RE:RE:RE:RE:RE:RE:RE:FFO says it all - based on Q3 Numbers - Its a StealGas Market Strategy, really sets the coporate price for gas futures, the price gas companies sell for. That why when they release their earning they alway include the corporate realized price for their Natural gas.
ARX Price $1.78 mcf
TOU Price $3.19 mcf
NVA Price $1.92 mcf
VET Price $6.57 mcf
The price you sell your production for directly impacts FFO, and that is why a company like VET can have rougly a 2 billion dollar market cap and FFO of 275 (46%) of ARX's FFO of 592 million, which has a much higher Capex obligation to maintain that prouction.
Essentially ARX would not of had the cash to buy back any meaningful amount of shares it it did not sell an asset.
If you are telling me that the price you sell you commodity is not important to investor, i think your wrong. Your also telling the wrong set of investors here, who are doing meaningfull buybacks the have a direct 2% gain on production per share a quarter, and they have been doing that in a compounded nature quarter of quarter with roughly using only 25% of their FCF. They have a magic balance formula (Save a Little, Pay a Little, Buy a Little) Putting cash on the balance sheet for future optionality, Pay a dividend that is better than ARX's, buy back 2% of their shares a quarter.
What could ARX do if it spend 25% of it FCF last quarter? 134 million / 4 = 33.5 million. Well they really could not buy to many shares (1 million?). However 592 million share * .19 dividend = 112 million dividend to pay a .19 cents dividend, did they really have any money to buy back shares without an asset disposition in Q3?
Why do you really need to come to the VET board and tell us ARX is what we should be buying, i can tell you why i would not buy it and the answer is $1.78 realized corporate gas price, with 250 MMcf shut in last quarter of some of the cheapest gas produced, that could not be sold or marketed for a profit by one of the largest gas companies in Canada. The proof is in the results, and performance in Gas marketing.
I am way more comfortable with an investment in VET than ARX, and they are selling gas into a market that pays $17 mcf and where they can hedge at 15 dollars. What is the the value of ARX hedges for gas today? Its all about what you get when you sell your gas...
IMHO
MHP