2026 Outlook, Analysis and Estimates (all figures in Canadian dollars)
~$1.85B in Capex, forecasted as ~$1.65B towards D&C activity and ~$185MM towards non-D&C activity such as infrastructure, maintenance, seismic and corporate.
D&C focus continues in the Kakwa, with an estimated ~95 TILs and 4-6 rigs totaling $1.1B in Capex forecasted for FY26.
Capex tied to ARX’s BC assets (Dawson, Sunrise, Attachie) is forecasted at $550MM, including estimated 50-55 TILs and 1-2 rigs.
Capex tied to ARX’s Ante Creek assets is forecasted at $70MM, including estimated 8-10 TILs and ~1 rig forecasted over the second half of 2026.
FY26 capital program equates to ~410Mboepd, a 9% YoY production increase.
Production guidance continues to be driven by ARX’s Kakwa and BC assets, with Kakwa production forecasted to grow to ~205Mboepd, and the aggregated BC production from Dawson, Sunrise and Attachie increasing to ~185Mboepd.
Attachie asset continues to not meet production targets and Attachie-specific guidance has been removed.
Sunrise-specific production curtailments due to low gas prices could potentially impact 2026 production targets
ARX maintains an active hedging program with ~42% of natural gas production hedged for 2026.
Hedges largely tied to long-term LNG agreements, including 150MMcfpd with Shell and its feedstock working interest for LNG Canada Phase 1.
ARX is expected to nearly double its LNG production commitments via Cheniere Energy’s (NYSE:LNG) Corpus Christi Phase 3 LNG expansion, with 140MMcfpd committed to the LNG expansion project. Corpus Christi Phase 3 includes trains 5-7, which are forecasted to achieve commissioning and operational start in 2H26 (Train 5), followed by Trains 6 & 7 expected to be online at the end of 2026/early 2027.
ARX’s capital allocation strategy plans to continue emphasizing share buybacks to compliment its base dividend. This strategy is expected to distribute ~$1.1B between these two levers in 2026, with a modest ~$200MM forecasted for debt repayment. ARX’s FY26 forecasted net debt to cash flow from operations is 0.9x.
ARX’s valuation is comprised of a series of methods including a 50/50 combination of enterprise value/EBITDAX, free cash flow (FCF) yield, and debt-adjusted cash flow (DACF).
For FY26 and FY27, the EV/EBITDAX method uses a 4.3x multiplier. This assumes a continued downward trend from its 4-year peak in 2024 (5.1x) and 2025 (4.9x).
The FCF yield method uses an 8.6% multiplier. This assumes a continued upward trend from its 4-year low in 2024 (3.6%) and 2025 (7.1%).
The DACF method uses a 6.1x multiplier. This assumes a continued downward trend from 2024 (7.1x) and 2025 (6.3x).
Based on the series of valuation methods, ARX’s projected 2027 price target is estimated at $33/share.
Financial Statement Model Summary
Companies Mentioned
Arc Resources Ltd. (ARX)
Cheniere Energy (LNG)
Disclaimer: All information contained in this publication has been researched and compiled from sources believed to be accurate and reliable at the time of publishing. However, in view of the natural scope for human and/or mechanical error, either at source or during production, Patrick Enwright accepts no liability whatsoever for any loss or damage resulting from errors, inaccuracies or omissions affecting any part of the publication. All information is provided without warranty, and Patrick Enwright makes no representation of warranty of any kind as to the accuracy or completeness of any information hereto contained.
