Crude Oil Futures
Sasol has entered into hedging transactions (zero cost collars) for 16,425
million barrels of oil (equivalent to about 30% of its planned South African
synfuels production) for the remainder of the 2009 financial year.
The hedge will provide downside protection should monthly average dated Brent
crude oil prices decrease below US$90/ bbl (put level) on the hedged portion of
synfuels production. Conversely, Sasol will incur opportunity losses on the
hedged portion of production should monthly average oil prices exceed a volume
weighted average US$228 / bbl (call level). The hedge has been executed over a
four week period (commencing at the beginning of the new financial year, 1 July
2008) and due to the volatility of the oil price, call levels between US$195 /
bbl and US$253 / bbl were attained.
Similar to the synfuels hedge Sasol also entered into zero cost collars for 550
000 barrels of oil for its Sasol Petroleum International`s West African crude
oil output (representing about 30% of planned net output for financial year
2009). The levels attained were a put level of US$90 / bbl and a call level of
US$240 / bbl.
Sasol considers oil price hedging on an annual basis as part of its risk
management activity. In the light of very volatile oil prices, Sasol believes
that the hedge that has been entered into will mitigate the risk of any
substantial fall in oil prices.
Appropriate disclosure of these instruments will also be made in our 2008 annual
financial statements and Form 20-F.
1 August 2008
per Stock Exchange News Service (SENS)
The execs at Sasol are clever fellows - the above will give a guide to where the price of crude is likely to go.