RE:RE:RE:RE:RE:RE:RE:This Thread is filled with Haters!Re1ndeer2 wrote
Hedging 33% of forward sales @ $ 80 is a solid stategy.....for all Companies .....Still got 67% to ride the market......
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Exactly. At $80 Surge is making very good money on their oil. There are also ways of hedging that would allow them to capture some of the upside even on the hedged oil if oil prices were to keep rising. Not to mention that they would still have two thirds of production unhedged to take advantage of high oil prices.
Lets remember that the reason that Surge has been doing so poorly over the last several years is because they took on a lot of debt a few years ago expecting oil prices to rise which never happened untill now. Surge came quite close to bankruptcy because of this.
And while it is good to be optimistic about oil prices and things are looking a lot better than they have in many years for oil nobody can guarantee for certain where oil prices will go. High oil prices may be good for oil companies but they are a drag on the economy which increases peoples fuel expenses and increases the cost of goods leaving people with less disposable income to buy things. There is huge instability and so many problems in the world now with Covid supply chain problems,natural disasters, huge government money printing causing high inflation which will get worse in time and will eventually lead to higher interest rates which will likely blowout the world economy.
And if and when some of these things cause oil prices to collapse again as they alway eventually do and Surge is sitting there with no hedging and $300 million in debt and on the verge of bankruptcy like they just were, those who are now saying that they should not have any hedges going forward will be yelling and screaming at how incompetent Surge management were for not heding 100% of production at $80.
Remember a lot of the time in the markets "Hogs do get slaughtered."