Spot on with the explanation regarding Elk's oil hedging.
My take on the opportunity cost is a bit different. As dill said, the Aneth hedging was necessary to facilitate the debt finance..... no hedging would have mean't no finance, and no Aneth deal, or an Aneth deal which would have been more equity dilutive, or with significantly more expensive and restrictive finance.
The opportunity cost to Elk of not picking up Aneth would be immeserably more any hedging loss.
Cheers
Dan
ELK Price at posting:
9.2¢ Sentiment: Buy Disclosure: Held
