Tourmaline Oil Corp (Alberta) T.TOU

Aldan

[idleweiss]

hi Aldan - thanks for clarifying that. Can you tell me how the hedging may involve cash. My understanding is that the company enters into a contract to sell gas (at say $4.00) and then the benchmark price goes up to say $8. The company has lost some money it could have made but where's the cash outlay? I don't know much about hedging so just asking.

[Aldan007]

Hi Idleweiss, there are different ways of implementing hedging or fix price strategies. As far as I know, most O&G companies use a hedging strategy that is decoupled from physical deliveries. Let's use your example above and let's assume a company hedges 10,000 mcf/d for 3 months. For example: The company sells and delivers its gas to AECO and gets 8 CAD per mfc/d this results in

[BuccarestIsland]

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