ARC Resources Ltd T.ARX

Hedging Losses

[northman]

Gents,

Thought I saw some folks here earlier discussing the Q1 23 hedging book so thought I might clarify:

1. approx $150MM in realized losses - these are legacy hedges that have been out of the money for a long time and rolled off this quarter, which ARC had to settle with cash. This affects the cash flow statement but not the income statement.
2. $260MM unrealized gains - from an accounting perspective the hedging position gained in value by this amount. This is a non cash value. What this means is that the amount ARC may have to settle in cash over the future life of its hedge book has decreased by roughly $260MM this quarter, ignore time value/discounting.
3. approx $110MM net gains from hedging this quarter. point #2 minus point #1.

While the cash figure is important, from a value perspective we should be looking at the $260mm in gains as a net benefit to us as that is what will future realized losses from hedgign. It is important to note that ARC currently has only net $80mm in risk management liabilities on the balance sheet. Absent a large rise in commodity pricing this should result in very low realized losses in future quarters, giving a bump to free cash flow, although some of these are realted to FX no doubt due to their debt being USD denominated.

However, at current commodity prices and their relatively low hedge coverage, we should be hoping for maximal hedging losses in the future so that the 25% of their book not hedged can do much better. Overall I don't think hedges should be much of a topic for discussion in future quarters.

[MyHoneyPot]

That is very detailed and i could not see that in the Q1, report.  I hope your correct, i guess we will find out when we see the next quarter results. I could not see where these hedging losses were coming from, based on the presentation, and i aske the question to the board.   Thx MHP IMHO

[GunnerG]

OMG MHP,  search "table 12" of Q1 2023 report. "The board" has mentioned the same information as northman many times and all you did was come back with your usual blah blah blah. Hopefully you understand now, but somehow I doubt it.

[MyHoneyPot]

Gunner i reference that table all the time, and all i am really interested in is the realized cost of those hedges. The rest of the accounting stuff is meaningless.  We will see what the realized costs are going forward, i kind of find it hard to believe that its over with, but being the reasonable person that i am i have an open mind. Risk management is not suppose to be a cost center like

[Sunsurfer12]

c'mon MHP..be fair..the rest is not meaningless..like saying your credit card bill is meaningless becuase you havent paid it yet...or tomorrows paycheque is meaningless as its not in your bank today....same concept..it is highly meaningful.

[GunnerG]

Well it doesn't sound like it;  "That is very detailed and i could not see that in the Q1, report." Everything northman said is from that table and you couldn't see it, your words.  ROF

[MyHoneyPot]

Thats a Lie. Thanks

[GunnerG]

Your post dummy.

[Trapped]

Sometimes I wonder why any of us are still engaging with this obvious moron. Sigh...

[Quintessential1]

Because everytime he dumps on it,  we get to pump it.  We're pumpers LOL  GLTA ARX BULLS 

[MyHoneyPot]

The real Morons are the ones that sit by and watch over 2.2 billion dollars over the last 9 quarters evaporate in hedging losses, and say nothing. Worst than common Moron, cheerleader Morons.  These are the people you can sell a lot in the middle of the ocean. IMHO

[GunnerG]

First, it is "Worse than common morons, cheerleader morons", not worst....moron. I am still happy with my double on ARX and because of my crazy low ACB, these divy's put a smile on my face ever quarter and with every increase ARX announces in the divy. What was your ACB MHP on you VII shares?  This should be good for a laugh and explain his whining.

[Quintessential1]

Yup, calling other people morons when he can't grasp the complexities of basic grammar. ARX also outperforms KELT (KEL) -16.92% and Paramount (POU) -2.85% over the last year. Hedges are important but obviously ARX management are compensating in other ways that these other names either cannot or did not. I will add one more name.  The heralded Cenovus (CVE) -14.05% 1 year and -24.13% 6

[Trapped]

Well put, Quint. I still think William aka MHP isn't being honest about the genesis for his hatred of this management team. It's certainly not based on share performance or fundamentals. William / MHP: Genesis means 'the reason why.' This tool is looking for reasons to hate this company no matter what they do or how they do it. Unfortunately, it's a sickness we will all have

[Tothemoon2]

A scorned lover wouldn't type with this much vitriol.

[Quintessential1]

Yeah it is like he let them go atm and now can't get the taste out of his mouth. Not sure why, AN's mom doesn't seem to mind, (or so he tells me). Just to throw mhp a bone (not that way he still reeling from ARX management). One of these teams would be smart to pick up Kelt or Crew and now would be the time. GLTA ARX BULLS