ARC Resources Ltd T.ARX

580 million cost of Oil Hedges 2022 if prices hold

[MyHoneyPot]

If this price hang in for 2022, this is the potential ARX has for its Risk Management Program.

Risk Management Cost, Oil only (Swaps and Ceiling Prices as Per Jan Presentation)


Oil SWAP $46.90
$46.90     10479 boe/day
92.50 - 46.90 = 45.60

45.60/.78*10479*365 = 224 million dollars
 
Oil Ceiling $60.52

$60.52 23767 boe/day
92.50- 60.52 =31.98

31.98/.78*23767*365 = 356 million dollars
 
580 million dollars in Oil hedges, with no new hedges put in place back on Jan presentation.
 
So, these are just the Risk Management Costs (Just Oil), I am sure they can accomplish the same risk manage objectives with gas. We will have to see.

Oil (580 million loss)  + Gas (420 million loss) = 1 Billion loss Risk Management
 
1 Billion Projected Risk Management (Gain/Loss) if Prices Hang in.

Risk management in ARX case is a Loss.

This is real cash, if it were not a risk management loss it would be Free Cash Flow, because all the expenses to produce their boe, still need to be paid by the producer. 


IMHO

[Cheadle12]

Take the good with the bad..  Acquired great condensate assets with the VII acquistion. Acquired terrible hedges with the VII acquisition. MHP, I agree with you that VII had terrible hedges and now ARX are paying for these poor VII hedges.

[MyHoneyPot]

Sorry, your so certain they are 7 generation hedges, why is that, do you have insider knowledge of that being the case, of course not. Get off your high horse.  The fact that hedged price is pushed forward so many years, 3 years as a matter of fact, illustrates that it was done a one point in time. Also i suggest you back through ARX videos and listen to Terry and Bibby discussion regarding

[clamlinguine]

Thank goodness  Arc is paying off the bankers first so we aren't forced into these hedges ever again. Losing that much upside for this year is unnecessary. Less than 11 months of unreasonably high % of hedges. Time flys.