Canadian gas producer Paramount Resources has entered into option-based strategies to hedge its exposure to natural gas prices over the coming winter, according to Aaron Thompson, controller in Calgary, Alberta. The term of the hedges runs from November until March 2004, he said. Bank of Montreal and CIBC World Markets were counterparties on the hedges.
The gas producer bought puts that allow it to sell gas in 5,000 gigajoule increments with strikes at CAD6.36, CAD6.41 and CAD6.50, said Thompson. It also purchased puts on an additional 15,000 gigajoules with strikes set at CAD7.55.
Paramount also purchased collars on another 20,000 gigajoules of gas via the purchase of puts struck at CAD5.50 and selling calls with a strike set at CAD7.80. Natural gas was trading at USD4.98 (CAD6.54) per million Btu last Monday. One gigajoule is equal to 0.95 million Btu.
