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Gold/Mining/Energy : Canadian REITS, Trusts & Dividend Stocks -- Ignore unavailable to you. Want to Upgrade?

To: a.handbag. who wrote (5526)	2/22/2003 10:47:59 PM
From: bill	Respond to of 11633

I think Kastel may be right. They may have hedged forward too much and too long. There's more to doing this than just missing out on the upward move in prices. I own a spec oil stock that is now doing very well but awhile back they hedged too much too soon and then had serious problems with wellhead taxes--if I remember correctly. I don't know if they have to pay tax on the current rate and then get a refund. Maybe someone can enlighten us as to the tax implications, if any, of low hedges in a rising mkt. That is, if there are any. It may just be they incurred big expenses, hedged low and are caught in a squeeze while the unhedged benefit from the rising price of NG. Do trusts ever sell more production forward than they can actually supply if they believe that the price of O&G are going down and can be bought cheaply on the mkt.? If so, then an O&G company, like a gold company with a large hedge book, could find itself in serious trouble. I'm not saying it's done. I'm just asking.