Accounting gains and loses on the Hedge Book are not a source or use of cash
In the case of LINE it is imaginary fiddling with meaningless numbers.
LINE pre-sells their forecast production using swap and puts in the past.
The business model is one of production margins and not the spot prices of commodities.
For some reason a poster desires to draw our attention to GAAP rules around accounting for 'derivatives' over a five year time frame when what really counts are the production margins.
Mr . Ellis and the team fell down on efficiency and ethane last quarter. That brought on this new wave of short operations which was topped off by a remarkably well timed announcement of an SEC informal investigation which already had access to all the information they were requesting as part of their review.
Most analysts believe LINE management can work through the pressure or infrastructure challenges and maintain the distribution with out the BRY deal. Inclusive of the American economy destroying ethane due to a strike of capital investment. Correcting the pressure issues in a short time frame is the only way now to end this wave of the short operation.
If Mr. Ellis and the team can achieve this the analysts discounts around the uncertainty of the short operation doing sustained damage will be lifted.
We will soon hear from LINE management on whether or not they are still trying to recover the quarter fumble or have recovered the ball and are running again. The rest at this point is just wind and show.
do we know that LINE simply buys puts and never monetizes any of them? You are implying that if they simply buy them, lose the money and let them expire worthless. They would then either have an expense when purchasing or a gradual loss until expiration if they amortize them over life of puts.