• 1 day Statoil Changes Name
  • 2 days Nuclear Bomb = Nuclear War: Saudi Arabia Will Develop Nuclear Bomb If Iran Does
  • 2 days Tillerson just sacked ... how will market react?
  • 2 days Petrobras Narrows 2017 Loss, Net Debt Falls Below $85bn
  • 19 hours Russian hackers targeted American energy grid
  • 16 hours Is $71 As Good As It Gets For Oil Bulls This Year?
  • 2 days Proton battery-alternative for lithium?
  • 2 days Ford Recalls 1.38 Million Vehicles (North America) For Loose Steering Wheel Bolt
  • 16 hours Oil Boom Will Help Ghana To Be One Of The Fastest Growing¨Economies By 2018!
  • 19 hours Country With Biggest Oil Reserves Biggest Threat to World Economy
  • 2 days I vote for Exxon
  • 2 days South Korea Would Suspend Five Coal - Fire Power Plants.
  • 17 hours HAPPY RIG COUNT DAY!!
  • 2 days Why is gold soooo boring?
  • 2 days UK vs. Russia - Britain Expels 23 Russian Diplomats Over Chemical Attack On Ex-Spy.
  • 16 hours Spotify to file $1 billion IPO
Alt Text

U.S. Gasoline Demand Climbs To Record Highs

United States gasoline demand has…

Alt Text

Gas Wars: The First Energy Conflict In 2018

Territorial disputes over newly discovered…

Charles Kennedy

Charles Kennedy

Charles is a writer for Oilprice.com

More Info

Trending Discussions

Natural Gas Drillers Rush To Hedge Production As Prices Soar

Shale gas drilling

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:

Back to homepage

Trending Discussions

Leave a comment

Leave a comment

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