That point applies to many of these e&p companies. As the months roll by and the hedges roll off month by month, do they put on new hedges at dramatically lower prices? Or do they go naked and hope for a rebound in prices? Taking on hedges now locks them in to low prices and , possibly, losses for future earnings.
LRE mgt seems to have the deer in the headlights response to their issues.
Not to mention the report says the return rate is from the wells as a grouping. So LINE will need to drill many successful wells to get over the criteria set up by Blackstone. That is no small achievement. I wonder if LINE ever had such a rate of success in drilling a group of wells? So bad wells hit directly into Line by pulling down the grouping's rate of return.
Blackstone NEVER gives away a good deal to the counter party. It sounds like LINE will provide the cream of the crop properties to the venture. That is the standard operating procedure for Blackstone. Scalp the premier assets in a deal and leave the other party with the scraps.
I will read the deal but I'm sure there is plenty of risk to LINE in this venture. Blackstone wouldn't do a deal on the even.