Additional Limitations on Hedging Clause Samples
The "Additional Limitations on Hedging" clause restricts a party's ability to engage in certain hedging activities related to the subject matter of the agreement, such as securities or financial instruments. Typically, this clause outlines specific types of transactions that are prohibited, like short sales, derivative trades, or other strategies that could undermine the intent of the agreement or manipulate market value. Its core practical function is to prevent parties from circumventing contractual obligations or gaining unfair advantages through hedging, thereby maintaining the integrity and fairness of the agreement.
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Additional Limitations on Hedging. The Borrower shall not, nor shall it permit any of its Restricted Subsidiaries to, be party to or enter into any Hydrocarbon Hedge Contract; provided that, the Borrower and its Restricted Subsidiaries may be party to and enter into Hydrocarbon Hedge Contract covering PDP Reserves subject to the following limitations:
(i) other than as provided in the immediately following clause (ii) and clause (iii), before and after giving effect to such Hydrocarbon Hedge Contract, no more than 85% of the anticipated production of gas volumes and no more than 85% of the anticipated production of oil volumes, in either case, attributable to the Borrower’s and its Restricted Subsidiaries’ PDP Reserves, as reflected in the most recently delivered Engineering Report delivered pursuant to Section 2.02(b) and calculated on an aggregate basis for the Borrower and its Restricted Subsidiaries’, taken as a whole, may be covered by Hydrocarbon Hedge Contracts;
(ii) the volume limitations in clause (i) shall not apply to put option contracts that are not related to corresponding calls, collars or swaps;
(iii) the volume limitations in clause (i) shall not apply to the anticipated production of Hydrocarbons which are the subject of an Acquisition prior to effecting such Acquisition;
(iv) such Hydrocarbon Hedge Contracts shall otherwise comply with the terms of this Agreement.
Additional Limitations on Hedging. The Borrower shall not, and shall not permit any of its Restricted Subsidiaries to, enter into or maintain any Hydrocarbon Hedge Contract with any Person other than Hydrocarbon Hedge Contracts (i) with an Approved Counterparty and (ii) the notional volumes for which (when aggregated with other Hydrocarbon Hedge Contracts then in effect other than basis differential swaps on volumes already hedged pursuant to other Hedge Contracts) do not exceed, as of the date such Hydrocarbon Hedge Contract is executed or at any time during the term of this Agreement, the percentage set forth below of the Borrower’s and Guarantors’ Current Production for each month during the period during which such Hydrocarbon Hedge Contract is in effect, for each of crude oil, natural gas liquids and natural gas, calculated separately: provided, that, if at any time, the aggregate notional volumes of all the Borrower’s and its Restricted Subsidiaries’ respective ▇▇▇▇▇▇ of crude oil, natural gas liquids and natural gas (calculated separately) under all Hydrocarbon Hedge Contracts corresponding to the delivery dates of the Current Production exceeds the “Percentage Limitation” of Current Production, then Borrower shall have the opportunity to cure such excess by (A) furnishing to Administrative Agent, by no later than 5:00 p.m. (Houston, Texas, time) on the next Test Date, a detailed calculation of such determination and such excess, in form, and substance reasonably satisfactory to the Administrative Agent, and (B) no later than 15 days after such Test Date, Borrower shall (1) furnish to Administrative Agent an updated Engineering Report (the "Updated Engineering Report") in form and substance reasonably satisfactory to the Administrative Agent, and (2) terminate, create off-setting positions or otherwise unwind existing Hydrocarbon Hedge Contracts such that, after giving effect thereto, no more than “Percentage Limitation” of the Borrower's and its Restricted Subsidiaries' aggregate Current Production of crude oil, natural gas liquids and natural gas are covered by all Hydrocarbon Hedge Contracts (it being understood that volumes of crude oil, natural gas liquids and natural gas are calculated separately and that natural gas liquids may be hedged on terms reasonably satisfactory to the Administrative Agent by Hydrocarbon Hedge Contracts for crude oil, natural gas, natural gas liquids or a combination thereof), and Borrower shall deliver a certificate of a Responsible Officer of the B...
Additional Limitations on Hedging. The Borrower shall not, nor shall it permit any of its Subsidiaries to, be party to or enter into any Hedge Contract; provided that, the Borrower and its Subsidiaries may be party to and enter into Hedge Contract covering PDP Reserves subject to the following limitations: (A) other than as provided in the immediately following clause (B), before and after giving effect to such Hedge Contract no more than 75% of the anticipated production of gas volumes and no more than 75% of the anticipated production of oil volumes, in either case, attributable to the Borrower's and its Subsidiaries' PDP Reserves (as reflect in the most recently delivered Engineering Report under Section 2.02(b)(i) or Section 2.02(b)(ii)) may be covered by Hedge Contracts; (B) the volume limitations in clause (A) shall not apply to put option contracts that are not related to corresponding calls, collars or swaps; and (C) such Hedge Contracts shall otherwise comply with the terms of this Agreement.
Additional Limitations on Hedging. Borrower shall not, and shall not permit any other Loan Party to, be party to or enter into any Hedge Transaction unless:
(i) such Hedge Transactions are listed on Schedule 4.18 or, after giving effect to such Hedge Transaction, the aggregate anticipated production of natural gas volumes subject to Hedge Transactions for any period may not exceed ninety percent (90%) of the anticipated production of crude oil, natural gas and natural gas liquids volumes attributable to the Loan Parties’ PDP Reserves, as reflected in the most recently delivered Reserve Report, and calculated on an aggregate basis for the Loan Parties, taken as a whole;
(ii) the calculation of volume limitations in clause (i) shall not double count volumes subject to a collar;
(iii) the volume limitations in clause (i) shall not apply to the anticipated production of Hydrocarbons which are the subject of an Acquisition prior to effecting such Acquisition; and
(iv) such Hedge Transactions shall only reference Hydrocarbons of the type described in the Reserve Report and otherwise comply with the terms of this Agreement.