Diminishing Returns of Arc Hedging ProgramArc hedging program looks more like an income averaging program, and when you start the program with low energy prices, you have a bigger risk then simply protecting the downside commodity risk, ARC has actively destroyed the upside for the stock.
53 U.S. hedges when oil is trade at not of 82 dollars U.S. means, and if the royality rate is 12.5% you are paying is based on 83 dollars U.S., paying more than 10 dollars a boe in royalities when you have capped the upside of the barrel of condensate at 53 dollars. So you are almost paying 25% royalities because of a stupid hedging strategy.
Everytime the price of oil goes up you are reducing your revenue per boe, for those hedge barrel. It is destructing the revenue associated with your hedged Barrels.
ARC hedging plan is like a brain dead plan, and it done mechanically, and spead out over three years pure stupidity. That what happens when the CFO is managing it.
This hedging plan, is a example of why ARC need better management.
IMHO