Surge understand oil - yesterdays press release
this CEO, understand commodities, hedging and how to run a company. He understands backwardation, and contango and what is going on. This is one smart company, building a company, and no mention from them of sitting on vacation for 6 months now is there!!!!! ........ from the press release ..... HEDGE RECONFIGURATION: The forward curve for world crude oil prices has changed dramatically in just a few short months. In June of 2014, crude oil prices spiked to US$108 WTI per barrel and the forward curve for oil became backwardated. Accordingly, Surge management locked-in significant hedge positions in range of C$96-103 per barrel pricing for 2014 and 2015. These hedge positions are now significantly "in the money". From June of 2014 to the present world crude oil prices have dropped precipitously from US$108 WTI per barrel to a low of US$43 WTI in February. With world oil demand at record levels, and massive capital spending cuts for crude oil drilling occurring worldwide, the shape of the forward curve for crude oil has moved into a very strong contango position. Accordingly, Surge management has now monetized its existing forward fixed swap positions at a profit of $35 million. Surge management has now "re-hedged", on a costless collar basis, approximately 45 percent of the Company's net crude oil production for the rest of 2015 - with a floor of over C$62 per barrel, and a ceiling of over C$82 per barrel, at no cost to Surge. Proceeds from this hedge reconfiguration will be utilized to reduce bank indebtedness. Surge management has elected to maintain its natural gas hedge at C$4.14/MCF for approximately 50 percent of the Company's natural gas production for all of 2015