e. Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices, will affect the Company's income or the value of its financial instruments. There were no changes in the Company's exposure to market risks or the Company's processes for managing the risks from the previous period.
(i) Currency risk
The majority of the Company's revenues and expenses are denominated in U.S. dollars and the Company holds the majority of its funds in U.S. dollars, except as required to fund dividends and make interest payments on the convertible notes. As a result, the Company has limited its cash exposure to fluctuations in the value of the U.S. dollar versus other currencies. However, the Company is exposed to changes in the value of the Indian rupee versus the U.S. dollar as they are applied to the Company's working capital, income tax receivable and deferred tax liability of its subsidiaries in India. The Company does not have any foreign exchange contracts in place to mitigate currency risk.
A 5 percent strengthening or a 5 percent weakening of the Indian rupee against the U.S. dollar at March 31, 2013, which is based on historical movements in the foreign exchange rates, would have respectively decreased or increased the net loss by $5 million. This analysis assumes that all other variables remained constant.
The financial instruments are exposed to fluctuations in foreign exchange rates, which are used in the translation of the financial statements of the Canadian and corporate operations to U.S. dollars. The reported U.S. dollar value of the cash and cash equivalents, accounts receivable, short-term investment and accounts payable of the Canadian and corporate operations is exposed to fluctuations in the value of the Canadian dollar versus the U.S. dollar. A 3 percent strengthening or a 3 percent weakening of the Canadian dollar against the U.S. dollar at March 31, 2013, which is based on historical movement in foreign exchange rates, would have respectively increased or decreased other comprehensive loss by $2 million. This analysis assumes that all other variables remained constant.
(ii) Commodity price risk
The Company is exposed to the risk of changes in market prices of commodities. The Company enters into natural gas contracts, which manages this risk. Because the Company has long-term fixed price gas contracts, a change in natural gas market prices would not have impacted the net loss for the period ended March 31, 2013. The Company is exposed to changes in the market price of oil and condensate. In addition, the Company will be exposed to the change in the Brent crude price as the average Brent crude price from the preceding year is a variable in the gas price for the following year, calculated annually, for the D6 gas contracts.
(iii) Other price risk
The Company has deposited the cash equivalents with reputable financial institutions, for which management believes the risk of loss to be remote.
19. Share capital
a. Fully paid ordinary shares
The Company has authorized for issue an unlimited number of common shares and an unlimited number of preferred shares. The common shares issued are fully paid and the shares have no par value. No preferred shares have been issued.
b. Share options granted under the employee share option plan
The Company has reserved for issue 7,021,591 common shares for granting under stock options to directors, officers, and employees. The options become vested immediately to five years after the date of grant and expire one to six years after the date of grant. The stock options are settled in equity.
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