Need some help reading this report

[Dover]

This is a report from Concho Oil. On page 23 they discuss hedges, or rather a 'hedging schedule'. Can anyone explain that to me, and what a 'hedging schedule' is?
Do oil companies create their own hedges or how does that work?


http://phx.corporate-ir.net/phoenix.zhtml?c=211775&p=irol-presentations

http://media.corporate-ir.net/media_files/irol/21/211775/UBS%20Global%20Oil%20%20Gas%20Conf%20%20(May%202008).pdf

[woolldog]

1. A schedule

is just an appendix at the end of a document listing certain information. Frequently in legal documents you have various "schedules" appended at the end that deal in detail with a wide range of issues not dealt with in the main body of the document.

In this case, "hedging schedule" is simply a listing of all the hedging transactions the company has open at the moment.

You can create your own hedge sure. For example if I know I'm going to be paid a year from now in euros (say 15,000 euros) and I want to lock in the current exchange rate (because I live in the US and I'm scared the dollar will depreciate further in between now and the time I'm paid), I can go into the market and sell 15,000 euros. That would be a very simple way to hedge my exposure to the dollar depreciating.

But, beyond something simple like that, you would probably have lawyers working on a contract/documentation and a bank advising you on the structure and risks.

A company would need to find a counter-party for the hedge, someone to take the opposite side of the trade. That could be anyone from an investment bank to a private person, or another business entity.