Unless SFY has changed their strategy they don't do any hedging.
PG,
Hum...... yes and no. If you look at the last two Annual Reports, they
include a section which says -
"Hedging Activities. The Company's revenues are primarily the result
of sales of its oil and natural gas production. Market prices of oil
and natural gas may fluctuate and adversely affect operating results.
To mitigate some of this risk, the company engages periodically in
certain limited hedging activities, but only to the extent of buying
protection price floors for portions of its and the limited partnerships'
oil and natural gas production. Blah, blah, blah....."
So, the company does engage in hedging, but these appear to be for
short term insurance rather than for longer term pricing stability.
(Unlike EVER which has already committed about half it's '99 output!)
Anyway, still unclear whether this would mean we would have to wait
until SFY benefited from the higher market prices, I contacted the
company to clarify things. As far as I could tell, they do not have
any long term commitments (which is what I think you were trying to
tell me), and simply use put options to prevent sudden falls in market
prices from crippling them. On this basis, I assume that the higher
prices are already beginning to flow through.
I also managed to clarify the situation on the NG output reduction.
To a certain extent this was caused by the low market prices, but was
also due to reduced drilling activity and maintenance. It didn't
sound like there was anything catastrophic.
Mark |
