RE:Big jump in cash flow/netbacks Strong numbers. Strong hedges but need the CDN vs WTI discount to turnaround.
For those wanting to watch the differential go to www.dailyoilbulletin.com and keep an eye on
| Net Energy Sweet Closing Price* | -$19.75 | USD/BBL | $75.05 |
$19.75 is the current forward discount for a cdn oil contract vs WTI. The net $75.05 is in US dollars so about $78.60 cdn, quite a drop from the $98 they realized in Q3.
From operations, you have to like that they kept operating costs flat against increased activity. As much as the weather delay took a couple of 100 boed of the production realized for the quarter, it has set them up for increases in Q4 that will help offset the price decreases.
Also helping the cash flow for this quarter are the hedging contracts in place. Costs of $7 million realized and unrealized losses are estimated on the hedge contracts, as at Sept 30; but no doubt this amount is coming down as current wti prices have dropped significantly since September to a current $94, reducing the $4 million of unrealized losses.
Too bad thay cannot or have not hedged the cdn differential. However, this is expected to improve as refineries complete their shut-in, hopefully.
Terr