How much cash does ARC Resources really make, and what is a share of it worth?

The words on this page

Real cash (true cash)

What was left in the bank each year after every bill, every tax payment and every well drilled. Not profit, and not "cash flow" as companies usually quote it, which leaves the drilling out. The strictest number there is.

Required return

The yearly return you insist on for taking the risk. A dollar promised in ten years is worth less than a dollar today; this rate says how much less. 9% is a common professional figure for a large Canadian producer; the reserve engineers use 10%.

Well life (reserve life)

How long the wells keep producing. After the life you choose, nothing is counted. Year-end 2025 reserves were 1,444 million boe proved and 2,277 million boe proved plus probable, against 2025 production of 374,336 boe a day (about 137 million boe a year): roughly 11 years proved and 17 years on 2P.

What a share is worth

Every future year's cash, shrunk back to today's dollars at your required return, added up, less the debt, less the cost of cleaning up the wells, divided by the number of shares. Pay less than this and you earn more than your required return; pay more and you earn less.

Where the default growth comes from

ARC guided 2026 production to 405,000 to 420,000 boe a day, roughly 10 per cent above 2025 as Attachie ramps and the Kakwa purchases land, so we default the first decade to a more sustainable 4 per cent.

The arithmetic, step by step

1. Count the real cash each past year: cash generated by operations as reported, plus interest paid put back, minus rent on leases, minus every dollar spent on wells and plants. Buying and selling assets is shown separately.
2. Project it. The starting cash you choose (an average of the history, or the latest year) grows at your growth dial for ten years, then at the long-run rate for as long as the wells keep producing. Nothing is counted after the well life ends.
3. Bring it back to today. Each year's cash is shrunk by your required return, counted at mid-year because cash arrives through the year rather than on 31 December.
4. Turn it into a share value. Add up the shrunk cash; take off net debt of C$2,634M; take off the C$526M cost of cleaning up the wells if that switch is on; divide by 566.4M shares.
5. Work it backwards. "The growth today's price assumes" is the ten-year growth rate at which this start is worth exactly the share price.

Where the numbers come from

• The Shell takeover CLOSED and ARC's shares were delisted from the TSX on 4 September 2026 (the terms, agreed 27 April 2026: 0.40247 of a Shell share plus $8.20 cash per ARC share; shareholders approved 14 July 2026). There is nothing left to buy; this model stands as the record of what the business looked like going into the deal, priced at its final trading range.
• ARC merged with Seven Generations in April 2021. Years before 2021 describe a company roughly half the size with far fewer shares, so per-share history spans two different companies.
• Capital spending is development plus exploration and evaluation spending from the cash flow statements; acquisitions sit in their own row. 2025 acquisitions are mostly the $1.6 billion cash purchase of Strathcona's Kakwa Montney assets.
• Net debt is total debt minus cash and short-term investments and excludes lease obligations, matching ARC's own net debt measure ($2.9 billion at year-end 2025, $2.6 billion at June 30, 2026). Figures for 2020 to 2024 come from aggregated data and may classify some obligations differently.
• Lease payments before 2019 are zero because leases only moved onto the balance sheet when IFRS 16 arrived in 2019.
• Diluted weighted share counts for 2020 to 2025 are taken from the annual reports; 2016 to 2019 from the five-year tables in the 2017 and 2019 annual reports.
• Shares outstanding of 566.4 million is the diluted weighted average for the second quarter of 2026 from the Q2 2026 report; basic shares outstanding at June 30, 2026 were 565.9 million.
• Production and reserves come from ARC's year-end 2025 release; per-year production history is not carried in this model.
• Analyst targets: average C$32.94 across 18 analysts (stockanalysis.com consensus, 30 August 2026).

For the technically minded

The method is the one used to evaluate capital projects, from Ted Lawrence, The Business Guide to Economic Evaluations: Projects, Leases, Tariffs and Acquisitions (2017). "Real cash" is the book's project cash flow (chapter 3) with depreciation, debt servicing and debt-like leases restructured out (chapters 4, 5 and 19); short operating leases stay in as a cost of producing, a chapter 19 judgment. The value per share follows the share-purchase evaluation of chapter 20: present value of the company's cash flows at the cost of capital (chapter 10), mid-year discounting (chapter 12), plus non-required assets, less net debt and the decommissioning liability. "What you gain or lose" is the bid-curve NPV of chapter 20; "when you get your money back" is the discounted payout of chapter 13; the bars follow the project profile of chapter 6. The reverse solve on growth is a plain reverse DCF.

Discount-rate anchors: 9% is a common cost-of-equity figure for a large Canadian producer and 10% is the reserve-report convention (PV10). The long-run rate defaults to 0% here: a depleting resource should not be assumed to grow forever, so anything above zero is a judgment you make with the dial.