ARC Resources is reducing its 2019 capital budget “within the backdrop of near-zero domestic AECO natural gas spot prices,” analysts with GMP FirstEnergy noted on Friday.
Alberta’s AECO price has averaged approximately $0.39/GJ so far in June, compared to US$2.34/mmbtu on the NYMEX, according to the Daily Oil Bulletin.
It’s a reflection of the ongoing crisis facing Canada’s natural gas industry.
In many ways the natural gas egress challenge is more acute than the problems being faced by oil producers, according to Peter Tertzakian, executive director of the ARC Energy Research Institute.
ARC announced it would reduce spending to approximately $700 million from $775 million.
Central to this is the deferral of its Attachie West Phase I facility, wrote GMP FirstEnergy analyst Robert Fitzmartyn.
The plant, on the B.C. side of the Montney play, previously had an on-stream date of Q2/2021.
“ARC had previously reserved $184 million in capex for Attachie entering 2019 ($129 million infrastructure + $55 million for a 6-well pad), but is hiving this back to ~$80 million, and instead moving forward with 10 wells, of which half will be completed,” Fitzmartyn wrote.