Poor Performance Really guys the bottom line is ARX lost 290 million in Risk Management Losses, and if it wasn’t for that loss, they would have had 63% more Free Funds Flow.
They lost 1.041 billion in Risk management in 2021, and its not a paper loss, it’s a loss of FCF that has zero costs associated with it. It would add directly to the Free Funds Flow of the company.
Question Management Really are your investors a bunch of sheep being led to the slaughter, 290 million in Risk Management costs in Q4 and management fails to mention this in their 10-minute reporting of the quarter/year end, where only 2 analysts called in. (What wrong here guy’s, 10-minute summary, 2 analysts)
This is a failed management team all you need to do is open your eyes. The management team has cost shareholders multiple billions of dollars in Risk Management on the books, and I afraid what they will do in the future, loss of confidence and the markets have lost confidence.
Fourth Quarter FACT 459 / 749 = 61 % of the total Free Funds Flow went to balance sheet, 39% went to risk management.
My gut feeling is this, if ARX shut down all their legacy assets and just produced Kakwa unhedged, they could achieve better results.
Net production Impact of Risk Management 345,831 boe/day production 39% FFF lost in Risk management = 210,000 boe/day
Effectively that is what ARX produced in the 4
th quarter when you consider the Risk Management Loss that directly reduce the Free Funds Flow, after all the operational and costs.
If I took maintenance capex into consideration, a lot of ARX production is getting very low returns because of the extreme losses due to risk management.
Hedges Oil Going forward So, the average hedge price for oil in 2022 is $56.67 U.S. X 34,247 boe/day
Crude is trading at 94 dollars U.S.
Project 2022 losses for crude at today price =
$37.33 boe X 34247 X 365 = $466 K U.S. or 600 million Canadian.
2022 Hedging Outlook Gas hedging seems to have a loss of about 2/3 of oil hedging losses on average
I think that on the Hedging front with higher prices ARX can achieve another 1 BILLION in hedging losses in 2022, maybe more if prices go higher.
Attachie I think it is unbelievable the Terry, ARC CEO thinks Attachie is their best prospect, (Because it his idea and has been on Arc books for 7 years, and they have never had capital to develop it)
This is current a poor investment and has no garutee of any kind of return, or perspective return, or real shareholder interest when you sitting on an asset like Kakwa. Utter stupidity.
Kakwa Economics Every BOE produced at Kakwa today is (35.5% condensate, 22 % NGL’s, 45.5% gas)
Condensate = 97/.78 = 124.35 boe
Every BOE at Kakwa is worth $124.35 * .35.5% = $44.147 dollars
just for the condensate. The average realized commodity price per boe was $41.88 for all of ARC’s production in the 3
rd quarter.
Gas = $5.00 NGL’s = $5.00
1 Boe from Kakwa = $63.50 dollar/boe
So, if you were going to compare that to a boe from Sunrise, that is 30 dollars for dry gas.
85% of ARC’s condensate is produced at Kakwa.
Year End-4th quarter call It last 10 minutes, Management wanted to get over it as quickly as possible. They are continuing on this stupid plan of shareholder destruction.
I am confident they will achieve another billion dollars in hedging losses, and have effectively diminished share holder returns, by the destruction of per boe return with poor capital allocation and stupid objectives, like Attachie, and share buyback while constraining Kakwa production.
Make Hay well the Sun Shines.
ARC management is asleep with their heads buried in the ground.
Sunrise – if you consider the 125 million in capital, will not make money for a long time. Lousy dry gas economics and a very expensive build to add incremental production.
IMHO