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Gold/Mining/Energy : Oil & Gas Price Economics -- Ignore unavailable to you. Want to Upgrade?

To: kormac who wrote (310)	10/18/2000 9:13:04 PM
From: Ed Ajootian	Read Replies (3) \| Respond to of 350

All, "To Hedge or Not?" That is the question I would like to pose here. Let's say you are the management of a highly leveraged small-to-medium size E&P company such as Panaco and currently do not have any of your production hedged other than some way-out-of-the-money "floors". Would be interested to hear what folks would do if they were calling the shots at this point. As we've seen over the last few years, companies that hedged production generally lost out on profits when the prices came back up. If we are approaching the peak here, as some folks seem to think, would you agree that companies should start to think about hedging? More on the philosophical side, should E&P companies _ever try to call future commodity prices? They are in the business of finding and producing hydrocarbons. Should they just let the chips fall where they may, and never hedge, or maybe just get some cheap "floors" so they don't go bankrupt if all hell breaks loose? Would be interested to hear about any companies (the smaller the better) that have recently hedged significant amounts of their production. The 12-month natgas strip has nicked over $5 I believe on some of the recent days. Imagine selling all of your next year's gas for $5??!!! I believe Miller Exploration (MEXP) has recently hedged a bunch of their gas at around $4.40.