Lowering Our Fair Value Estimate on ARC Resources; Stock Remains in 3-Star Territory
After taking a fresh look at no-moat ARC Resources' first-quarter earnings, we are lowering our fair value estimate to CAD 9 from CAD 9.50. The change is driven by our lower forecast for price realizations due to pipeline shortages coupled with our increased forecast for operating costs. The shares are now trading near CAD 8, in 3- star territory. Accordingly, we suggest that potential investors remain on the sidelines. Although the company’s Montney production possesses a low-cash-cost structur...ARC Resources is engaged in the exploration for, development and production of crude oil, natural gas and natural gas liquids in western Canada. As of Dec 31 2011, net proven reserves for light and medium oil, heavy oil, natural gas and natural gas liquids were 87,905 thousand barrels, 1,801 thousand barrels, 1,197 billion cubit feet and 15,002 thousand barrels, respectively.
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