We enter into commodity price contracts to actively manage risk associated with price volatility to protect adjusted funds flow from operations required to fund our capital program.  We use fixed price and costless collar contracts as well as balancing physical and financial contracts in terms of volumes, timing of performance, and delivery obligations to manage risk. 

 

In July 2009, Compton increased its risk management activities by expanding its natural gas price hedging position to reduce cash flow volatility as natural gas prices are not expected to recover until late 2009 or the first half of 2010. Approximately 60% of our production is hedged for 2009 and beyond at prices between AECO $4.50 per GJ and $7.18 per GJ, safeguarding a portion of revenue. The following table outlines commodity hedge transactions in place at August 5, 2009:

 

Commodity   Term Volume
(GJ/day)
Average Price
($/GJ)
Index
Natural gas
    Collar
    Collar
    Collar
    Collar
 
Apr. 2009 - Oct. 2009
July 2009 - June 2010
July 2009 - June 2011
July 2009 - Oct. 2011

15,000
14,000
30,250
10,000

$6.25 - $7.18
$4.50 - $5.80
$4.52 - $7.01
$4.50 - $7.00

AECO
AECO
AECO
AECO

 

Net earnings for the year-ended December 31, 2008, include realized and unrealized loss of $1.9 million (2007 - $1.6 million loss) on these transactions. For the first half of 2009, we recognized realized and unrealized gains of $11.1 million from commodity hedge transactions.