ARC Resources Ltd T.ARX

Balance Sheet Issues make ARC uncompetitive

[MyHoneyPot]

How can you expect your share price to be competative with other energy companies when in 2022 you had a balance sheet RISK MANAGEMENT liability of 1.47 BILLION DOLLARS? FFO Loss

So ask yourself how do you fix a broken risk management program?, you buy back shares while you continue to disapoint investor quarter over quarter with astronomical risk management losses?

You continue this to the tune of 2 billion dollars, while the market refuses to appreciate the value of you shares because you have not done anything to repair the balance sheet and the quarter after quarter loss in FFO/FCF and  and disapointments your shareholder have to endure. 

Even Q1-2023  in a very low gas price commodity enviroment, you manage manage to manufacture 120 million gas hedging losses in sub 2 dollar gas while your competition TOU make a 110 million dollar gain on their risk management, ARX is not competative, and the Fault lies in Management. 

If there was a rerating of ARX shares, and their share price approached 30 dollars a share this would add 7 billion dollars to the market cap for the benifit of the existing shareholders. Hasn't the management optioned themselves up enough yet that maybe now they can start working in the best interests of the shareholders and get the value of the share price to a reasonable evaluation. 

In 2022 investors in ARX missed seeing 1.47 billion in FFO, essentially Free Fund Flow because of the dismal management of the balance sheet. That is esentially 1.47 billion in FCF.

Now in 2023 we are off to a great start, in a low commodity price quarter Bibby managed to loose 175 million in Q1 in risk management, in the same quarter their competitor TOU benefited 110 million with no losses. So when you compare the two companies TOU will have 285 million dollar competative advantage in Free Funds Flow because of the work of ARC management has accomplished, this has nothing to do with operations.

ARX Management is not COMPETATIVE with the management of TOU and where their board of directors who actually provide accountability and oversight to the hedging program. 

ARX needs to fix these ongoing quarter after quarter hedging losses so the company evaluation is in line with the actual performance of the energy assets, rather they being skewed by a failed management Hedging strategy and a broken balance sheet.

Management is in fact robbing shareholder of major share appreciation because of their failed internal risk management strategy, poor governance, and their inability to fix it!

Q1 could of had much higher FFO and FCF if management would pay attention to the perfomance of the balance sheet and stop being preoccupied with share buyback. 

Arx is likely trading 7 billion dollars below its true evaluation, even with it #1 assets in the entire montney, because of rookie CFO mistakes that can't repair the quarter after quarter losses. 

There is no better time for ARX to fix this hedging Disaster impose by Bibby than now, and you will accomplish the same thing your trying to accomplish with share buyback, that is share appreciation.

At the same time fixing the risk management liability on the balance sheet strengthens the balance sheet and does not evaporate case the way buybacks to, the money actually sticks to the balance sheet. 

IMHO

[Quintessential1]

Ler me get this straight.  TOU is down 8% YTD and ARX is up 6% YTD but ARX screwed up? They can continue to screw up like that for the rest of the year as far as I am concerned. GLTA ARX BULLS

[Sunsurfer12]

Just catching up here..i hate hedges as mich as anyone unless taking minor short term advantage of cyclical high prices. Q1 hedge loss was already on the book in 2022..only thing to be determined was amount of realized gain or loss..had arx bought back its hedge book at dec 31 it eould have paid a higher price (as ng was higher at dec 31) as opposed to letting them expire in a lower ng

[MyHoneyPot]

Significant balance sheet issues occur when the hedges are grossly offside and this was especially obvious in 2022 when they lost 1.47 billion in hedging.  The problem that exists is in determining Funds From Operations you take off partner shares, and hedging losses, etc. This really skews your Funds From Operation, and ultimately your FCF, and Cash from operations. (In the Negative

[MyHoneyPot]

It been more than 2 years after the merger and this risk management disaster still has not gone away, time for management to stop the buyback and fix the root problem that is really the cause of the depressed stock.  Fixing the risk management will improve all the operational Metrics, FFO, FCF, and it would not require them to evaporate the cash off the balance sheet in share buybacks to

[Quintessential1]

So are you saying that you didn't know that VII hedged out to 2024 3 years ago? Terry and BIbby didn't do this they just didn't fix it.  In 2024 it fixes itself. GLTA ARX BULLS

[MyHoneyPot]

The share buyback is a wasted effort and wasted cash, (think of the companies you could of bought with cash for 2 billion dollars?) Fixing the risk management may be associated with a little cash but ultimately the cash remains on the balance sheet and does not evaporated into thin air when they cancel the shares. A share buyback will not be effective in driving a rerating as long as these

[Quintessential1]

 (think of the companies you could of bought with cash for 2 billion dollars?) What they appear to be buying is VII with their own cash! They put it on the layaway plan. When they have bought back all of the additional post merger shares that is exactly what they will have done.   You lack vision.  I have to admit that I did not see them being able to re-work their cap-ex