RE:RE:RE:Heat Wave = Increased Nat Gas ConsumptionThanks for the numbers. i am sure they are as accurate as can be.
I don't think the record hediging losses are in dispute but how much has already been accounted for?
Just because there are hedging losses does not mean that they will not net a profit.
I am also not sure it is afir to blame management for hedges that have reportedly come with the VII aqcquisition. Were they not rquired for VII's debt that ARX renogotiated already.
It is entriely possible that VII was going to be in much more trouble before ARX rescued them.
We may all have to wait for more proceeds connected to the deal. As if the over 150% share price accreation was not enough.
GLTY and all longs
MyHoneyPot wrote: ARC's Gas Hedging Issues
448 Mmcf roughly is hedged at a price of about $3.20 Canadian. on the Gas side
They produced in Q1 about 1280 Mmcf
35% of their gas is hedged at $3.20
It is equalivent to 75,000 boe/day of production roughly at $19 dollars a boe ( 22% of their total production)
AECO GAS
200 Mmcf is hedged at AECO for a price of $2.44 Canadian
The june contract at AECO is around $6.90 Canadian or $4.46 difference
200/6 = 33,333 boe day hedged at $14.64 a boe for AECO Gas
That is a long way from the 41.40 a boe gas is currently trading at.
Loosing on AECO gas alone = 33,333* (41.40-14.64) = $892,000 day or Roughly 82 million/Quarter
Henery Hub Gas $7.62 U.S.
258309 Mmcf is hedged at Henery Hub for price of $2.80 U.S.
258309/6 = 43,051 boe day hedged at $16.80 U.S. boe for Henery Hub Gas
Henery Hub gas is currently trading for $45.72 U.S. a boe
Losses at Henery Hub alone = 43051 * (45.72-16.80) = 1,245,034 U.S. a day
Loss per boe is 28.92 U.S. a boe at henery hub. loss quarter = 114.5 million U.S.
Can dollars henery hub loss = $1,245,034 * 1.30 = 1,618,544 day
ARC Gas Losses Day = 1,618,544 + 892,000 = $2,510,544 Canadian day
At current prices for a 92 day quarter they would loose $231 million on just Gas Hedged
Q2 will be a new record high hedging loss for ARX
There is only really two ways out of this to reduce the impact
Increase production at Kakwa, and add new unhedged production to offset the losses (YES)
Buy back the hedges in Oct-Dec and hope that backwardation protects you. The impact of doing this is that it keeps the cash on the balance sheet and moves it to future quarters, you are reducing hedging losses (Buying them back) and buying more FCF in the future. It is kind of an optionality play.
Disclaimer
Could be some errors, and these prices are what i saw on may 15, 2022. If the price for gas goes up this losses will go up higher.
IMHO