Condor - First, we are talking hypotheticals here, but for the sake of answering your question, I would examine Newmont's logic with their investment in COS.UN last year. Think of it as a variation on vertical integration.
Investing in COS.UN was a quick way for NEM to appropriate an input cost offset, however imperfect the matching, without having to know or learn much about the oil business, and thereby at least partially mitigate what they saw at the time as energy costs rapidly spiralling upward against them.
By holding COS.UN they make a few bucks in one pocket while losing it out of the other. I doubt in the big scheme of things that NEM's oil sands investment is covering the marginal increase in their energy costs, but it obviously helps, and the 'hedge' will never expire unless they want it to by selling out.
Now in the case of ECA, if you ran e.g. a chemical company that significantly depended on NG as a feedstock and were fretting about the future long-term supply and/or price, I would consider my Treasurer enlightened if they proposed trying to cover that risk off by grabbing a chunk of a big NA-based NG producer as a form of instant insurance -- like Newmont, all they would have to do is write a cheque, no fuss no muss no bother. You could even be an oil sands company yourself and need a secure NG supply to make sure the billions you're investing doesn't go in the crapper for lack of being able to extract the oil -- now wouldn't that be a corker if it were Newmont lurking in the back room here |
