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Athabasca Oil Corp T.ATH

Alternate Symbol(s):  ATHOF

Athabasca Oil Corporation (AOC) is a Canadian energy company with a focused strategy on the development of thermal and light oil assets. AOC’s segments include Light Oil and Thermal Oil. The Thermal Oil segment includes the Company’s assets, liabilities and operating results for the exploration, development and production of bitumen from sand and carbonate rock formations located in the Athabasca region of Northern Alberta. It also consists of two operating oil sands steam assisted gravity drainage projects and a resource base of exploration areas in the Athabasca region of northeastern Alberta. The Light Oil segment includes its assets, liabilities and operating results for the exploration, development and production of light crude oil and medium crude oil, tight oil and conventional natural gas. Its Light Oil segment consists exclusively of the Duvernay in the Greater Kaybob area with about 155,000 gross acres across Kaybob West, Kaybob North, Kaybob East and Two Creeks.


TSX:ATH - Post by User

Comment by Maxmoeon Apr 04, 2022 1:54pm
193 Views
Post# 34573828

RE:RE:https://www.bnnbloomberg.ca/cenovus-closing-wti-hedges-sees-

RE:RE:https://www.bnnbloomberg.ca/cenovus-closing-wti-hedges-sees-

My post on the cve board.

"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."

BLACKJACK86 wrote: one billions dollars loss on hedge

 

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