Twin Butte Energy Ltd TBTEF

RE:Annualized loss of c. CAD 100 millons from hedging

[konzelmann]

Of course when oil is high it's easy to say that they should suspend hedging activity. If the tables were turned and we had a quarter of really low oil prices, everyone would be wondering why a mid-cap dividend payer didn't hedge more of its production at a price that would allow them to maintain a reasonable payout ratio. My guess is that because they really try to stay on target with their payout ratio they like to hedge a large chunk of production because it allows them to plan in advance and not worry so much about the price of oil on a monthly basis. However, I do believe that some of their lower priced hedges were coming off the books in this quarter - although now oil isn't as high as it was either.