TCOP May Not Be All That Relevant -- CLR -- Bakken, North Dakota, USA

I've blogged about this before, that the television crawler oil price (TCOP) may not be all that relevant -- oil exploration and production companies use various instruments to protect themselves from severe price swings. In addition, the contracts are written well in advance of the spot price we see on the crawler.

It's great to see this in print.

CLR is delivering its oil to "premium markets." "More than 90 percent of our operated production is priced, apart from transportation costs, at a premium to West Texas Intermediate. WTI is an increasingly unrealiable reflection of the realized value of Bakken oil due to the chronic oversupply at Cushing," Mr. Hamm said. The majority of Continental's oil is sold for delivery by pipeline to Clearbrook, MN or Guernsey, WY, or delivered by railroad to various points including St. James, LA.


During the third quarter of 2011, Continental had 3.1 million barrels of oil production covered by derivative instruments, with fixed price swaps averaging $85.64 per barrel and collars in a weighted average range of $79.39 to $91.27. The Company expects to recognize a pre-tax unrealized gain on mark-to-market derivative instruments of more than $500 million for the quarter.

There's something to be said for flexibility in ways and places to ship oil.

I've always said the key to success is effectively and efficiently managing the "business of the business."