RE:between rock and a hard placePeter, you should also note this about CKE's Chicago Citygate premium pricing:
" During the third quarter of 2017, we sold over 70% of our natural gas production at Station 2; and approximately 28% at the comparably higher Chicago City Gate benchmark. We realized a recovery of royalties during the third quarter of $0.52/boe due to BC Government royalty grants and a gas cost allowance adjustment. " Additionally, CKE has hedged significant natural gas volumes for its 2017 production at very good prices, which offsets Station 2 pricing, see this:
We use financial commodity price contracts to support our capital investment and growth by providing more certainty regarding our adjusted funds from operations and balance sheet management and also when required to comply with our credit facility covenants. Our current financial commodity price contracts in place are as follows:
| | | | | | |
| Indexed Price | | Notional Volumes | Company's Received Price | Remaining Contractual Term | |
| AECO | | 7,500 GJ/d | $3.205/GJ | October 1, 2017 to December 31, 2017 | |
| AECO | | 4,000 GJ/d | $2.50/GJ | October 1, 2017 to October 31, 2017 | |
| | | | | | |
Additionally AECO price has been rising since early November because TRP finished the NGTL expansion and natural gas outlook is bullish thanks to reduced inventories this year versus last year, so CKE will have again the chance
to hedge significant natural gas volumes for its 2018 production at good prices in the next couple of months.
With Henry Hub at US$3.20 /mmbtu and AECO above CAD$2.50/GJ, CKE can hedge 50% of its 2018 natural gas production at good prices
to offset the Station 2 pricing.