Company Peer Group Analysis – North American E&Ps third-quarter 2019 hedging update: Hedge prices are down while pressure to refinance debt and return capital to shareholders is up
22 Jan 2020 - Upstream Companies and Transactions | Insight
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Thomas WilsonThomas WilsonAssociate Director
At the end of third quarter 2019, the overall IHS Markit Company Research North American E&Ps had 23% of 2020 estimated oil production hedged at an implied realized oil price of $55.69/bbl. Late in the fourth quarter 2019 and into early 2020, oil futures moved above $60/bbl, providing an opportunity to add hedges at higher prices. Natural gas hedges in place cover 33% of estimated 2020 production at an implied realized price of $2.70/Mcf. Unlike crude oil, natural gas futures trade well below hedged prices and have dampened the opportunity to add hedges at favorable prices. The North American E&Ps posted $1.0 billion in realized gains through the nine months ended 30 September 2019, a reversal of the $2.9-billion realized loss for the same period in 2018. At the end of third quarter 2019, the group had unrealized derivative gains of $285 million, versus a $5.2-billion unrealized loss in the same period of 2018. We expect additional realized gains in the fourth quarter on the strength of natural gas hedge prices versus spot prices, as the fourth-quarter implied strike price of $2.77/Mcf was well above the Henry Hub average price of $2.41/Mcf for the quarter.
Article Information
Companies
Antero Resources Corporation; Apache Corporation; Approach Resources Inc.; Battalion Oil Corporation; Cabot Oil & Gas Corporation; Callon Petroleum Company; Canadian Natural Resources Limited; Carrizo Oil & Gas, Inc.; Centennial Resource Development, Inc.; Chesapeake Energy Corporation; Cimarex Energy Co.; CNX Resources Corporation; Comstock Resources Incorporated; Concho Resources Inc.; ConocoPhillips; Continental Resources, Inc.; Devon Energy Corporation; Diamondback Energy Inc.; Encana Corporation; EOG Resources Incorporated; EQT Corporation; Extraction Oil & Gas, Inc.; Gulfport Energy Corporation; Hess Corporation; Jagged Peak Energy, Inc.; Laredo Petroleum, Inc.; Marathon Oil Corporation; Matador Resources Company; Mesquite Energy, Inc.; Murphy Oil Corporation; Noble Energy Incorporated; Oasis Petroleum Inc.; Occidental Petroleum Corporation; Ovintiv Inc.; Parsley Energy, Inc.; PDC Energy, Inc.; Pioneer Natural Resources Company; QEP Resources, Inc.; Range Resources Corporation; SM Energy Company; Southwestern Energy Company; Whiting Petroleum Corporation; WPX Energy Inc.
Locations
Appalachia (United States); North America; Permian (United States); United States of America
Attachments
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Company Peer Group Analysis – North American E&Ps third-quarter 2019 hedging update: Hedge prices are down while pressure to refinance debt and return capital to shareholders is up