In honor of $AR's 52 wk high.

Here's something else I've been thinking about.

AR has relatively low leverage to rising NG prices in the short run as it pertains to cash flow (only sort of true given price exposure to NGLs) because of their hedge book.

But their book value has tremendous leverage to the space, because of their 29% ownership stake in $AM.

That stake is valued at $1.01bln vs AR's market cap of $1.19 bln.

So even after the huge move in AR, their stake in AM equates to 85% of their market cap.

Because the stake is such a high %, and the high correlation between the two, any move higher in the price of AR won't actually increase the valuation. Crazy.

In fact, given that the value of AR's other assets will also increase if we are indeed in a structural bull market for NG, P/Book will actually fall while the share price rises unless AR can begin to SIGNIFICANTLY outperform AM.

As mentioned in a prior thread, when AR was trading in the $20s during the summer of 18, it was trading at a P/B of .9. Today it's less than .19 based on Q2 earnings, so actually trading south of that (for the exact reasons mentioned in this thread).