Arc Resources Ltd (ARX.TO)

In the penalty box, having some issues developing some of its resources.

They reported earnings a few weeks ago. Decent earnings, but withheld guidance of a new project. Shares dropped 10%, which was way overdone. This new project still has value. Patience will be rewarded. Is adding on this weakness.

Underperformer for a long time. He'd move on, better places to be. It'll take a long time for natural gas to expand in Canada and allow companies to sell at higher prices. Too early for this space. Focus on upper-tier companies such as CNQ. 

Mike isn't a quick-money guy, he's a long-term investor. Sometimes he gets lucky, buying something and it goes up a lot in a short time.

Extremely well run. Likes what it's doing with assets in very safe geographies. Problems with the Attachie property, and the market's soured on the name. That needs to be fixed, and management is capable of that.

Both are great companies. Owns neither right now. See his Top Picks for 3 US gas names and why he prefers US over Canada for natural gas.

Reasons to be bullish on nat gas, with LNG 2 ramping up. Better valuations south of the border. 

Issues with its Attachie project, which is supposed to be the next big growth platform for the company. Geological surprises, very expensive mistakes. Will know in 6-9 months if errors have been fixed; if yes, then it's off to the races. Stock's discounting a failure in that project, so it represents deep value.

As a fund manager it's challenging, as this could be dead $$ until there's a resolution. If you own it and you're patient, sit on it and collect the modest dividend. He'll revisit it for his fund after problems have been resolved.

See his Top Picks.

His favourite Canadian oil & gas company. Probably best-run mid-tier oil and gas company on the planet.

Natural gas just had a big pullback in the US and prices have been weak. Natural gas may well be a 2026 story. Stocks in the sector have consolidated going back to 2023. Probably needs a bit more time.

Canadian energy producers have really significantly outperformed what's happened to gas and oil themselves. That's a good sign longer term. His firm has about 10% energy exposure, more in large-cap oil. You want to take advantage of bull markets, and this sector isn't rocking and rolling just yet.

Trimmed slightly, still holds. Very high quality. Teething problems with Attachie project, so it's in the doghouse till it proves the economics of that play. Still sees very good upside, but knows it might lag the next quarter until produces better well results. 

Now trading at a discount. For M&A, would be at the top of his list to acquire (but don't buy for that reason alone).

Has been buying dips the past year, but doesn't see long-term growth. North America is oversupplied in natural gas. Trades in a range. Buy around $25 and sell in the low $30s.

Stock's down on Attachie issues and low price of natural gas. She'd take a position today. Short-term blip, but long-term thesis still intact. Nat gas price is higher in US, as they have more LNG facilities -- we're working on this in Canada.

High-quality assets, strong balance sheet, drilling inventory of over 15 years. She's been adding around $24. Probably her favourite nat gas holding.

Great company, well managed. Nat gas stocks have been consolidating for months. If they break out at some point, he'll start adding. Doesn't hold this one, but still has a pretty significant energy weighting (predominantly in oil). See his Top Picks.

Stumbled -- it is meaningful, but not so much so in the grand picture. Really sold the sizzle of Attachie to the market, but has had teething issues. Company thinks it's fixed, but will take time (perhaps another 3-4 month) to prove that to the market. Probably in a holding pattern during that time. CEO bought $1.1M of stock, a good sign.

Long-term value in this name, may struggle in short term. Trades at 4.8x cashflow. If fixes prove successful, could see a multiple of 7x in next 1-2 years.

(Note the short timeframe.)  This one moves like a yo-yo. A great trader, classic swing-trader stock. Chart shows what predictable support it has. Trapped in a zone, but still likes it. Natural gas (the commodity) has started to move. This will follow because it's a producer. Meanwhile, you just have to grit your teeth and be patient.

His colleague Craig (the fundamental guy) loves the stock.

The production guidance was largely self-induced by the company, due to low prices. It limited its exposure to Canadian markets and curtailed volumes at its Sunrise facility. We like ARX's valuation, cash flow and dividend (just raised). The balance sheet is in good shape. Other than the usual cyclicality of the sector, there is not a lot to dislike. We would be fine owning it and TOU, which remains our favourite. PEY is also showing a lot of strength right now. 
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