With crude surpassing $60 per barrel in Tuesday’s trading session, it looks like the worst of the carnage in the oil market could be behind us.

But that doesn’t mean that many of Canada’s producers are in the clear. For companies with a high cost of production or iffy balance sheets, crude at $60 per barrel is a nice start, but they’ll need the commodity to average $70-80 per barrel to get back to profitability. Most of these companies cut their dividends in the depth of the crisis, sending income-oriented investors fleeing to the safety of some of the more stable names in the sector.

Arc Resources Ltd. (TSX:ARX) is one of those stocks that managed to survive the worst of the crisis without cutting its dividend. But if oil remains around the $60-per-barrel mark, is the 4.9% dividend safe? Let’s have a closer look.

The skinny

In 2014 Arc generated more than $1.1 billion in cash from operations, leading to a year of record profits. Earnings came in at $1.20 per share, crushing 2013’s mark of just $0.77 per share.

But most of those earnings were reinvested back into the company. Once it paid for its capital expenditures, Arc only generated about $70 million in free cash flow. After paying out more than $220 million in dividends, that leaves a shortfall of $150 million, or about $0.40 per share. That’s not great, especially considering that 2015 will undoubtedly be worse.

But if we dig a little further, the future doesn’t look nearly as bleak. The company recently reported first-quarter numbers that featured record production, a focus on low-cost operations, and a drastic reduction in projected capital expenditures to just $550 million over the course of 2015. These are all good signs, but are they enough to maintain the dividend?

2015 outlook

To perform a stress test on Arc’s dividend, let’s assume the company can only maintain its first-quarter results throughout the whole year. Yes, I realize that the price of crude is currently higher than it was at any point in the first quarter, but for tests like this it pays to be conservative. And besides, Arc has quite a bit of natural gas production, which hasn’t recovered as much as oil has.

During the first quarter Arc generated $191 million, or $0.57 per share in funds from operations. Annualized, that works out to $764 million. Once we deduct the company’s planned capital expenditures of $550 million, we get a projected free cash flow of $214 million.

But the company issued 17.9 million shares in a bought deal back in January, which increases the amount of dividends it has to pay even if the payout stays the same. During the first quarter shareholders elected to take approximately $90 million of the $101.6 million worth of dividends in cash, using the rest to automatically buy new shares via the share-repurchase plan.

Based on that, we can assume the company will pay out $360 million in dividends in 2015, while only generating $214 million in free cash flow. That’s a shortfall of nearly $150 million. This isn’t a great scenario in the long term.

But as a temporary situation, it should be fine. The company has more than $1.3 billion worth of borrowing ability on its line of credit, and it isn’t anywhere close to breaching other debt covenants. As long as oil recovers at some point in 2015, Arc’s dividend should be pretty solid.

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Arc should be able to make it through the crisis with the dividend intact, but it's still a little risky. Perhaps investors would be better off with more secure names.

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Fool contributor Nelson Smith has no position in any stocks mentioned.