06:16 AM EDT, 05/16/2025 (MT Newswires) -- National Bank of Canada on Thursday raised its price target for ARC Resources ( AETUF ) to $35 from $33 and maintained its Outperform rating after the company agreed to buy Strathcona Resources' ( STHRF ) Kakwa assets for $1.6 billion in cash.

The deal, expected to close in early July, provides ARC with 40,000 barrels of oil equivalent per day of liquids-rich production from assets adjacent to ARC's existing Kakwa development, as well as an additional 93,000 net acres and processing infrastructure in the area.

The transaction implies $40,000 per boe/d and an estimated price-to-cash flow value of around 4-5.0x, the bank said.

National Bank said it expects buybacks will slow as debt repayment becomes a priority, with leverage remaining less than 1.0x debt-to-cash flow next year.

The bank does not expect any material changes to the long-term development plans across the portfolio in an updated guidance from ARC due early July.

On Thursday, ARC rose 3.1% to $28.60 in Canadian trading.