RE:RE:AECO 7A BASIS SWAP: 147,500 MmBTU/d @ HH LESS USD 1.088To clarify please for Birchcliff natgas (82% of production):
1) Dawn is 44% of total natgas (44% of 82%, not 44% of 100%), usually sells for a little less than HH (40-60 cents less - does it have its own basis hedge), transportation is deducted in the presentation but in the MD&A its part of the transportation line item (don't double count it) - very expensive btw. Its in US$.
2) sold to AECO is actually 56% of total natural gas. 37%/56% of that is basis hedged (see 3)
3) the HH to AECO basis is 37% of total natgas and are FINANCIAL hedges. The gain (or loss - big gain right now) is (HH price-less basis)*exchange rate less AECO * volume * days and is over and above the price received in 3 for the 37/56 portion.
when HH price goes up but AECO stays low, BIR benefits in 1) & 3) ((current situation).
when HH AND AECO both go up, BIR benefits in 1) & 2). 3) is neutral (no gain no loss).
when HH skyrockets and AECO goes up, BIR benefits, in 1), 2) & 3)
when AECO skyrockets and HH stays flat, BIR benefits in 2) but loses in 3).