Post Tagged with: "hedging"

The real price of Occidental’s ‘costless’ oil hedge

The real price of Occidental’s ‘costless’ oil hedge

Reuters In just 12 days, Occidental Petroleum Corp pulled off one of the biggest hedges against falling oil prices ever placed by a U.S. energy company. It characterized the transaction as “costless” but a Reuters review of regulatory filings, market data and interviews shows that’s not the whole story. The aim of the complex financial maneuver, the company said, was to help preserve Occidental’s generous dividend to shareholders as it sought to take over rival Anadarko Petroleum for $38 billion last summer in the biggest industry deal for years. “With the additional leverage from the Anadarko acquisition, these new hedges will strengthen our 2020 cash flow in a low oil price environment, and provide additional assurance that our dividend is safe, while we are deleveraging,” Occidental’s Chief Financial Officer Cedric Burgher told an earnings call in August. However, to secure the hedge swiftly and discreetly and to avoid paying its[Read More…]

Source: ringenergy.com

Ring Energy, Inc. announces completion of fall 2019 redetermination of its senior credit facility

Oil and Gas 360 Company Enters into Additional Hedges for 2020 Ring Energy, Inc. -Midland, Texas- (NYSE American: REI) (“Ring”) (“Company”) announced today it completed the scheduled fall 2019 redetermination evaluation of its $1 billion senior credit facility. The Company entered into an amendment to the senior credit facility as part of the scheduled fall redetermination. The amendment reaffirmed the immediate borrowing base at $425 million and required the Company, as it has been required in the past, to enter into additional hedges for 2020 and 2021. The next redetermination evaluation is scheduled for May 2020. The Company announced it had entered into additional hedges for 2020 in the form of collars of WTI Crude Oil prices, with an offsetting put option (“floor”) and call option (“ceiling”). The new hedges are for a total of 3,500 barrels of oil per day (“BOPD”), bringing the total amount of oil hedged for[Read More…]

December 2, 2019 - 3:15 am Closing Bell Story, Energy News, Finance
Antero Monetizes Hedge Portfolio for $357 Million

Antero Monetizes Hedge Portfolio for $357 Million

Paying down debt with cash, share buybacks continue Antero Resources (ticker: AR) announced it has monetized a portion of its hedge position today, taking advantage of the recent shifts in gas prices. Antero sold part of its hedge portfolio by an early settlement of 68% of its swaps for April through December and replaced the volumes with collars. This sale generated $235 million for the company. Antero reports its 1.575 Bcf/d of new collars for April through December have a floor of $2.50/MMBTU and a ceiling of about $3.40/MMBTU. Antero also reset 70% of its 2020 fixed price swaps from $3.25/MMBTU to $3.00/MMBTU for $122 million. Use of proceeds Overall, the volumes the company has hedged are unchanged with an average floor price… Login or click here to subscribe Username or E-mail Password Remember Me     Forgot Password

Growth in Tight Oil Shakes Up Oil Futures Markets and Hedging Needs

Growth in Tight Oil Shakes Up Oil Futures Markets and Hedging Needs

From Bloomberg Declines in open interest of WTI forward contracts seen: CFTC Shale boom has shifted producers’ need to hedge farther out The vibrations of the shale boom are now shaking the futures market. A visible decline in open interest of West Texas Intermediate crude futures contracts for delivery five or more years in the future is due to the growth of tight oil fields and the shift in producers’ need to hedge oil so far out in the future, according to a study by the U.S. Commodity Futures Trading Commission. That’s because oil extraction has become more efficient in tight oil fields compared to conventional wells and producers have more flexibility in turning on and off the taps in response to oil prices. The increasing amount of crude coming in from tight oil in portfolios of production firms has left them with less crude to sell five or more years forward,[Read More…]

September 7, 2018 - 1:05 pm Closing Bell Story, Commodity Pricing, Energy News
Courtesy of RSP Permian

Futures Curve with Severe Backwardation is Laughable: Papa

CDEV likes oil’s prospects and New Mexico well results Centennial Resource Development, Inc. (ticker: CDEV) reported a net income of $66.1 million, or $0.25 per share for Q1 2018. The company’s average daily net production was 54,069 BOEPD for the quarter. “We saw consistent well performance during the quarter, with the average well producing approximately 1,200 barrels of oil per day for the initial 30-day production period,” Chairman and CEO Mark G. Papa said. “These well results coupled with low unit costs were key to giving us very strong overall results for the quarter.” More wells In Lea County, New Mexico, the Juliet Federal Com 1H (85% WI) was drilled with an approximate 4,000-foot effective lateral and reported an initial 30-day production rate of 1,447 BOEPD (78% oil). The well averaged 282 BOPD per 1,000 feet of lateral for the first 30 days, and it produced more than 50,000 barrels[Read More…]

Pioneer Selling Oil at Premium Pricing, Looks to Add 250-275 Wells to Production in 2018

Pioneer Selling Oil at Premium Pricing, Looks to Add 250-275 Wells to Production in 2018

