RE:RE:RE:RE:Kelts is projected to growth Commodity Sales SignificantlyI appreciate you frustration, but you will find that hedging requires expertise in hedging an (call, puts, spreads, etc) most companies do not have the expertise in house and hedging is done in a hap hazard way.
I think this is a great quarter to look at companies that hedged gas properly, the only ones i have seen that have reasonable hedges in place are TOU and VET.
In fact in Europe VET has an objective to hedge 60% of their forward production because they can did it at $15.52, i asked them why they don't hedge 90% and they said it introduces risk to the operationally if they do it and have issues.
TOU you can see the hedges they had in place for gas, their realize gas price was $3.19 a mcf (3rd quarter), where ARC realized price was $1.78, in ARX confrence call they said in if they didn't shut in 250 MMcf of gas Sunrise their realized price would of been lower. Thats about 156 million difference in FCF essentially (ARX-TOU price), and it does not account for the 250 MMcf shut in. Arc could of produced about 20% more gas (250 MMcf shut in) in Q3 but they could not get a price that one of the cheapest operating gas plants in the industry that could make money. So if your frustrated with Kelts hedging you have a great time with Arx hedging.
I think your points are valid, and i believe that Kelt will be of the size that they can hire the right person to work on hedges and marketing. AAV did not have a good gas price either, and these are suppose to be gas waited companies with gas marketing and pipeline optionality. Kelt is a little more oil weighted.
I think you have insightful and valid feedback, i would encourage you to talk to management and express your concerns, but I don't think it would of make 100 million difference this year. Kelt had issue with production numbers this year, gas plants not resouce held their numbers down.
Good for them the balance sheet was pretty stellar, once the plant comes on expect an over 50% increase in petroleum sales.
IMHO