Lightstream Resources Ltd. LSTMF

RE: oil hedging and production

[ltrabs]

Petrobakken don't hedge in the normal sense. They have Collars. If the price is within the range there is no hedge, they get market price. The ranges pieroll posted suggests they get market price up to $99.50. In a recent cc they said they are not hedged they have collars ... at the time $99.50 didn't seam likely, thus, not hedged was reasonable at the time. By definition ... collar, also referred to as "min-max strategy," is a zero or low cost hedging strategy that assures the Oil Producer a minimum / maximum price range for future oil sales

Under a collar contract, the minimum possible sale price is equal to the floor price and the maximum possible sale price is equal to the ceiling price. For prices within this range, the Producer achieves the market price.
The contract is normally financially settled and often covers several pricing periods.
There is usually no up-front premium payment. Under a standard zero cost collar contract, the Producer can specify either the "floor" or the "ceiling" price level. The other price level is calculated by SET to ensure a zero-premium expense. If the Producer wishes, it can specify both price levels, but then it may incur some premium expense or income.
The Producer gains complete price protection from any prices below the floor price. However, in exchange for zero up-front premiums, any benefit from an oil price increase above the ceiling price is foregone. The collar is, in many ways, similar to a swap, but it allows for greater flexibility through some market responsiveness. The collar outperforms a swap strategy if prices increase. As for production, they will be updating their Bakken & Cardium producing wells list soon ... https://www.petrobakken.com/?s=current+cardium
They will likely update update the presentation this week as well. New wells cardium barrels flow rates maybe some up to 20 - 30 days. https://www.petrobakken.com/investors/presentations/