Money
ARC Resources Earnings Call Summary
Earnings Call Date:May 01, 2025
(Q3-2024)
| % Change Since: 19.04%|
Next Earnings Date:Jul 31, 2025
Earnings Call Sentiment Positive
The earnings call was largely positive, highlighting strong operational results, successful project completions, and significant growth in free cash flow and production. However, challenges such as weak natural gas prices and potential inflationary pressures on future projects were noted.Q3-2024 Updates
Positive Updates
Strong Operational Performance
ARC successfully commissioned the first phase at Attachie, increasing production to 20,000 BOE per day with plans to reach 40,000 BOE per day by year-end.
Dividend Increase
ARC announced a 12% dividend increase and continued share buybacks, reflecting strong shareholder returns.
Record Production Expected
2025 production is expected to be between 380,000 and 395,000 BOE per day, a 10% growth from 2024.
Free Cash Flow Growth
Free cash flow is expected to more than double to about $1.5 billion in 2025 at strip pricing.
Attachie Phase 1 Completion
Attachie Phase 1 was completed on time and on budget, a significant achievement in project management.
Negative Updates
Weak Natural Gas Prices
ARC curtailed production at Sunrise due to weak Western Canadian natural gas prices, impacting overall production.
Inflationary Pressures on Phase 2
Attachie Phase 2 is expected to encounter inflationary pressures compared to Phase 1, although costs are projected to remain flat.
Company Guidance
In the ARC Resources third quarter 2024 earnings call, guidance highlighted several key metrics and strategic initiatives. The company reported an average production of 327,000 BOE per day, with 89,000 barrels per day of light oil and condensate, marking a 20% increase quarter-over-quarter. ARC maintained its 2024 production guidance, aided by high deliverability at Kakwa, which averaged 180,000 BOE per day. They also announced a 12% dividend increase and continued share buybacks to enhance shareholder returns. The capital budget for 2025 is set between $1.6 billion and $1.7 billion, targeting a production increase to 380,000-395,000 BOE per day, with a 20% growth in condensate production and a 10% reduction in capital expenditures compared to 2024. The company expects to generate approximately $1.5 billion in free cash flow, promising to return this to shareholders through dividends and share repurchases. Furthermore, the Attachie Phase 1 project, recently commissioned on time and budget, is expected to produce approximately 40,000 BOE per day by year-end, contributing significant cash flow and improving margins. Looking ahead, ARC plans to advance Attachie Phase 2, expected to be included in the 2026 budget, with an on-stream date of 2028, further enhancing production and margin growth.ARC Resources Financial Statement Overview
Summary
ARC Resources demonstrates strong financial health with robust profitability, effective cost management, and a solid balance sheet. Revenue growth has slowed, which requires monitoring, but the company's prudent use of leverage and strong cash flow generation support its overall stability. Continued focus on managing capital expenditure and sustaining growth will be key to maintaining its financial strength.Income Statement
ARC Resources shows strong profitability with a stable gross profit margin of 48.9% and a notable net profit margin of 22.9% for TTM. Revenue growth is moderate at 4.1% from the previous period. The EBIT margin is solid at 30.4%, and EBITDA margin is robust at 55.4%, indicating effective cost management. However, the revenue growth has slowed compared to previous years, which could be a concern if the trend continues.78
Positive
Balance Sheet
The balance sheet is healthy with a low debt-to-equity ratio of 0.25, reflecting conservative leverage. Return on equity is substantial at 16.6%, indicating efficient use of equity capital. The equity ratio stands at 62.1%, showcasing financial stability and a strong asset base. These metrics suggest a well-capitalized company with prudent financial management.82
Very Positive
Cash Flow
Cash flow analysis reveals a positive trajectory with operating cash flow to net income ratio at 2.03, indicating strong cash generation relative to earnings. Free cash flow growth is impressive at 73.9% TTM, and free cash flow to net income ratio is 0.71, reflecting solid cash flow health. Nevertheless, the high capital expenditure reflects ongoing investment, which could impact short-term liquidity.74
Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 5.85B | 5.62B | 5.66B | 9.85B | 5.51B | 1.17B | Gross Profit |
| 2.86B | 2.73B | 3.33B | 4.80B | 2.62B | -362.20M | EBIT |
| 1.78B | 1.22B | 1.72B | 4.04B | 2.04B | -685.00M | EBITDA |
| 3.24B | 2.95B | 3.57B | 4.39B | 2.18B | -185.70M | Net Income Common Stockholders |
| 1.34B | 1.12B | 1.60B | 2.30B | 786.60M | -547.20M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 1.10M | 0.00 | 1.10M | 57.10M | -869.30M | 400.00K | Total Assets |
| 12.33B | 13.10B | 12.38B | 11.62B | 11.38B | 4.95B | Total Debt |
| 2.19B | 2.39B | 2.21B | 1.79B | 2.57B | 751.10M | Net Debt |
| 2.18B | 2.39B | 2.21B | 1.73B | 3.44B | 750.70M | Total Liabilities |
| 4.83B | 5.15B | 4.96B | 4.97B | 5.45B | 2.16B | Stockholders Equity |
| 7.50B | 7.95B | 7.43B | 6.65B | 5.93B | 2.79B |
| Cash Flow | Free Cash Flow | ||||
| 951.00M | 546.90M | 567.80M | 2.41B | 953.90M | 320.90M | Operating Cash Flow |
| 2.73B | 2.35B | 2.39B | 3.83B | 2.01B | 655.70M | Investing Cash Flow |
| -1.84B | -1.91B | -1.69B | -1.41B | -808.10M | -364.30M | Financing Cash Flow |
| -888.80M | -443.50M | -759.60M | -2.36B | -1.20B | -299.50M |
ARC Resources Peers Comparison
Overall Rating
UnderperformOutperform
Sector (57)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
| $12.65B | 13.30 | 17.25% | 2.39% | ― | ― | ||
57 Neutral | $7.23B | 3.16 | -4.49% | 5.63% | 0.82% | -49.15% | |
| $4.72B | 10.97 | 13.64% | 1.18% | ― | ― | ||
| $7.81B | 5.69 | 16.40% | 8.27% | ― | ― | ||
| $3.97B | 24.67 | 8.39% | 4.33% | ― | ― | ||
73 Outperform | C$24.26B | 18.84 | 8.35% | 2.38% | -8.29% | -30.52% | |
73 Outperform | C$3.85B | 12.95 | 11.17% | 6.83% | 2.80% | -7.94% |
* Energy Sector Average
Performance Comparison
AETUF
ARC Resources
21.53
3.69
20.68%
MEGEF
MEG Energy
18.53
-2.07
-10.05%
SPGYF
Whitecap Resources
6.34
-0.66
-9.43%
PREKF
PrairieSky Royalty
16.99
-1.60
-8.61%
TSE:PEY
Peyto Exploration & Dev
19.53
5.36
37.83%
TSE:TOU
Tourmaline Oil
64.30
0.21
0.33%
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.