• 5 minutes THE GREAT OIL PRICE PREDICTION CHALLENGE OF 2018
  • 8 minutes So oil touched $80! (WTI break $71 twice). What does the future hold?
  • 14 minutes China Tariff Threatens U.S. LNG Boom
  • 12 hours Tesla’s Powerpack Battery in Australia Made up to $17 Million
  • 20 hours Realism Replaces Unlikely Bromance: Macron and Trump Aren't As Chummy As They Used To Be
  • 2 hours The Warning Lights: Full-Blown Trade War Would Cost Jobs, Growth And Stability
  • 8 hours Barrick to Buy Randgold
  • 20 hours Lucid Motors Partners With Electrify America For ‘Ultra-Fast’ Charging
  • 15 hours Saudi Aramco IPO Seems Unlikely
  • 19 hours Global Hunger Continues to Grow Driven By Climate Change
  • 14 hours The moves toward 'zero-manning' in oil & gas
  • 2 days Downloadable 3D Printed Gun Designs, Yay or Nay?
  • 1 day Will Robots Bring The Demise Of European Artistry?
  • 1 day Threat: Iran warns U.S, Israel to expect a 'devastating' revenge
  • 2 days 100% Renewables will Fuel the Growth of Poverty and Homelessness
  • 2 days Why Are the Maldives Still above Sea Level?
Alt Text

Oil Markets Unfazed By $200 Billion Trade War Escalation

Another escalation in the U.S.-China…

Alt Text

Why U.S. Electricity Sales Surged In 2018

U.S. electricity sales have had…

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

Trending Discussions

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

Trending Discussions





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