In conjunction with the extension of its current credit facility to fund the Foreman Butte acquisition, Samson Oil & Gas Ltd. (ASX: SSN; NYSE MKT: SSN) has entered into new hedging arrangements. Approximately 75% of total current production including the acquisition has been hedged from May 2016 to April 2018. Additional hedges will be put in place as production increases.
The counter party to the hedges is BP, Samson’s previous hedge counter party. The hedges were put in place on March 30. Samson has deferred premiums of $0.5 million with respect to this hedge program. The net value, after deferred premiums of the hedge portfolio at April 4 was approximately $0.8 million. The hedge program was designed to protect the acquisition price of the Foreman Butte project and has a floor of around $41 per barrel.
Together with the company’s hedging advisors, Samson will continue to monitor the oil markets with a view to trading out of these hedge positions or reducing the deferred premiums as the market dictates.