MyHoneyPot wrote: 2023 Quarter 1
Oil Liquids WTI Only (56% of hedges fall off) That is 19,137 boe that is currently hedged at $60 U.S.
Example Case (Oil Only) WTI $85 dollars that will add about 19137 *25 *1.38 * 365 = $240 million dollars (2023)
240 million/650 shares = 37 cents a share improved FCF in 2023
340 million dollars were realized in
OIL risk management contracts for oil in the first six month ot 2022.
Say it works out to 600 million for the year (2022) because of lower oil prices second half of year. (discounted 12% first half)
So if 56% of the Oil hedges come off that would be 336 million in FCF if the prices are the same in 2023
Gas Hedges (38% of gas hedges are roling off in 2023) Gas Hedges 2020
40,000 GJ $2.52
30,000 Gj $2.12
15,000 $3.13 U.S.
90,000 $2.53 U.S.
38% of the gas hedges are rolling off at the end of the year.
$305 million in costs for gas hedges in first 6 months of year, that is 610 million for the year projected (2022)
That mean 231 million in reduced hedging losses in 2023 if prices stay at the same level. That is another 36 cents a share for 2023.
2023 Outlook So it looks like hedging losses for 2023 will be almost 500 million dollars less. ARX will have an increase in FCF of at least 70 cents a share just based on the hedge book and assuming 650 million shares. (Pretty good considering the dividend is on 48 cents a year)
If they buy back 10% more shares that will add and additional 11% FCF to every share that ARX owns.
Currently they have 1 billion dollars in risk management liability (June 30, 2022) on the balance sheet, in Q1 2023 this will be significantly lower, less than 500 million (guess) and should improve the balance sheet a lot and be a boost to the earnings.
This will make a big difference to earnings and FCF and earning, because those hedges had a real huge cash cost.
ARX Potential to Double ARX has a real potential to double, Kakwa is going to starts ramping up, and we get resolution with Attachie, it could go a lot higher.
Growth per share When ARX did the transaction with VII generation they had roughly 720 million shares now they have 650 million shares. If they take that share count down to 580 million shares that is effectively 20% growth in terms of production per share.
The hedges coming off will have a impact on earnings growth per share, that will be significant, at least 50-65 cents per share is my guess.
The balance sheet is going to drop 500 million in risk management liability, that represents more than 75 cents a share in reduced hedging losses.
So it looks to me that the hedge loss liabilities, really start rolling off NOW (This Quarter) and you will see that number come down quarter after quarter. Which will give a big booast to earnings.
ARX is way to cheap, their debt levels are great.
I expect a double between now and the end of Q2 2023
Alliance Take Away
I noticed the alliance take away contract kicks in this quarter, does anyone know the impace that has on costs? or the potential to lock in production?
IMHO