RE:RE:RE:RE:RE:HORRIBLE BROKEN PROMISE !!! Alex, Your Second BLACK STAR !!!A few HUGE Risks still possible:
1) Cash Flow Risk..... As I assume when contract mature/expire any profits/losses are due immediately..... vs the gradual cash flow from physical delivery.
2) related to #1, you hedge more than you produce, in which case you DO actually "lose".
ETFs don't produce any oil themselves, it's all paper trading. Actual "Losses" occur. Oil ETFs trade Billions..... NONE delivered. It's all a scam/paper trading.
All just my opinion/view/thinking/guessing.
Maxmoe wrote: PS , 110 is at or near record highest prices we have ever sold our oil for since cenovus was created. It generates HUGE cash flow for profits reinvested, dividends, buybacks, and maybe a great Xmas party.
Maxmoe wrote: OMG, take a breath. Rethink the hysterics. Hedging "losses" are not out of pocket, out of shareholders equity losses like selling oil for less than it costs to produce. There is an offset on the top line that covers the give up on hedges. Hedges work in a multitude of ways but in essence they all give up POTENTIAL upside in exchange for the safety net on the downside. Eg, let's say oil is 100. I hedge my future sales by capping my upside at $110. Ie I sell call options. I use the proceeds to buy put options at say 90. So, in the future, no matter what spot prices trade at, I will get a minimum of $90 , but a maximum of 110. It's all done using contracts. Nobody is delivering a million barrels at your front door or showing up with a mile long train to get filled. So if oil goes to say 130, it will cost me $20 to close the contract. That is reported as a "loss". But in reality, I sell the physical oil at 130, record a "loss" of 20 and net 110. To repeat, oil was $100, it goes up but I "only" get 110 versus 130. But I get 110! I don't actually LOSE anything other than foregone profit.
TopStockBuy wrote: Disgusting....sick to my stomach. I had a very uneasy feeling when they spoke of hedges at the AGM. As they just admitted..... Cenovus doesn't need to hedge. They are an integrated producer paying off short term debt and refinanced long term debt that isn't payable for another 15-20yrs. 1.5B could have paid off more debt. Despicable....$2B fiasco of wasted money. Someone should be fired over this...