Dry Gas Pursuit of ARX managementKakwa 80% of ARX's Liquids
80% of Arx liquids production in Kakwa, 85% of their condensate lite oil is produced in Kakwa.
Management objects are to grow dry gas production and leave liquids production flat. That I what their action will accomplish.
Management Strategy Sell Low, shut in Produciton
Selling the floor on Kakwa at $50 dollar oil means the oil production is cost effective enough that at $50 dollars they can sustain operations, in the December presentation they suggest they can do this at less than $40-dollar WTI.
Capping the ceiling on Kakwa with a 2% decline objective, when we know we have more than 40,000 boe of ½ cycle liquids rich production capacity, suggest to the shareholders that management is pursuing the bottom of the barrel. Management efforts are all about saving $1 a boe base on 2% of the $50 dollar hedge.
Risk Reward - They need a Finance Person
Save $1 and lose $35 dollars
Management objective all along, is to save a 1-dollar U.S. and forfeit 35 dollars U.S. to the upside. A penny wise, 35 dollars upside a fool. Filling in the half cycle production would go a long way to mitigating the worst risk management in the entire industry.
Operations People Need a Christmas Miracle to Compensation for Management
While the operation teams works their tails off to get the decline reductions (2%), management we a stroke of a pen wipes out all their good work now and for years to come. Credit Bibby handy work for this accomplishment. He will never make back his hedging losses.
ARX Management is Misaligne with the World
While the rest of the world is pursuing Liquids Rich Gas plays, ARC management want to pursue dry gas like sunrise, and put a cap on its liquid’s rich growth of the company. That is exactly what their actions have done.
Their actions speak for themselves.
IMHO