Staying alive: kancevci are hedging oil at $45

4

Остаться в живых: сланцевики хеджируют нефть по $45

American oil companies, failing to recover after an 18-mesyachnogo the fall in oil prices, started to hedge future production this week, fearing it could be their best chance to get $45 per barrel for 2017 and beyond.

As oil prices recovered slightly this week, the us shale company for the first time in recent months began to submit requests and place bids at hedging for the next few years, Reuters quoted three sources familiar with the situation on the market.

Oil prices fell by more than 70% over the past 20 months, which was a result of near record production levels in OPEC and other oil-producing countries, which led to the formation of excess on the market.

The revival of interest in hedging, according to traders, at the moment is still very limited-only queries, but the case comes to implementation.

However, for many it was a surprise, because the interest arose when the price of oil below the psychological $50 a barrel, which many traders believed it necessary, in order to arouse the interest of mining companies.

This reflects the growing desire of investors and creditors to reduce high debt and the fact that drilling costs continue to decline, allows companies to remain profitable at lower prices.

“$45 per barrel is the price at which production remains profitable for many producers. The question is not so much to make a profit. The question is, to survive in these conditions,”– said one of traders.

The Reuters source did not name the company, which this week expressed interest in hedging.

This interest could be, among other things, provoked by news that oil producing countries within and outside OPEC, agreed to freeze production at the level of January.

So, Denbury Resources Inc this week said that “recently” increased the number of hedges to cover the amount of 30 thousand barrels per day priced at about $38 per barrel.

“It’s not the best prices, however, they protect our liquidity and minimise our borrowings, if prices remain low for a long period, as these prices are still higher than our cost,” said chief financial officer mark Allen.

Another company Matador Resources stated that it has increased the number of hedges, however, did not specify how. Currently about 43% of oil production hedged for 2016 at a minimum price of $44 and a maximum of $66 per barrel.

Hedging future production – a common occurrence among American oil and gas companies that use this method, in order to secure future profits and to continue production.

The need to hedge at the moment, it seems higher than ever, however, according to some estimates, only 14% of oil production 2016 hedged at the moment.

The fall in prices since mid-2014 has led to the fact that even the most persistent shale companies in the US have been forced to reduce additional costs and to remove from service rigs to balance the costs and oversupply in the market.

Some experts note that companies that are showing interest in hedging, can impede the recovery, as this will enable them to develop the drilling faster than they could do it under other conditions.

Production data for North Dakota, which became the birthplace of the shale revolution in the U.S. decreased by 3% in December, and the regulators note that this only means that mining companies do not expect a quick recovery of prices.

LEAVE A REPLY

Please enter your comment!
Please enter your name here