Re Bir not being hedgedWell Bir was hedged last year and hopefully did well with that position. On principal, it would seem hard to argue against the merits of hedging. Futures markets have been around a long time, in fact, dating back to the Dutch tulip mania of the 17th century; nor does it look to me that they have lost any of their appeal since that time. Many companies trumpet the fact they’re hedged (good press). It convinces the shareholders that management is savvy, - but chiefly because most don’t realize what a minefield hedging can be. The concept is great, but pulling it off successfully, - more in the realm of a blind man threading a needle. Take for example a heavy oil producer that wishes to hedge future production but to do so it must references WTI for the hedge. Now say that for one reason or another that heavy oil price breaks down due to some problem specific to that grade which has nothing to do with WTI. So the hedged position does not track the lower price received for the heavy crude and the producer is not compensated for his loss. And don’t tell me that doesn’t happen because it does. And when you move away from the oil majors (all of whom have their own trading rooms) to the smaller operators, they must get outside help to do their hedging. Not cheap. Now let’s consider NG hedging. I recently read that some CDN company had hedged a large part of their NG production at $4.35. I can only assume this is referenced to Henry Hub prices. Why the Henry? At least 8 pipelines converge on that hub and the sheer volume of NG passing through it creates some pricing reality upon which to base futures contracts. Secondary hubs like Aeco, and Dominion etc. are quite volatile. Note also that the Cdn company can’t actually make delivery against its Henry Hub contracts, - it’s too far away. For pricing protection, the correlation between Aeco and Henry can be tenuous at best to downright unreliable. Obviously there are lots of cases where it does work but it doesn’t necessarily follow that if you’re hedged you’ve got an ironclad guarantee of pricing protection. When I see the rig count come off 60 today I kind of like the idea Bir is operating without hedges especially coming out of this winter. IMO.