ARC Resources touts liquids rich gas and commits 100% FCF to investors despite project timing noise

ARC Resources is sharpening its message to investors, the money is in liquids rich gas, and the money is coming back to you.

With condensate weighted Montney wells at the core and long dated LNG exposure building, the Calgary producer says it will distribute essentially all free funds flow through its base dividend and buybacks, keeping its capital program tight while project timing debate plays out.

ARC’s emphasis tracks with a broader market shift toward assets that can monetize natural gas at premium prices and spin out steady cash.

ARC closed a Kakwa acquisition on July 2 valued at about C$1.6 billion, adding more condensate rich Montney inventory that improves margins and deepens runway.

The company has also ramped Attachie, a Phase I development designed around high liquids cuts that combination explains why some investors are rotating from dry gas champions toward ARC’s blend of oil linked condensate and gas.

Our recent view that pick shifts to liquids rich ARC Resources mirrors the company’s argument that condensate pricing cushions volatility and lifts corporate returns.

ARC reported average production of 357,228 boe per day and kept 2025 guidance at 385,000 to 395,000 boe per day alongside a revised capital plan of C$1.85 billion to C$1.95 billion, figures that underpin its returns first stance.

ARC has a long term supply agreement with an LNG Canada participant for 150 MMcf per day that commences with the terminal’s startup.

In TC Energy gas pipeline backbone including Coastal GasLink to LNG Canada underpins the long term case, Coastal GasLink ties Western Canadian molecules to Kitimat, and LNG Canada loaded its first cargo on June 30, 2025.

Statistics Canada’s July GDP report showed support activity from the terminal’s first full month of operations, a small but telling data point we noted in Canada’s GDP rose 0.2% in July as goods producers rebounded.

Beyond Kitimat, ARC has signed a long term tolling agreement at Cedar LNG and a matching sale and purchase contract with ExxonMobil’s LNG arm for the offtake. Those deals layer in international pricing exposure and diversify away from Western Canadian benchmarks.

ARC’s capital framework rests on a simple sequence, protect the balance sheet, invest in highest return projects, and return essentially all free funds flow through the dividend and repurchases.

In 2025, management reiterated that approach and has been retiring shares under its normal course issuer bid while maintaining the payout.

The cadence depends on commodity strips and execution, but the through cycle goal is unchanged that policy, paired with liquids uplift and LNG access, explains why investors can model double digit free cash flow yields in midcycle scenarios without heroic gas assumptions.

Investors are still debating the cadence of LNG Canada’s initial ramp, the pace of Cedar LNG milestones, and integration work around Kakwa.

The larger backdrop favors systems tied to premium hubs and LNG nodes, which is why our sector playbook argues to play the power demand supercycle through infrastructure with firm contracts and clear line of sight.

Liquids rich Montney development and a growing LNG book should keep cash generation resilient, and the board’s pledge to return essentially all free funds flow sets a high bar for capital discipline.

The North American gas market is stitching tighter connections to global prices, and commercial moves like Texas LNG and Gunvor strike a 20 year supply pact show why export optionality matters.