24/7 Wall St.
01-13-2009, 03:00 PM
24/7 Wall St. Daily News
http://www.247wallst.com/images/2009/01/13/oil_well_image.jpg (http://247wallstreet.typepad.com/.shared/image.html?/photos/uncategorized/2009/01/13/oil_well_image.jpg)Encore Acquisition Company (NYSE:EAC) announced this morning that it would cut its capital spending budget for 2009 by $150 million to $210 million. The company primarily buys and operates long-lived, slowly declining assets that offer continuing profits at low cost. Encore couples that with an aggressive commodity hedging strategy.
That's what's interesting about today's announcement. Encore included achart (http://www.businesswire.com/portal/site/home/permalink/?ndmViewId=news_view&newsId=20090112006397&newsLang=en)that shows the value of its hedging portfolio at a range of pricingassumptions for crude oil and natural gas. If crude sells for around$40/barrel and natural gas at about $5/thousand cubic feet, Encore'shedges pay off more than $400 million net in the 2008 fourth quarter.
In the third quarter of 2008, Encore's net income was just over $206million, including a gain in fair value on its derivatives of about$239 million. As commodity prices fall, Encore's hedges pay better.Encore's shares are up about 3% today.
Paul Ausick
January 13, 2009
http://feeds.feedburner.com/~f/typepad/RyNm?i=aIebiT.P (http://feeds.feedburner.com/~f/typepad/RyNm?a=aIebiT.P) http://feeds.feedburner.com/~f/typepad/RyNm?i=DeZrKK.P (http://feeds.feedburner.com/~f/typepad/RyNm?a=DeZrKK.P) http://feeds.feedburner.com/~f/typepad/RyNm?i=s9fPnH.p (http://feeds.feedburner.com/~f/typepad/RyNm?a=s9fPnH.p)
complete story here... (http://www.247wallst.com/2009/01/when-oil-gas-he.html)
http://www.247wallst.com/images/2009/01/13/oil_well_image.jpg (http://247wallstreet.typepad.com/.shared/image.html?/photos/uncategorized/2009/01/13/oil_well_image.jpg)Encore Acquisition Company (NYSE:EAC) announced this morning that it would cut its capital spending budget for 2009 by $150 million to $210 million. The company primarily buys and operates long-lived, slowly declining assets that offer continuing profits at low cost. Encore couples that with an aggressive commodity hedging strategy.
That's what's interesting about today's announcement. Encore included achart (http://www.businesswire.com/portal/site/home/permalink/?ndmViewId=news_view&newsId=20090112006397&newsLang=en)that shows the value of its hedging portfolio at a range of pricingassumptions for crude oil and natural gas. If crude sells for around$40/barrel and natural gas at about $5/thousand cubic feet, Encore'shedges pay off more than $400 million net in the 2008 fourth quarter.
In the third quarter of 2008, Encore's net income was just over $206million, including a gain in fair value on its derivatives of about$239 million. As commodity prices fall, Encore's hedges pay better.Encore's shares are up about 3% today.
Paul Ausick
January 13, 2009
http://feeds.feedburner.com/~f/typepad/RyNm?i=aIebiT.P (http://feeds.feedburner.com/~f/typepad/RyNm?a=aIebiT.P) http://feeds.feedburner.com/~f/typepad/RyNm?i=DeZrKK.P (http://feeds.feedburner.com/~f/typepad/RyNm?a=DeZrKK.P) http://feeds.feedburner.com/~f/typepad/RyNm?i=s9fPnH.p (http://feeds.feedburner.com/~f/typepad/RyNm?a=s9fPnH.p)
complete story here... (http://www.247wallst.com/2009/01/when-oil-gas-he.html)