RE:RE:RE:RE:RE:RE:AECO spot and futures, due to protocol changethe HH hedges may not be as bad as we think - if the basis gets too low because of low HH absolute prices, then it's an issue, because any additional AECO production would be at a loss, so not an option to crank up volume; but if the basis ends up low because of high AECO, then PEY can crank up production and offset some of the hedging losses; yes, they'd have to possibly tap the bank line, as TE pointed out, but borrowing costs are low, in absolute terms, so they're likely to be far outweighed by the AECO margins, if AECO does in fact warrant cranking up the volume;
in other words, worst case scenario would be low AECO and low HH, but then the basis would be higher so lower heding loss at least
best case scenario, considering the hedges already in place (aside from the obvious, high prices all around), is high AECO, and crank up production - won't help ROC as much as ROE, but hey, profit is profit
as it stands, seems the unrealized HH hedging losses, by my guess, total about 100mil over the next three years (2020-2022 cumul, $0.90 basis, so say $0.50/mmbtu loss); so in theory, if AECO goes up $0.50 then 26,000BTU production bump would fully offset that potential loss;