ARC Resources Ltd T.ARX

Hedging losses

[Farmer12]

If you BUY a "PUT" hedge contract for 2023 which gives you the right to SELL oil at $47, for example, this protects you from downside risk if the price falls below $40. The gain or loss is only realized if you SELL TO CLOSE that contract In other words this is a form of insurance against a worst case scenario. If you SELL a CALL for 2023 at $60, for example, you receive the price of that call but you have given up any upside above that price. The loss is only a paper loss until you actually close out that contract with a BUY TO CLOSE, which creates a cash gain or loss.Those who criticize ARX hedging performance should also look at the context when these hedges were put in place ie debt, covid, contemporary commodity prices, blah, blah, blah The transaction only becomes a real cash gain or loss when the contract is closed out. Up to that point the paper gain or loss is subject to the daily fluctuations of the market for that commodity.

[Cheadle12]

Well said Farmer12. Also Team ARX, keep this in mind, a simple way to look at it: Despite any 'losses' on risk instruments, Arc still generates about $500M per quartert in FREE Cash Flow. So MHP, even with hedging "losses", Arc's assets generates more FCF than Tourmaline per quarter.   So what happens when the poor (legacy VII) hedges roll off? 

[Trapped]

Agreed. And while I think another dividend raise is imminent, I'm not overly fussed about it because I have other holdings for higher yields (banks, pipelines, insurers, REITs etc.). Patience is the key... Their plan is working, so let them carry it out and just watch it unfold. So I'm good with 3% for now knowing that this will be repriced by the market this year; it's already

[MyHoneyPot]

Eric likely sold all his stock into the rally at the end of the show, and next time he is on will throw ARX in his bucket of old ideas with ATH that is just ditched, or SU that he promoted and did a flip before earnings. Eric ideas around share buyback only benefit him and reduce the investment community and exposure of the investment community that would otherwise invest in a stock if it

[Westcoastenergy]

Wrong again on Eric.  No surprise there that MHP is wrong and on the wrong side of facts and history.  Definitely a mental case. Long on ARX here.

[Farmer12]

I screwed up. The PUT prices should be $47 and $47. 

[MyHoneyPot]

Sorry the context of these hedges is the product of management utter stupidity, and inability to work within a hedging framework, or defined strategy.   If you had a hedging methodology, or follow a hedging strategy you would never have 47 dollar hedges 3 years into the future, for so much of your production.  You woud layer hedges on over time in a methodocial manner, to protect

[Quintessential1]

Perhaps the future hedging was put in place to guarantee the refinancing of the VII G debt 3 years out and has saved more money than they have cost or at least mtigated those losses. I am going to hold my shares and let management do what they do as long as my total return looks as good as it does. The only control you can excercise is buy and hold or sell and short.  Your share votes about

[topdown99]

VII Gen was forced by the bank to enter those ridiculous hedges when Covid tanked the market in 2020 . VII dropped below $1.50 , shares held as loan collateral were sold in a panic by that bank and it all spelled the end of VII . ARC has the benefit of time and price to repair the damage inflicted by those "woke" bankers . Does anyone else find it strange that the better ARX does , the

[MyHoneyPot]

Pehaps nothing, hedging malpractice, and go back though the ARC videos and listen to management defending their hedging malpractice when the finalized realized their BLUNDER. The devil made them do it, hedge out 3 years. A company with a prestine balance sheet, why doesn't every other energy company in the industry have this dimal hedge book in place. This was not done by VII generations

[Cheadle12]

Terry wasn't the VII CEO nor CFO who put on the bad hedges.. might be worth a call to Marty "The hedge Doctor" Proctor ? MHP, with any company, you took the rough with the smooth, the good with the bad.. nothing & no one is perfect. Tourmaline is a great company, I hold shares, but a bigger seller was dumping the past few weeks as they do not like their 'special dividend

[MyHoneyPot]

I do know Marty, go jump in the lake.. Take not of the shares he now holds of ARX, he sells them as fast as he get them.  Look at the insiders list, this is public information.  IMHO

[topdown99]

Well said "great" Cheadle , we're all tired of HP's broken record spewing misinformation and out-dated whimsy .