Thanks for the analysis. If I read your table it suggests that roughly only 20% is hedged for Aneth. I thought we were at a figure considerably higher and also that Grieve was also partially hedged going forward. If Elk is only hedged to the tune of 20-25% of shared production, it could benefit from some of the hike in oil prices which would mitigate some of the cash flow issues related to the 10 million premium and the delayed ramp up of Grieve. i still think they have operational costs issues unless a restructure is in process of outsourced/insourced production contracting which prevents an escalation of operating costs with production increases.
Hindsight always 20/20 and yes it is clear they would need the hedges for the financing. However, having those hedges also meant they were unhedged partially for the obligation to pay the deferred premium of 10 million if prices rose. I guess you pick your poison.
I re-looked at the Taylor Collison review, noting that TC was also an underwriter on multiple occasions, also with at the time of writing a nominal stake holder and not going to bite that hands that feeds it. So it is necessary to have caution when reviewing their estimates, the Grieve estimates although you could not tell at the time, are most likely highly optimistic for 2018 and reasonably optimistic for 2019.
ELK Price at posting:
7.4¢ Sentiment: None Disclosure: Not Held
