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Gold/Mining/Energy : Big Dog's Boom Boom Room
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To: Sweet Ol who wrote (123772)8/29/2009 1:13:11 PM
From: Think4Yourself  Read Replies (1) of 206223
 
Their weighted average revenue dropped pretty significantly from last year, so they have at least some unhedged. They are also playing with derivatives so I had trouble getting a feeling from their 10Q. I would note that their production levels appear to be declining but the acquisition below might counter that trend. The below comment causes me concern that they are in a big cash squeeze, which is why I questioned the dividend being secure and why I am short them. China's warning that they will be canceling commodity contracts is also a reason for some concern, given the tight storage here. The E&P's might not eat the loss, but where is the oil and gas going to go on delivery? Not their problem directly, but could end up being a major issue indirectly.

biz.yahoo.com

Commodity Derivative Repositioning

In the third quarter of 2009, the Company repositioned its commodity derivative portfolio to help protect against sustained weakness in commodity prices. The Company canceled oil and gas derivative contracts for years 2012 through 2014 and realized a net gain of approximately $44.8 million, which, along with an incremental premium payment of approximately $48.8 million, was used to raise prices for its oil and gas derivative contracts in years 2010 and 2011. As a result of these transactions, the Company anticipates the borrowing base under its Credit Facility will be reduced to approximately $1.65 billion; however, the Company anticipates the borrowing base under its Credit Facility will be increased in October 2009 due to its pending acquisitions in the Permian Basin (see Note 2).
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