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Linn Energy, LLC Message Board

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  • nsupper1 nsupper1 Nov 22, 2008 1:39 PM Flag

    10Q on Counterparty Risk

    I am new on the oil hedges.Explain the counter parties. Who are they and why did Line not just sell forward NYNMEXCL crude oil futures to cover their forward production I know the margin calls can be expensive if futures rally but at least there would be no chance of counter parties going BK . As I said I am new to these counter parties hedges. Answer please

    • You can search this Linn message board for a list of counterparties (same banks as on their credit facility).

      Keep in mind the counterparties offload the hedge risk to those on the other side of the trade such as airlines. The counterparties on Linn are probably not highly exposed to the change in the hedge value themselves.