Does Connacher hedge some of its production?
Connacher’s diluted bitumen (“dilbit”), crude oil and natural gas are generally sold on month-to-month sales contracts negotiated with major Canadian or U.S. marketers, refiners or other end users, at either spot reference prices or at prices subject to commodity contracts based on WTI for crude oil and AECO for natural gas. As a means of managing the risk of commodity price volatility, Connacher enters into financial derivative commodity price-hedging contracts from time to time to ensure a target level of net operating income and cash flow, especially during periods of large capital expenditures. At November 10, 2010, Connacher had the following hedging contracts in place for the sale of crude oil: • May 1, 2010 – December 31, 2010 – 2,500 bbl/d – minimum of WTI US$75.00/bbl and a maximum of WTI US$95.00/bbl; • Calendar year 2010 – 2,500 bbl/d – WTI US$78.00/bbl; • January 1, 2011 – March 31, 2011 – 1,000 bbl/d – WTI US$86.10/bbl; • January 1, 2011 – March 31, 2011 – 1,000 bbl/d – WT
