Valued at a market cap of $13 billion, ARC Assets (TSX:ARX) is a Calgary-based vitality producer. Within the fourth quarter (This fall) of 2025, it reported manufacturing of 408,000 BoE (barrels of oil equal) per day, representing 7% year-over-year development and 10% on a per-share foundation. Full-year free money move virtually doubled to $1.3 billion, whereas it returned 75% of this money to shareholders by way of buybacks and dividends.
ARC Assets operates as Canada’s largest pure-play Montney producer with over a million internet acres throughout Alberta and northeastern British Columbia.
The corporate owns and operates important infrastructure throughout its asset base, making a low-cost construction that rivals can’t match.
Throughout This fall, ARC realized a pure fuel worth of $3.77 per thousand cubic ft (Mcf), almost $1.50 above AECO (Alberta Power Firm) pricing, in response to the corporate’s earnings name.
CEO Terry Anderson defined the technique: “In 2025, we curtailed almost 400 million cubic ft a day of pure fuel at Dawn during times when pure fuel costs have been low. This highlights our disciplined method of specializing in profitability over BOEs.”
This self-discipline enabled ARC to defer roughly $50 million in capital expenditures whereas preserving sources for improved pricing. Most producers lack the infrastructure flexibility to make these strikes.
The bull case for the TSX vitality inventory
ARC’s pure fuel diversification technique is anticipated to achieve an inflection level in 2026 and 2027.
- The corporate commenced deliveries to LNG Canada by means of its Shell settlement throughout This fall.
- The bigger catalyst arrives in 2027, when ARC begins delivery pure fuel to worldwide markets by way of Gulf Coast LNG services.
- These provide agreements present publicity to international LNG pricing somewhat than Western Canadian spot markets, representing a structural margin enchancment that’s troublesome to quantify in as we speak’s valuation.
- Notably, ARC’s Kakwa operations exceeded expectations in This fall with manufacturing hitting 215,000 BOE per day, up 10,000 BOE per day quarter over quarter.
- ARC reported document reserves throughout all classes, with proved developed producing reserves rising by 15% and proved plus possible reserves rising by roughly 10%.
- The corporate calculated a before-tax internet current worth of $39 per share for 2P (proved plus possible) reserves, primarily based on roughly 25% of internally recognized stock.
- With over 30 years of Montney stock and minimal reserve reserving at Attachie up to now, ARC’s useful resource base helps many years of worthwhile improvement.
Monetary power allows capital returns
ARC ended 2025 with a internet debt of $2.9 billion 2025 which is lower than one occasions its free money move. The corporate repurchased slightly below 20 million shares for $514 million throughout 2025 whereas paying $452 million in dividends. That represented the fifth consecutive 12 months of dividend development with an 11% improve in 2025.
Bibby outlined 2026 plans: “We plan to proceed to return primarily all free funds move to shareholders in 2026 … by means of a mix of a rising base dividend and share buybacks.”
At present strip pricing, administration tasks roughly $1.2 billion in free money move for 2026, regardless of sustaining a conservative capital program of $1.8-$1.9 billion.
ARC maintained company manufacturing steerage of 405,000 to 420,000 BOE per day for 2026, with capital unchanged at roughly $1.8 billion.
The corporate’s capacity to take care of company steerage whereas slowing Attachie improvement demonstrates the power of its core enterprise, notably at Kakwa, the place over 15 years of improvement stock supplies development choices.
The Silly takeaway
For buyers searching for publicity to Canadian vitality with infrastructure benefits, diversified markets, and a observe document of capital returns, ARC’s 2026 setup seems compelling. Analysts monitoring the TSX inventory forecast free money move to extend from $1.1 billion in 2026 to $1.51 billion in 2028.
On this interval, its annual dividend per share is projected to increase from $0.84 to $0.92. Given a ahead yield of three.7%, the Canadian dividend inventory trades at a 33% low cost to consensus estimates. If we regulate for dividends, cumulative returns may very well be nearer to 36%.