Ann: Strategic Review, page-39

Sorry Coopec, that is also incorrect. Many many (US companies) have hedged production in significant volumes out as far as 2017. I know this as I hold stock in them e.g. LNCO.

All I am saying is the futures market/hedging was AVAILABLE to them long ago. It was their choice not to hedge . Now they have hedged - AS REQUIRED BY CREDIT AGREEMENT.

I mean its flogging a dead horse. TAP mgmt made a poor decision not to hedge when prices were much higher. Hedging is not free if only buying puts (can be low cost by using collars).

To your specific questions

• So in October 2014 Tap should have hedged production at 80/90 USD? YES
• For what contract term and how many barrels? Assume simple Put/Call spread - Buy Put at $70 and Sell Call at $90 with oil price at $80 say. That would be low cost premium to initiate to TAP. If oil dropped below $70 they hold a Put to sell it at $70 and receive $70 no matter if oil is priced at $40. If oil rose above $90 their counterparty will take their oil at $90 even if oil was selling at $120 Bbl. Volume wise what was wrong with say 67,500 Bbls for each month for 2015 and say 50,000 Bbls month for 2016.
• I am vaguely aware of the futures market but I assume Tap could have sold those Puts if there was a lengthy delay in start up. Of course - its a trading derivative & Yes you are only vaguely aware of the future market. Best leave it be.

As has been pointed out by other posters, TAP has been quite the leveraged bet on the recovery on oil prices - with a lot of that due to the structure of how Manora was acquired/developed and being paid for. They aren't the first company to play the "high oil price forever strategy" and won't be the last but for heaven's sake use some protection (hedges)!