1) You are the CEO of a small oil company that has bought up a lot of land and drilling rights in the Permian Basin. With oil at $60, it is profitable for your company to drill, but you are worried about oil prices declining in the near future. You are carrying a heavy debt load and halting production when prices drop is not an option. Can you use a futures contract to address this problem? Explain who might be your counterparty in this contract.

2) Derive and explain futures-spot parity