RE:RE:Peters Report - ARX has Brain Dead ManagementThe way i look at it is like this, in the 4th quater of this year, ARC has about 45,000 boe of oil WTI sold at roughly 50 dollars U.S.
If the price of oil stays above 80 dollars for the quater, they have lost 30 dollars U.S. a boe, on those liquids. 37.5% of the price is lost because of their hedging strategy. That not all you have to add the royalities associed so add another $3.75 (12.5% or 30 dollars) to the hedging loss. So as a result of their hedges that are loosing $33.75 U.S a for 45,000 boe in a 91 day quater, or 42% of the value of the commodity destroyed by hedging. They the same strategy out 3 years, so the company is hooped, they need to increase produciton to get out of the stupid hedges.
45,000 *33.75 U.S. * 91 day /exchange 80.5 = 171 million dollars they will loose in Q4, more money than they pay yearly in dividend to the shareholders. That sounds like pretty expensive share holder insurnace policy.
45000 boe of liquids than net 46.25 U.S. , so you have destroyed your liquids torque, and now you premium condensate is returning less than heavy oil . Gas at $7 dollars would be the same returns.
They have basically destroy to liquids premium, and ultimately rob shareholders of return.
Worst managed company in the patch, Peter confirms their dismal strategy has failed, i am moving on because thos 45,000 boe of condensate, have had the upside destroyed with hedging
I am not use to investing with dummies, i will focus all my attention on POU and ERF adn CVE. They have intelligent management.
IMHO