Forecasts cashflow of approximately $3.2 billion at current strip prices for the remainder of 2018 – $66 per barrel for oil and $2.80 per Mcf for natural gas Running 20 Permian Hz rigs Pioneer Natural Resources Company (ticker: PXD) reported Q1 2018 net income of $178 million, or $1.04 per diluted share. Companywide production was 312 MBOEPD in the quarter, but freezing temperatures in early January caused production losses of ~6MBOEPD and a compressor station fire in the West Panhandle field also decreased production by ~2 MBOEPD. WPX said that West Panhandle production resumed in early April at ~8 MBOEPD. President and CEO Timothy L. Dove said, “Our transition to a Permian Basin ‘pure play’ is progressing according to plan… When the divestiture of these non-Permian assets is complete, the company will report stronger cash operating margins and corporate returns due to an increase in revenue per BOE and a[Read More…]

Oil Hedges: Brazil and Mexico

Oil Hedges: Brazil and Mexico

Brazil’s state-controlled oil company, Petrobras, has hedged a portion of its 2018 oil production. The move should protect cash flow against downturns in the marketplace. Bloomberg reported that the company hedged 128 MMBbls, or 350,685 BOPD at an average Brent price of $65/bbl. The average cost, a company filing on Wednesday said, is about $3.48 a barrel. Petrobras has become more dependent on worldwide prices recently, abandoning a policy of domestic fuel price fixing – it now prices refinery-gate according to daily global benchmarks. This move was made after the Rousseff administration had Petroleo Brasileiro SA subsidize fuel prices during the oil boom – resulting in billions of dollars lost. The company’s revenue will reflect international markets more so than previously. Mexican hedges lower at $46~/barrel With a total cost of about $445 million, Petrobras’ hedging activity is very significant, but falls short of the largest hedge in the world,[Read More…]

Whiting Petroleum: 2018 CapEx of $750 Million, 100-Plus Wells Planned

Whiting Petroleum: 2018 CapEx of $750 Million, 100-Plus Wells Planned

Whiting Petroleum (ticker: WLL) has a 2018 capital budget of $750 million, of which $600 million will be invested in Williston Basin operations. The capital budget forecasts a production growth of 9% from Q4 2017 to Q4 2018, with an estimated average annual production of 128,400 BOEPD. In the Williston Basin alone, production is forecasted to grow 14% from Q4 2017 to Q4 2018. The remaining $150 million in the capital budget will be allocated as follows: $50 million will be spent on non-op development activities in the Williston Basin $75 million will be spent completing DUC wells in the Redtail field $25 million will be dedicated to land and facilities. In Q4 2017 Whiting’s average production increased by 12% from Q3 2017, producing approximately 11.8 MMBOE. Drilling, completions and production update Whiting finished 2017 with 51 DUC wells in its Bakken/Three Forks play in the Williston Basin and 39[Read More…]

Carrizo Oil & Gas Discusses Operations After Harvey, Updates Hedging

Carrizo Oil & Gas Discusses Operations After Harvey, Updates Hedging

Eagle Ford and Permian producer Carrizo Oil & Gas, Inc. (ticker: CRZO) reiterated that its operations in the Eagle Ford shale sustained no damage as a result of Hurricane Harvey, and drilling and completion operations returned to normal within a week. A temporary reduction in sales volumes did occur as a result of downtime at third-party midstream facilities and Gulf Coast refineries, but production and sales returned to pre-storm levels last month, Carizzo said. Carrizo estimates the impact from Hurricane Harvey on third quarter production volumes from the Eagle Ford Shale to be approximately 2,500 BOEPD (approximately 55% oil). Carrizo currently expects total production for the third quarter of 2017 to be above the midpoint of its previously-issued guidance range of 53,467-54,733 BOEPD. As a result of the storm’s temporary impact on Eagle Ford production, Carrizo revised its crude oil production guidance for the third quarter to 34,700-34,900 BOPD from 35,400-35,800 BOPD. Hedging update Over the last month, Carrizo has[Read More…]

Thick Hedge Book and New Pipelines Power Antero Resources into 2016

Thick Hedge Book and New Pipelines Power Antero Resources into 2016

Hedge book’s mark-to-market value listed at $3.1 billion Attractive hedges have the ability to make a significant impact on company balance sheets, and its positive effects (along with access to favorably priced markets) are apparent in a January 13 business update from Antero Resources (ticker: AR). The Appalachia-focused producer reported a realized natural gas price (after settled commodity derivatives) of $4.40/Mcf in Q4’15 – a staggering $2.13 positive differential to Nymex spot prices. The favorable prices come at the perfect time, as Antero boosted its overall dry gas production by 18% compared to the prior quarter and virtually the same amount as Q4’14. Management attributed the increase to the commissioning of the Stonewall gathering pipeline in December, opening up lanes for AR to sell “virtually all of its gas to favorably priced markets.” The Stonewall created a negative differential to Nymex of just ($0.14), compared to December differentials in the[Read More…]

