Canadian ARC Resources Reports Higher Q3 Loss
Canadian senior producer ARC Resources said November 6 it had a net loss in Q3 2020 of C$66.1mn (US$50.7mn), up from a C$43.5mn loss in the second quarter and a C$57.2mn loss in Q3 2019.
But it sees enough upward momentum in North American natural gas markets to modestly increase both its Q4 2020 and full-year 2021 capital budgets to take advantage of the improving outlook.
“The North American natural gas market is structurally improving, with demand expected to outpace supply, thus providing significant momentum into 2021,” ARC said in its earnings release. “While near-term pricing volatility is still expected, improving natural gas fundamentals are expected for 2021 and beyond as the supply/demand balance normalises.”
Through nine months this year, ARC’s capital expenditures reached C$266.5mn, close to its revised capital budget of C$300mn set in March. But it has increased that 2020 budget by $50mn, largely to accelerate multi-well pad drilling at its Dawson and Sunrise assets in the Montney fairway of northeastern BC.
“By accelerating these capital projects that would otherwise be part of ARC’s 2021 development plan, ARC will be able to maximise throughput of low-cost natural gas during the winter months to capture the anticipated strength in natural gas pricing,” it said.
Although ARC won’t finalise its 2021 capital budget until Q1 2021, its board has approved a budget that will range between C$375mn and $425mn and that will focus on maximising the generation of surplus funds from operations.
About 80% of the budget total will be directed at profitable half-cycle investments in the Montney, while other capital will be used to complete two minor facility optimisation projects. The planned budget range is expected to deliver average daily production next year of between 158,000 barrels of oil equivalent (boe)/day and 165,000 boe/day, of which about 80% would be natural gas and 20% crude oil and liquids.
In Q3 2020, ARC produced 158,444 boe/day: 708mn ft3/day of natural gas, 15,373 b/d of crude oil, 14,831 b/d of condensate and 10,208 b/d of natural gas liquids.