• 4 minutes Projection Of Experts: Oil Prices Expected To Stay Anchored Around $65-70 Through 2023
  • 7 minutes Oil prices forecast
  • 11 minutes Algorithms Taking Over Oil Fields
  • 14 mintues NIGERIAN CRUDE OIL
  • 4 hours UK, Stay in EU, Says Tusk
  • 2 hours Socialists want to exorcise the O&G demon by 2030
  • 2 hours Nuclear Power Can Be Green – But At A Price
  • 14 hours Blame Oil Price or EVs for Car Market Crash? Auto Recession Has Started
  • 2 hours Chevron to Boost Spend on Quick-Return Projects
  • 12 mins U.S. Treasury Secretary Mnuchin Weighs Lifting Tariffs On China
  • 11 hours Venezuela continues to sink in misery
  • 2 hours Maritime Act of 2020 and pending carbon tax effects
  • 5 hours What will Saudi Arabia say? Booming Qatar-Turkey Trade To Hit $2 bn For 2018
  • 1 day WSJ: Gun Ownership on Rise in Europe After Terror Attacks, Sexual Assaults
  • 24 hours How Is Greenland Dealing With Climate Change?
  • 4 hours German Carmakers Warning: Hard Brexit Would Be "Fatal"
  • 1 day Trump inclined to declare national emergency if talks continue to stall - Twitter hides this as "sensitive material"
  • 2 hours Conspiracy - Theory versus Reality
Nick Cunningham

Nick Cunningham

Nick Cunningham is a freelance writer on oil and gas, renewable energy, climate change, energy policy and geopolitics. He is based in Pittsburgh, PA.

More Info

Locked Into Hedges, Shale Misses Out On Oil Price Rally

Rig

The shale industry is set to enjoy its best year, arguably in its history, but some drillers are not benefitting as much as expected because they locked themselves into hedges at lower prices.

Shale drilling has historically been a loss-making proposition. The precipitous decline in output from shale wells meant that companies had to use the revenue from one well to drill the next well. Cash was continuously recycled back into new wells, and shareholders rarely saw any profits flow back to them.

That is set to change this year. “Higher prices and operational improvements are putting the US shale sector on track to achieve positive free cash flow in 2018 for the first time ever,” the International Energy Agency (IEA) wrote in a recent report on energy investment.

But not everyone is raking in as much money as they might have wanted. A handful of shale companies posted lower-than-expected profits in recent days, owing to the fact that they secured hedges for their second quarter production at prices that were lower than the prevailing market price.

Among the companies that undershot expectations were Devon Energy, Anadarko Petroleum and Chesapeake Energy. As Reuters notes, many shale companies hedged at around $55 per barrel in the second quarter while WTI was much higher.

Those hedges were likely secured last year, when oil traded at lower levels. The shale companies locked in those positions as a risk management strategy, guarding…

To read the full article

Please sign up and become a premium OilPrice.com member to gain access to read the full article.

RegisterLogin



Oilprice - The No. 1 Source for Oil & Energy News