Over the past two year ARX has squandered
- 2 Billion of Shareholder Capital on Risk Management
- 2 Billion of Shareholder Capital on Share buybacks
No special dividends, and a pretty measly dividend at that, this month will be the first time they saw an increase since 2020. (4.02 percent whoopee!)
Share buybacks are for companies that have limited opportunity to add value to the balance sheet in a manner that would be typical for an Energy Company. (Dilling wells, adding to reserves, and doing land transactions, increasing produciton.)
Normally when an energy company is good at this they have a predictable income stream and want to reward their share holders with appreciation in the share price, special dividends, and a good regular dividend.
What are the Conditions that justify a share buyback? When a company does a buyback it is usually after their balance sheet is in prestine shape.
However with ARX carrying more that 2 billion in risk management liability on its balance sheet, that is hardly prestine. In fact it is shameful, and has hurt shareholders with the stock unable to garner support from potential shareholders or the investment community.
ARX's CFO is a rookie, he has never held this position before, and appears to have zero background in finance. He is destroying the company in a single handed manner. He has a great audience of Naval Gazers who don't recognize the fiscal malpractice taking place at ARC, which has resulted in poor shareprice performance.
The CFO is responsible for Risk Management at ARX, so it is simply coincedence that they did not chosse to repair the atrocious, risk management strategy Bibby had put in place.
ARX published a video where Terry and Bibby talked about this brillant strategy,
which seems to have evaporated from ARX website, management should be embarrassed.
BALANCE SHEET FOLLIES Really ther performance of ARX assets have been undermined by the CFO, and with a stroke of a pen he destroy more that 2 billion dollars in shareholder FCF. Analyst can't depend on FFF, FFO, FCF, CFO because of the continual and never ending risk management follies quarter after quarter.
Case in Point - Last quarter TOU made 110 million on risk management, ARX lost more that TOU made. Great job Bibby.
Share Buybacks So rather return capital because of ARX good operational performance Bibby has made sure that will never happen with his balance sheet destruction strategy, and trying to hide and not realize over 2 billion in cash hedging losses. The balance sheet has only been presting in Bibby mind.
ARX delivered zero increases in production, and only moderate reserve increases.
Buying back you shares should be the lowest means of providing returns to shareholders who are already 100% invested, ARX wants to take any potential upside that is due to them and invest it for them. This is tottally offside in my opinion, Eric Nutally could not have had better sheep to lead then the management of ARX, now he has dust the ARX dust off his sandles and headed into the sunset.
CHEVRON
Chevron just added 10% to their reserves, as well as a significant production with a purchase that will be paid for by stopping sharebuyback for six months.
Buying your share back simply evaporates capital off the balance sheet and in ARX case with essentiall no shareholder appreciation.
ARX needs to get a real CFO and become a real company, the damage done to the shareholders can't be understated by poor balancesheet management.
IMHO