An Interview with Manitok Energy CEO Mass Geremia –  Part Two

An Interview with Manitok Energy CEO Mass Geremia –  Part Two

Manitok Energy Talks 2015-16 Drill Plans, Hedging, Liquidity and 18-Month Outlook Manitok Energy (ticker: MEI) is a conventional operator focused on projects in Alberta, and the company has spent the last several years amassing a considerable land position with output now approaching 6,000 BOEPD. Its footprint now extends 449,000 gross acres (93% working interest), of which 430,000 gross acres (94% working interest) have yet to be developed. In July 2015, the company closed a deal that bolstered its position with a $61.5 million acquisition of more than 67,000 gross acres with volumes of 1,800 BOEPD ($34,167 per flowing BOEPD). MEI management, led by president and CEO Mass Geremia, has established a goal of reaching 20,000 BOEPD within five years by capitalizing on future acquisitions and organic growth. Click here for the company’s latest presentation. Oil & Gas 360® had an opportunity to speak with Mass Geremia about his company’s operations and[Read More…]

To Be, or Not To Be… (Hedged)?

To Be, or Not To Be… (Hedged)?

In EnerCom’s Energy Industry Data and Trends for January 2015, the company examined the impact of hedges on the stock valuations of the companies that hedged versus those that did not. The research looked at companies’ performance over the eight cycles in crude oil commodity prices from January 2007, to December 2014. The chart below illustrates the closing near-month futures price of West Texas Intermediate crude oil from January 3, 2007 to December 29, 2014. The blue shaded sections denote periods of rising oil prices and the light orange shaded sections highlight bearish price environments. The hypothesis driving the research was this: If a company has a high proportion of their production covered by hedges then the share price of the company would be highly insulated to commodity prices. Said another way, companies with high proportions of the their production hedged should not see their share prices rise or fall as[Read More…]

February 13, 2015 - 11:08 am Analytics, Oil and Gas 360 Articles
LINN Energy Taking New Measures to Adapt to Commodity Swing

LINN Energy Taking New Measures to Adapt to Commodity Swing

MLP Pioneer Cuts Dividend and Capex by more than 50% LINN Energy LLC (ticker: LINE), a top-15 independent oil and natural gas development company, has announced reductions of more than 50% in both capital expenditures and dividends in 2015. LINN Energy has an unconventional approach in the oil in gas industry, with LINE executing on oil and gas development while the sole purpose of its subsidiary, LinnCo, LLC (ticker: LNCO), is to own LINN units and raise additional capital. The strategy has assisted LINE’s acquisition strategy, which has amounted to more than $16 billion in acquisitions since 2008. LNCO was created in October 2012 and announced its first dividend just weeks later, prior to the announcement of its Q3’12 results. LINN’s business plan called for a stable growth structure, with attractive dividends and highly hedged production. Expected natural gas production is approximately 100% hedged through 2017, while its oil hedges[Read More…]

E&Ps Taking Advantage of Hedging to Protect Profits

E&Ps Taking Advantage of Hedging to Protect Profits

Production is expected to increase West Texas Intermediate has continued to fall from its 2014 peak of $107.73 a barrel in June to $51.68 at 10:38 a.m. London time. That’s below the breakeven price for 37 of 38 U.S. shale oilfields, according to Bloomberg.  Prices have dropped even further since then, sitting at $50.49 a barrel at the time of this story’s writing. RBC Capital Markets and CIBC World Markets predict prices will remain below $60 for the first three months of 2015. Societe Generale SA’s Michael Wittner forecasts an average of $64.50 in Q1’15 and $61.50 in Q2’15, reports Bloomberg, continuing to keep pressure on U.S. shale producers. Prices have remained low as Saudi Arabia maintains production targets in order to protect their market share. Despite being able to keep prices low, the Kingdom has not been able to prevent U.S. producers from continuing to increase output. The U.S.[Read More…]

January 5, 2015 - 6:35 pm Oil and Gas 360 Articles
The Price(s) of Operating in the Oil & Gas Business

The Price(s) of Operating in the Oil & Gas Business

Commodity prices are influenced by several factors, including short-term catalysts and long term stimulus. Supply and demand often dictates short term prices, while factors such as future demand expectations and production decisions by the Organization of the Petroleum Exporting Countries (OPEC) can affect prices over the longer term. Supply and demand in the world oil markets are balanced through responses to price movements, with considerable complexity in the evolution of underlying supply and demand expectations. Steve Hargreaves of CNN writes: “There’s an old adage in the oil industry: The best cure for high prices is high prices. Soaring prices lead to new investment, bringing new supplies to market. And that’s exactly what’s been happening since crude prices went off to the races nearly a decade ago.” According to the US Energy Information Administration, average prices for West Texas Intermediate crude, natural gas, western coal and electricity were higher in 2013[Read More…]

January 28, 2014 - 5:05 pm Offshore, Oil and Gas 360 Articles, OPEC