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15/12/14
13:33
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Originally posted by cmonaussie
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Don't know the answer to that, but it was more as an illustration using real data trying to answer a question posed to the forum on hedging and whether SSN was well hedged. My numbers pulled from their 10Q and AGM preso.
Based on that if I was the Bank President over at Mutual of Omaha Bank, I'd be having a conversation with the loan officer as to why the level of hedging is what it is (appears less than 25% to me).
Doesn't get any better if one looks at all of 2015, which looks like 320MBO give or take 10% versus hedges of swaps of 18,061 Bbls, 18,000 with a Put @ $85 and a 3xcollar for 36,600 Bbls where SSN is exposed on the downside below $67.50 (with a deferred cost of $5.50 at settlement). Those 3-ways IMO can be interpreted as SSN receiving spot price +$15 (strike difference) - $5.50 (cost).
Thats a total of 72,661 hedged (at varying prices) against project production of ~ 320,000 Bbls. That doesn't look well hedged to me.
Maybe I should turn it over to Buc for follow through.
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You first cmonausie.
If you could explain, how a company with a current debt of over $250M, a current interest bill of over $20 million a year and looking to go into further debt in 2015, is in a stronger postion.