Lowering FVE for ARC on Lower Realizations; Stock Overvalued
After updating our model to incorporate lower price realizations, we are lowering our fair value estimate to CAD 12 per share from our previous estimate of CAD 13 for ARC Resources. Despite the recent fall in energy stocks, ARC is currently trading near CAD 13, which still represents a slight premium to our fair value estimate. Although the company’s Montney production possesses a low-cash cost structure and favorable economics, we remind investors that full-cycle break-even prices approximate $...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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