RE: Can Anyone confirmHere is what they said in their last MDA on June 1 found on SEDAR:
Periodically, Arcan utilizes economic hedges to protect a portion of its cash flows. The Corporation has
hedged 2,000 bbls per day from January 1, 2011 to December 31, 2011 by purchasing Canadian dollar
WTI put contracts establishing a $70.00 floor. As payment Arcan sold four 500 bbls per day Canadian
dollar WTI call contracts, two of which are at $100.00, one at $100.05 and the last, priced at $100.30.
Arcan also has hedged 1,000 bbls per day from January 1, 2012 to December 31, 2012 by purchasing
Canadian dollar WTI put contracts establishing a $75.00 floor. As payment, Arcan sold two 500 bbl per
day Canadian dollar WTI call contracts, one of which is at $126.00 and one priced at $127.50. Arcan
recognized a realized loss of $29,000 and an unrealized loss of $3.8 million during the quarter related to
these hedges. The Corporation will mark-to-market these contracts at the end of each quarter with realized
and/or unrealized gain or losses, if any, recorded in the statement of operations for each reporting period,
using the price curve for that instrument on the last day of that month and comparing it to the price curve
on the day the hedge was acquired. There were no hedging contracts for 2010 production volumes. All
hedges are approved by the Board of Directors of Arcan.
There was a small realized loss on commodity contracts for the first quarter ended March 31, 2011 as the
price of oil stayed below the hedged ceiling during much of the quarter. At March 31, 2011, Arcan had
outstanding hedge contracts for 2011 that were recorded as an unrealized loss of $3.8 million or $16.65 per
bbl for the quarter ended March 31, 2011 and $1.2 million or $4.71 per bbl for the quarter ended
December 31, 2010.