Three Key Takeaways: North American Oil Hedging For 2020 And Beyond

Below are three key conclusions from Evaluate Energy’s latest report on oil hedging positions for 102 North American producers heading into the second half of 2020.

  • Hedging strategies resulted in around US$15 billion in realized and unrealized commodity hedging gains combined appearing on North America’s upstream company income statements in Q1 2020. Among the companies recording the largest realized gains were Murphy Oil Corporation and MEG Energy Corp.
  • Average hedged prices for North American producers in 2020 and 2021 are now just below US$50/bbl for all contract types based on Q1 results, with many averaging around US$45/bbl. This is a decrease of around US$10/bbl for each contract type covered in the Evaluate Energy report since the same analysis was conducted without the addition of Q1 2020 data.
  • Despite this US$10/bbl drop in average prices, the volumes of oil hedged at under US$30 or US$40/bbl – i.e. agreements put in place after the price crashed towards the end of Q1 – is actually very low in relation to all hedged volumes in place, as the chart above shows. Apache Corporation and Centennial Resource Development are among those that hedged significant volumes at sub-US$30 prices.

The full report is available to download at this link.

Evaluate Energy also held a webinar on Q1 hedging results at the start of June. You can watch a full recording of the event at this link.