Saturday, May 09, 2009

Petroleum Development Corporation Trading Losses Surpass Operations

Petroleum Development Corporation (Nasdaq: PETD) announced quarterly losses late Friday well after market close. The fact that energy prices are down is well understood in the market place. Live by the sword die by the sword. But what is becoming apparent is that this firm’s earnings are more influenced by energy trading and derivatives contracts as opposed to the operating activities that investors would normally expect. The company reported a net loss for the first quarter ended March 31, 2009 of $5.7 million.

Then they explain

“The net loss for the first quarter 2009 was impacted by a $12.9 million net decrease in the mark to market value of the Company's derivatives resulting from contracts settled during the quarter. This unrealized loss was offset by realized gains of $36.6 million during the quarter, resulting in a net gain from price risk management activities in the first quarter 2009 of $23.7 million, compared to a net loss of $42.3 million in the same first quarter period of 2008.”