ARC Resources Ltd T.ARX

Alternate Symbol(s): AETUF

Energy Oil & Gas E&P

ARC Resources Ltd. is a Canadian energy company. It is focused on the exploration, development, and production of unconventional natural gas, condensate, natural gas liquids (NGLs), and crude oil in western Canada. Its operations are focused in the Montney region in Alberta and northeast British Columbia. Its operations in Alberta are located near Grande Prairie and the region includes Kakwa and Ante Creek. Kakwa is a condensate-rich and high-deliverability natural gas play with top-tier development opportunities. Its operations in northeast British Columbia are located near Dawson Creek and the region includes Greater Dawson, Sunrise, Attachie, and Septimus and Sundown. The Greater Dawson operating area includes Dawson Phases I, II, III and IV and Parkland. The Attachie is a condensate-rich, natural gas play primed for large-scale development. Sunrise is a dry natural gas play with a low-cost structure, well deliverability and direct connectivity to liquefied natural gas Canada.

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ARC Resources Ltd > Heat Wave = Increased Nat Gas Consumption

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Comment by GunnerGon May 15, 2022 10:36pm

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Post# 34685411

RE:RE:RE:Heat Wave = Increased Nat Gas Consumption

More numbers when you said previously all production was hedge loosing $11.35 per boe.

Now your HEDGING that post.

Wait three minutes for the new theory and set of numbers. ROFLMAO

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