Market Overview

Few U.S. Shale Companies Added To Hedges In Q2

Few U.S. Shale Companies Added To Hedges In Q2

A new Reuters report on the hedging positions of the 30 largest U.S. shale companies shows that only about one third of the companies chose to add to hedges and lock in $60/bbl crude oil prices during Q2. For now, many companies are holding off for a rebound in crude prices, but bounceback has yet to materialize.

The Numbers

According to the report, only 12 of the 30 companies added to their hedges in Q2 by increasing their outstanding oil options, swaps or other derivative positions by a total of 36 million barrels. On the other hand, 14 of the 30 top shale companies saw their net hedges reduced by a total of 37 million barrels during the quarter.

As a whole, the group of 30 shale companies has combined hedges of about a third less than they did a year ago.

Related Link: Morgan Stanley Rethinks E&P Stocks, Slashes Estimates For Crude Oil

Largest Q2 Additions

Anadarko Petroleum Corporation (NYSE: APC), Pioneer Natural Resources (NYSE: PXD) and Marathon Oil Corporation (NYSE: MRO) were the three biggest hedgers in Q2. The three companies added a combined 21.2 million barrels of hedges in the quarter.

Hedge Reductions

On the other end of the spectrum, Devon Energy Corp (NYSE: DVN), Noble Energy Inc (NYSE: NBL) and Newfield Exploration Co (NYSE: NFX) had the biggest reduction in hedge size in Q2. The three companies' net hedge positions shrank by a total of about 20 million barrels.

Best-protected names

It’s no surprise to see Pioneer at the top of the list of active hedging names in Q2, as the company currently has a total hedge of 60.1 million barrels, nearly double the hedges of any other name on the list. Whiting Petroleum Corp (NYSE: WLL) (34.3 million barrels) and Newfield (32.0 million barrels) are the only other two names with hedges of at least 30 million barrels.

Disclosure: the author owns shares of Whiting Petroleum.

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