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Enron Mail |
Clayton,
It translates into a credit risk for those on the other side of the hedge. Many producers have a long history of poor timing of hedges. I could give you quite a long list. They definitely need a bright adviser who will tell them the price of gas two years from now. Vince Clayton Vernon @ ENRON 06/29/2000 01:02 AM To: Vince J Kaminski/HOU/ECT@ECT cc: Subject: from today's paper Vince: Here's an amazing factoid in today's paper related to the issue of how much money you can "make" (sic) by hedging: ... Other companies analysts say are saddled with hedges include El Paso Energy Corp. and Coastal Corp., which are merging. A Coastal official declined to comment on the company's forward positions. Although El Paso is known for its pipeline business, it produces gas as result of its $6.2 billion acquisition last year of Sonat. "More than 90 percent" of that gas is hedged through the rest of the year, said Bruce Connery, vice president of investor relations. The forward contracts are for $2.40, he said. Hedging in the current market plays to the company's primary aim of meeting investors' expectations, Connery said. "Our first goal is to deliver the earnings goal that we set out, and that dictates that we hedge out commodity volatility," he said. ... $2.40??? Are you kidding???? Clayton
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