• 4 minutes Ten Years of Plunging Solar Prices
  • 7 minutes Hydrogen Capable Natural Gas Turbines
  • 10 minutes World looks on in horror as Trump flails over pandemic despite claims US leads way
  • 13 minutes Large gas belt discovered in China
  • 40 mins COVID 19 May Be Less Deadly Than Flu Study Finds
  • 20 mins 60 mph electric mopeds
  • 4 hours So the President is on that Hydroxy
  • 56 mins Russia loses its chance to capture the EU gas market
  • 2 hours Payback Time: Republican Senators turn the tables on Democrats. The difference is the Republican investigations are legit.
  • 5 hours Why 2030-Isn.t-The-Magic-Year-For-Electric-Vehicles
  • 7 hours US-China tech competition accelerates: on Friday 05/15 new sanctions on Huawei, on Monday 05/18 Samsung chief visits China
  • 2 hours China to Impose Dictatorship on Hong Kong
  • 6 hours Monetary and Fiscal Policies in Times of Large Debt:
  • 4 hours Beware the Left's 'Degrowth' Movement (i.e. why Covid-19 is Good)
  • 9 hours DEFIANCE – There are More of Us Than Them
  • 4 hours Oil Capex Proportions
  • 13 hours Let’s Try This....
China Dumps LNG Amid Massive Glut In Asia

China Dumps LNG Amid Massive Glut In Asia

PetroChina, one of the largest…

Has Natural Gas Hit Rock Bottom?

Has Natural Gas Hit Rock Bottom?

Natural gas prices fell below…

Charles Kennedy

Charles Kennedy

Charles is a writer for Oilprice.com

More Info

Premium Content

Natural Gas Drillers Rush To Hedge Production As Prices Soar

Natural gas prices are soaring on cold weather and falling production, spreading optimistic conditions for gas producers for the first time in years. Natural gas spot prices are at their highest point since 2014, boosting share prices for drillers across the industry.

Because natural gas prices are notoriously volatile, many companies are not taking any chances, locking in hedges for future production. According to S&P Global Market Intelligence, many top U.S. natural gas producers have already started to secure hedges for their production at $3 per MMBtu, which stands in stark contrast to how they approached 2016.

For example, at the start of the year, Chesapeake Energy and Southwestern Energy Co. had no hedges for their 2016 production, a decision that likely haunted them as natural gas prices fell below $2/MMBtu for large stretches of the first and second quarters of this year. Having been burned by the market, Chesapeake and Southwestern seemed to have learned their lesson, with both companies recently moving to secure hedges for next year. Both companies have more than half of their estimated production locked in at $3/MMBtu, S&P Global Market Intelligence says.

Other companies are following suit, even drillers that are not exclusively focused on gas. "We've been hedging significantly more, so that's helped underpin and provide more comfort to the cash flows that we'll have in 2017, but the opportunities are there to add more hedges and more rigs if prices go high enough,” Devon Energy’s CEO David Hager said on Devon’s quarterly earnings call in November. Devon, an Oklahoma and Texas-focused oil and gas producer, had 29 percent of its 2017 gas production hedged at $2.98, S&P said.

Locking in hedges at $3/MMBtu and above will provide a good bit of breathing room for natural gas producers, which have had a tough time over the past few years. Natural gas prices have not been this high since late 2014, and with NYMEX futures prices averaging above $3/MMBtu throughout 2017, a dose of optimism is spreading throughout the industry. Share prices for many natural gas producers likely have huge upsides heading into the New Year.

By Charles Kennedy of Oilprice.com

More Top Reads From Oilprice.com:


Download The Free Oilprice App Today

Back to homepage





Leave a comment

Leave a comment




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