ARC Resources Ltd T.ARX

RE:MHP take on the results

[Squint1]

"Hedging realized losses were 272 million, this means if ARX didn't have those losses their FCF would likely of been around 900 million dollars. (272 - 27.2 royalities = 300 million)"

Hedging losses or gains do not increase or decrease royalties.  Provincial governments are not not going to compensate you for hedging gains or losses.  As below FCF would be $880.9 million before hedging losses - rather than 900 million.  Below is a reconciliation of the numbers.  Note the multiples where the stock is trading.  

				Annualized
Arc Resources		Q4 2022	Per Share	Trading Multiple
Cash flow from operating activites		$878.3	$1.39	2.82
Net change in other liabilities		$13.9
Change in non-cash working capital		$94.0
Funds from Operations - Cash flow		$986.2	$1.56	2.51
Gain on risk management contracts	($39.6)
less: Unrealized gain on Management contracts	$317.6
Realized loss on management contracts		$278.0
Funds from Operations before hedging		$1,264.2	$2.01	1.96
Capital expenditures		($383.3)
Free cash flow before hedging losses		$880.9	$1.40	2.81
Funds from Operations - Cash flow		$986.2
Property, Plant & Equipment	($373.8)
Exploration & Evaluation expenditures	($3.6)
Other	($5.9)
Capital expenditures		($383.3)
Free funds flow		$602.9	$0.96	4.10
Average shares outstanding (millions)		630.3
Current Share Price			$15.70
				Annualized
Arc Resources		2022 Year	Per Share	Trading Multiple
Cash flow from operating activites		$3,833.3	$5.78	2.72
Net change in other liabilities		$129.2
Change in non-cash working capital		($250.0)
Funds from Operations - Cash flow		$3,712.5	$5.60	2.80
Gain on risk management contracts	$999.0
less: Unrealized gain on Management contracts	$280.5
Realized loss on management contracts		$1,279.5
Funds from Operations before hedging		$4,992.0	$7.53	2.09
Capital expenditures		($1,441.9)
Free cash flow before hedging losses		$3,550.1	$5.35	2.93
Funds from Operations - Cash flow		$3,712.5
Property, Plant & Equipment	($1,419.7)
Exploration & Evaluation expenditures	($6.4)
Other	($15.8)
Capital expenditures		($1,441.9)
Free funds flow		$2,270.6	$3.42	4.58
Average shares outstanding (millions)		663.1
Current Share Price			$15.70