RE:RE:NG Drops Below $2Agreed.
The hedging when done, should only be tied to capital expenditures to ensure the wells they are drilling this year pay out as expected. Hedging 60%+ percent when you have a 25% decline rate is just market speculation...done mechanically
They should have hedged less, and paid off more debt before raising their dividend. They should use bottom of the cycle prices and get Debt/ebitda to under 2 with that framework if they want to keep debt on their balance sheet.
In your example, it would be as if the farmer sold forward some of his crop and used the money when times were good to go on vacation...and didn't pay off the tractor. Then used the debt on the tractor for a reason why he needs to sell his crop forward every year.