Post by
Quintessential1 on Jan 20, 2023 7:33am
BIR will cut cap-ex to protect their div, will CJ?
BIR's CEO just did a PR blurb on BNN stating that the highway to hell is paved with hedges.
That may be true. Especially with oil.
BIR is more gassy than CJ and as such gets hit with commodity price highs and lows a couple of times per year. Hedging for the most part was a way for those gassy producers to even out pricing for the year but mostly it was to guarantee creditors that they were going to be paid when debt was due.
Fair enough. But what do you do when debt is no longer a problem? Can a good hedging strategy ever beat market pricing or the commdity cycle? Does oil even suffer from a commodity cycle like NG and is hedging even necessary once debt is paid and no guarantees are required? Don't we the shareholders become the credtors? Weren't we always? If hedging locked in cap-ex and the dividend then should you do it? It seems like hedging is always a roll of the dice.
I plan to keep an eye on BIR and maybe some cash and see how they fair. Perhaps it can map a plan for CJ too.
GLTA
Comment by
TheWokeLemming on Jan 20, 2023 3:44pm
CJ won't have to. Oil should stay steady above $70 whereas natural gas is exceedingly volatile.