Pretty decent quarterNothing spectacular, but a solid quarter.
I like the asset sale and I like the fact that they will exit 2018 with debt/ffo of less than 1.9 - not including the asset sales.
I also like that their capex is slightly ($25 million) under budget. Normally, they wouldn’t have cared, but it shows that they’re trying to finally save some shareholder money.
What I don’t understand is why they see the need to hedge so much. If they were severely indebted, I understand their banks would want them to hedge aggressively, Why be so conservative? Even Cenovus is going to give up their hedging plan soon. They should emulate CLR, which doesn’t hedge at all.
Hedging is expensive and over the long run, studies show that it is actually a less successful strategy than not hedging. Their hedges will cost them $300 million this year, money that could have gone to lower the debt. They’ve even hedges 50% of next year’s production!