Buffalo, NY 11/25/2009 12:07:52 AM
News / Business

(OTC: DRLY) Price Risk Management Activities

We formerly entered into a "costless collar" hedging position, which offer DRLY partial protection against variations in the price of crude oil.  The net effect of the costless collar was to set a floor of $100 on the price to be received for each barrel of production covered and a ceiling of $131 for each barrel of production covered. 

 

These are the number of barrels of production covered by the costless collar for production months through July 2011, Aug 2008 - Dec 2008: 1,900 barrels per month Jan 2009 - Dec 2009: 1,700 barrels per month Jan 2010 - Dec 2010: 1,600 barrels per month Jan 2011 - Jul 2011: 1,400 barrels per month.

 

 

 

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Last year in December DRLY re-structured hedge position to guarantee more near-term income by closing out the old position and using the value realized to enter into a combination of a swap and a costless collar, with more volume hedged in the near term.  This resulted in a fixed price of $94, covering the period from January 2009 through June 2010 and effectively guarantees us $94 per barrel on an average of our first 2,250 barrels of production each month.

 

 

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