Key Takeaways: Evaluate Energy’s new U.S. hedging report for Q4 2018

Pioneer operations in Midland, Texas. Image: Pioneer Natural Resources

Evaluate Energy has released a new report examining how hedging strategies may impact upstream company performance metrics in the Q4 reporting season. The full report is available to download here.

Among the key findings:

  • 67 companies included in the Evaluate Energy analysis hedged a combined 4.4 million boe/d under swap, collar and three-way collar agreements for the three-month period ended December 31, 2018. This represents approximately 43 per cent of the group’s total production in the preceding three-month period ended September 30.

  • Gas-focused producers tended to cover large percentages of gas production with hedging contracts. Locking in cash flow provides a greater ability to focus on cost-saving initiatives or operational efficiencies – vital when gas production is selling at a level close to break-even for many producers.
  • Oil production was covered to a lesser extent with larger netbacks providing oil-focused producers with greater confidence to withstand volatility in commodity pricing than gas-producing counterparts.

Evaluate Energy also examined data on a company-by-company level, providing detailed analysis on the hedging strategies of the oil- and gas-focused companies that either hedged the largest actual volumes heading into Q4 or covered the greatest portions of their portfolios. These companies include Devon Energy Corp., Pioneer Natural Resources, EQT Corp. and Concho Resources Inc., among others.

The full Evaluate Energy report is available to download at this link.

To find out more about the data used to build the report, download our one-page guide to the Evaluate Energy North American hedging database here.