A lot of the people that love buybacks have never seen, ( or don't remember) how quickly things can turn around in the oil patch, and how important it is to have a clean balance sheet when that happens. I will take dividends over buybacks any day.
ARX inherited a terrible hedge book from Seven Generations. It (about a $1b reduction in revenue so far in 2022) is in the process of washing through ARX income/cash flow statement.
Sometimes I have seen purchases come with lots of hedging, dishonest if not disclosed in advance....especially if they are terrible ones put on to get a kick back...
Aren't some of these companies forced to hedge by the lenders (banks) because of their debt? Once their debt levels diminish they can stop hedging. Correct me if I'm wrong.
NGas hedges from their new presentation, going lower in 2023, Seven Gen acquisition was in 2021
See page 19
https://www.arcresources.com/wp-content/uploads/2022/11/November-2022-Investor-Presentation.pdf
A lot of the people that love buybacks have never seen, ( or don't remember) how quickly things can turn around in the oil patch, and how important it is to have a clean balance sheet when that happens. I will take dividends over buybacks any day.
Im told that
ARX inherited a terrible hedge book from Seven Generations. It (about a $1b reduction in revenue so far in 2022) is in the process of washing through ARX income/cash flow statement.
Sometimes I have seen purchases come with lots of hedging, dishonest if not disclosed in advance....especially if they are terrible ones put on to get a kick back...
Aren't some of these companies forced to hedge by the lenders (banks) because of their debt? Once their debt levels diminish they can stop hedging. Correct me if I'm wrong.
Yes. But Arc CFO Kris Bibby told me in a phone call it was the company's decision to hedge and not a bank requirement.
Interesting. Do you know if they're dropping hedges in 2023 or they're keeping the same strategy?
ARC still has a sizeable hedge book into 2024, with most if not all hedges "out of the money".https://www.arcresources.com/wp-content/uploads/2022/11/November-2022-Investor-Presentation.pdf