Ann: Strike & Orica Sign Binding Gas Supply Term , page-45

re: Ann: Strike & Orica Sign Binding Gas Supp... the author can't be correct as the expected cost is $3 thus if we forward sell 150pj at 35c then we would need to fund close on $400mil over the 20 years to pay for it i.e. cost to produce is $3 you are selling for 35c - complete madness nobody would do it, and as soon as you wrote a hedge like that you would have to mark it to market and carry a liability so big that it would bankrupt you i.e. the auditors wouldn't sign off your annual report as being a viable entity.

My view is that they will be getting the gas at somewhere between cost of production and cost + x% + CPI , well below whatever the current price is for new contracts