This is just one company that may be affected by the Enron collapse - I wonder how many more are out there with hedges or floors in place where Enron is the party on the other side of the deal???? could be very interesting over the next couple of weeks to see how this thing shakes out.
Mark
Denbury answers queries re: hedge position with Enron
Denbury Resources Inc (2)
DNR
Shares issued 52,800,000
Nov 28 2001 close $10.600
Wednesday Nov 28 2001
News Release
Mr. Gareth Roberts reports
In answer to questions about its hedge position with Enron Corp. in light of
today's downgrade of Enron's debt ratings and the cancellation of Enron's
proposed merger with Dynegy Inc., the natural gas price floors that the company
has with Enron include a price floor for 2002 with a strike price of $4.25 per
million British thermal units covering 41 million cubic feet per day, a price floor for
2003 with a strike price of $3.75 per million British thermal units covering 33
million cubic feet per day, plus other minor natural gas price floors in 2002. Based
on natural gas futures prices at the close of business today, if Enron were to fully
and timely make payment on these price floors, the company would receive
approximately $19-million during 2002 and approximately $7-million in 2003 on
these contracts. No payments currently due the company from Enron are in
arrears. These hedges are part of the $18-million spent by Denbury on price
floors as part of the Matrix acquisition completed in July, 2001. To date, the
company has received approximately $9-million in cash payments from these
floors purchased in the second quarter. Given the nature of recent developments,
the company is unable to predict the amounts, if any, it will ultimately receive
under the Enron hedge contracts. Substantially all of the company's price floors for
the remainder of 2001, other minor natural gas price floors for 2002 and an oil
price floor covering 10,000 barrels per day with a strike price of $21.00 per
barrel for 2002 are with other counterparties. |
