Tudor, Pickering, Holt on Thursday reiterated its buy rating on the shares of ARC Resources (ARX.TO) with a C$30.00 price target following third-quarter results from the Western Canadian natural-gas producer.

"With Q4'24 and FY'25 guidance in-line and reflecting the late-Oct commissioning of Phase I, we'd look to beats across the board on Q3'24 results to drive outperformance today. In Q3, ARX delivered CFPS of C$0.99, well above consensus (TPHe/Street C$0.96/C$0.88), with the delta to our model driven by the increased volumes (327mboepd well above TPHe/Street 321/319). Production included ~250mmcf/d of curtailments at Sunrise due to low nat gas prices, production which has been restored as of mid-Oct. On capex, ARX printed C$459MM vs.TPHe/Street C$489MM/C$500MM, and returned C$220MM in distributions to shareholders, representing ~103% of free funds flow. Operationally, Attachie Phase I was commissioned late Oct, with drilling concluded for all start-up wells and completions on the final start-up pad to commence mid-Nov. Current production at Attachie is ~20mboepd and will increase towards the ~40mboepd of productive capacity, keeping prior Q4'24 production guidance of 380-385mboepd intact, and in-line with consensus 384mboepd. Looking further ahead, FY'25 capex guidance is now C$1.6-1.7B, at the low end of the prior C$1.6-1.8B range for expected production of 380-395mboepd; both in-line with consensus C$1.7B and 388mboepd of production, respectively. Breaking this down, Attachie will see ~C$360MM of capex for 37.5mboepd of production (TPHe market remains interested in Phase II color on the call, which is to be included in the 2026 budget with an on-stream date in 2028), Kakwa will see ~C$800MM to sustain 170-175mboepd, and ~C$500MM will be allocated to other Montney towards sustaining production," analyst Jeoffrey Lambujon noted.

(MT Newswires covers equity, commodity and economic research from major banks and research firms in North America, Asia and Europe. Research providers may contact us here: https://www.mtnewswires.com/contact-us)

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