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Connacher is a growing exploration, development and production company with a focus on producing bitumen and expanding its in-situ oil sands projects located near Fort McMurray, Alberta

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Message: Re: hedging

Nov 20, 2009 05:17PM

Nov 20, 2009 06:04PM
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Nov 20, 2009 06:22PM

Nov 20, 2009 06:38PM

Nov 21, 2009 08:55AM
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Nov 21, 2009 10:01AM

Nov 21, 2009 11:39AM

My point is simply to protect your downside. The downside occured last year. It could happen again. A hedge now simply guarantees a cash flow for a set time. While Algar is being built a guaranteed cash flow is nice just because of the current volatility. If things were not so volatile then maybe less hedging is needed. At $45.00 POO CLL and many other oil companies won't fare well. With an $80 hedge and POO at $45 then you are at least getting $80 for 5000 bbl/d and the balance at $45, which maintains cash for Algar being built. If POO is at $45 after hedge ends you just have to deal with it, but at least Algar will be done.

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