Easy Come, Easy Go: INR Q2 Hedge Gain Erased by $64.4M Q3 Loss

Back in July, Infinity Natural Resources (INR) told the world it had booked a $57.5 million derivative (hedging) gain for the second quarter, and MDN used the occasion to decode how hedging works (see INR Discloses $57.5M Q2 Derivative Gain Ahead of Earnings). Well, three months later, the hedge book has swung the other way. Infinity said yesterday that it will report a total derivative loss of approximately $64.4 million for the third quarter. That's a swing of $121.9 million in one quarter. Before anyone panics: almost all of it is "paper," and the reason behind it—oil prices that shot up—is actually good news for Infinity's physical sales. Here's what happened.

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