Penn West has also entered into AECO natural gas collars on 150,000 gigajoules ("GJ") per day (equivalent to approximately 142 mmcf per day) for the 5-month period from November 2008 to March 2009. These collars were transacted with an average floor price of CDN$7.33 per GJ (approximately CDN$7.73 per mcf) and an average ceiling price of CDN$9.39 per GJ (approximately CDN$9.90 per mcf). The volume hedged by these contracts represents approximately 28 percent of Penn West's expected natural gas production for the contracted period.
Total production hedged for the 2008 calendar year is now approximately 38 percent. The transaction of these collars is consistent with policies established by the Board of Directors of the Trust.
During 2008, the Trust continues to employ derivative instruments on a portion of its production volumes spanning several quarters into the future. The Trust also secured hedges to fix the costs of electric power at its oilfield operations, improving its ability to project operating costs, netbacks and cash flows.
Penn West is careful and judicious in its hedging activities in order to preserve exposure to commodity price upside and avoid unreasonable opportunity costs.
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