GREY:TBTEF - Post by User
Comment by
PetroExploreron Aug 28, 2016 3:29pm
141 Views
Post# 25184911
RE:Hedges? We don't need no stinking hedges
RE:Hedges? We don't need no stinking hedgesOOU812 wrote: Do all oil companies need to hedge? No.
A company with most of the following attributes
does not need to hedge.
-little or no debt
-low decline rates
-low finding costs
-low production costs
-low royalties
-low G&A
-good quality oil
-never pays a div
How many of these apply to Twin?
Twin was about the last company who could afford not to hedge.
It does appear that Twin Butte, definitely needed more hedges. Although they may have been gambling that the price collapse would be short lived, that didn't happen. Other companies like Northern Blizzard, produce heavy oil, and have a strong hedging program, and continue to survive.
Someone at Twin Butte was responsible for the decision not to hedge more of their production, and needs to be held accountable for that decision.