Backwardation CVE - confidence buying back Think of it this way, buying back hedges in the futures market will have a direct impact on Furture cash flows, and will do more to booast a lagging share price then share buy backs.
Think about it, if i buy back 250 million in potential hedging losses in Q4 2022, that means that quater ARC will have at least 250 million more of FCF. Because of backwardation they will acctually likely make money on buying back the hedges.
- 250 more in FCF = 36 cents a share
- 250 million in share buybacks is roughly 14 million shares, or 1.4 million difference in dividend payouts quarter.
So buying back those hedges will accelerate the FCF quicker than anything else ARC can do.
Gas is not just as big an issue as the bad condensate hedges that ARX put in place, if they put their cash toward fixing their hedge book, rather than buying back shares, they would significantly accelerate the share price immediately because of a big increase in CF.
Take the hit one quater and buy back some of these horrible hedges and ARC will be trading at 25 dollars in no time.
IMHO