Bridge Resources Corp V.BUK

Financial Put

[TORTOISE10]

From News Release;

The GLJ reserve numbers exclude the 2.41 BCFE produced through March 31, 2009.
GLJ also states that the flowing material balance estimate incorporated in the
proved producing and proved plus probable producing numbers should be viewed
as an absolute minimum. The net present values account for gas back-out under
the current profile and are based on GLJ pricing forecasts as of March 31,
2009. However, the GLJ NPV numbers exclude the incremental value of the
financial put commencing July 1, 2009 that hedges 4.8 BCFG over 12 months at
50p/therm (US$7.33/mcf).

Can someone out there explain what the last sentence, in this portion of the release , means to the bottom line in
14 months time from now.
Thanks in advance.
Tortoise10

[commoditiesbull]

It means that the BUK hedge is higher than the same time period natural gas price estimate being used by GLJ. So for example if GLJ figures gas will be $6 and BUK has a hedge at $7, GLJ is using $6 for the reserves report and working back to the NAV. Basically, GLJ is using the $6 for the valuation even though BUK will actually be receiving $7. In short, the NAV that GLJ provides is slightly lower

[TORTOISE10]

Thanks for the explanation.I was thinking that if gas was$8.50 then we would be losing big money by being hedgedTortoise10