Valued at a market cap of $13 billion, ARC Assets (TSX:ARX) is a Calgary-based power 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 progress and 10% on a per-share foundation. Full-year free money circulation nearly doubled to $1.3 billion, whereas it returned 75% of this money to shareholders through 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 vital 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 toes (Mcf), practically $1.50 above AECO (Alberta Vitality Firm) pricing, based on the corporate’s earnings name.
CEO Terry Anderson defined the technique: “In 2025, we curtailed practically 400 million cubic toes a day of pure fuel at Dawn in periods when pure fuel costs have been low. This highlights our disciplined strategy 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 power 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 through Gulf Coast LNG services.
- These provide agreements present publicity to world LNG pricing reasonably than Western Canadian spot markets, representing a structural margin enchancment that’s troublesome to quantify in at present’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 file reserves throughout all classes, with proved developed producing reserves growing by 15% and proved plus possible reserves growing by roughly 10%.
- The corporate calculated a before-tax internet current worth of $39 per share for 2P (proved plus possible) reserves, based mostly on roughly 25% of internally recognized stock.
- With over 30 years of Montney stock and minimal reserve reserving at Attachie to this point, ARC’s useful resource base helps many years of worthwhile improvement.
Monetary energy allows capital returns
ARC ended 2025 with a internet debt of $2.9 billion 2025 which is lower than one occasions its free money circulation. The corporate repurchased just below 20 million shares for $514 million throughout 2025 whereas paying $452 million in dividends. That represented the fifth consecutive 12 months of dividend progress with an 11% improve in 2025.
Bibby outlined 2026 plans: “We plan to proceed to return primarily all free funds circulation to shareholders in 2026 … by means of a mix of a rising base dividend and share buybacks.”
At present strip pricing, administration initiatives roughly $1.2 billion in free money circulation 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 potential to take care of company steerage whereas slowing Attachie improvement demonstrates the energy of its core enterprise, notably at Kakwa, the place over 15 years of improvement stock supplies progress choices.
The Silly takeaway
For traders looking for publicity to Canadian power with infrastructure benefits, diversified markets, and a monitor file of capital returns, ARC’s 2026 setup seems to be compelling. Analysts monitoring the TSX inventory forecast free money circulation 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 modify for dividends, cumulative returns might be nearer to 36%.
