Perpetual Energy maintains a policy of utilizing derivative financial instruments (hedges) in order to manage price risk and volatility and to maximize the price obtained for natural gas production. Continuous market surveillance and analysis by our dedicated gas marketing team leads Perpetual Energy to employ various hedging tools and pricing arrangements to protect the level of monthly distributions; enhance or protect the economics of acquisition and capital programs by capturing pricing, either at the same level or higher than the original evaluation; and to capitalize on market anomalies.
On an ongoing basis, we intend to utilize derivative financial instruments to manage our exposure to such factors.
Perpetual Energy currently has the following combined fixed and option hedges in place:*
|
Volume(2)
|
Price ($/GJ) |
Term
|
Current Forward Price ($/GJ)(3) |
% of Current Production(4) |
| 95,000 GJ/d | $7.53 | November 2010 -
March 2011 |
$4.14 | 49% |
| 47,500 GJ/d | $5.21 | April 2011 -
October 2011 |
$4.13 | 24% |
| 37,500 GJ/d | $5.33 | November 2011-
March 2012 |
$4.75 | 19% |
(1) Weighted average prices are calculated by netting the volumes of the financial and physical sold/bought contracts together and measuring the net volume at the weighted average "sold" price for the financial and physical contracts.
(2) All transactions at AECO unless identified specifically as a NYMEX transaction; AECO is C$/GJ/d; NYMEX is US$/MMBtu/d.
(3) Futures market reflects AECO/NYMEX forward market prices as at August 9, 2010.
(4) Calculated using pro-forma production of 192,000 GJ/d, including gas over bitumen deemed production volumes.
* updated as of Tuesday August 10, 2010