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September 2015 Oil & Gas Hedging Update

 

The energy markets have offered all market participants a pretty wild ride since our August update. While forward crude oil prices are currently trading lower by about $2/BBL relative to yesterday’s settlements, the past few days has been one of the most volatile in periods in decades. After a selloff in nearly all asset classes across the globe pushed crude oil prices to six year lows last week, the spike over the past few days is the largest in such a short period of time since the Iraq invasion of Kuwait in 1990.

Oil & Gas Producer Hedging & Financing - A Legal Perspective

 

This is a guest post by Jeff Nichols, partner at Haynes and Boone, LLP in Houston. Jeff  represents a variety of clients in the energy and finance industries with secured and unsecured credit facilities, project finance and other structured energy transactions.

Hedging is usually thought of in terms of cash-settled derivatives offered by lenders as part of a broader financial relationship tied together by a credit agreement and perhaps collateral documents. But many other transactions blend hedging and finance attributes. Focus on these different transactions becomes acute during times of financial stress, which drives concerns about enforcing remedies.


Top Energy Hedging Failures in the Current Market Environment

 

As energy hedging advisors, we often see many market participants, make significant, if not catastrophic, errors related to their hedging strategies. While the overall hedging and risk management knowledge and expertise of most market participants continues to increase, many continue to make the same mistakes as their decisions are based on their opinion about the markets rather than data and sound analysis.  In no specific order, these are the most common, avoidable hedging mistakes we have witnessed companies making in recent months.

Upcoming Singapore, London & Houston Seminars

 

If the recent decline in prices has you wondering how best to hedge or trade in such an environment, then one of our upcoming seminars is likely to be of interest. Whether you're new to the industry or a veteran, you'll not only learn the tools and tricks of the trade but also have the opportunity to network with other industry professionals.

A Practical Guide To Developing A Corporate Fuel Hedging Policy

 

As more and more companies are looking at hedging their exposure to volatile fuel prices, many for the first time, we thought it would be prudent to revisit our recommendations regarding the development, or updating, of a corporate fuel hedging policy. So, how does one go about developing a fuel hedging policy (also often called a fuel price risk management policy)?

An Introduction to NGL Hedging Part III - Collars

 

This article is the third in a series covering the most common hedging strategies utilized by market participants in the NGL (propane, butane, ethane and natural gasoline) industry. The first article in the series, An Introduction to NGL Hedging Part I - Swaps, explained how an E&P company can utilize fixed price propane swaps to hedge their exposure to propane prices. The second post in the series, An Introduction to NGL Hedging Part II - Options, addressed how an industrial propane consumer can hedge their propane price risk with a strategy known as a call option.

A Beginners Guide to Fuel Hedging - Call Options

 

This post is the third in a series where are addressing the most commonly utilized fuel hedging strategies. The previous posts in the series explained fuel hedging with futures (Part I: A Beginners Guide to Fuel Hedging - Futures and fuel hedging with swaps (Part II: A Beginners Guide to Fuel Hedging - Swaps.

An Introduction to NGL Hedging Part II - Options

 

This post, which explores hedging NGLs with options, is the second post in a series of several where explaining some of the most common NGL hedging strategies. If you missed the first post you can access it via the following link: An Introduction to NGL Hedging Part I - Swaps. In subsequent posts in this series, we will also be exploring some of the more advanced NGL hedging strategies such as costless collars and three-way collars.

An Introduction to NGL Hedging Part I - Swaps

 

As the NGL (natural gas liquids) industry matures, many companies, from the wellhead to burner tip, are starting to implement or modify their hedging activities. As such we thought it would be prudent to address the various strategies that companies can utilize to hedge their NGL (propane, butane, ethane and natural gasoline) price exposure.  This post is the first in a series of posts where we'll explain the various NGL hedging strategies available to market participants.

August 2015 Oil & Gas Hedging Update

 

Since our previous monthly update, crude oil and refined product forward prices have continued to decline significantly. Month-over-month, one year forward prices for WTI crude oil have led the complex lower, down 17.19% while LLS, Brent and Dubai have declined by 16.07%, 15.45% and 15.08%, respectively. On a year-over-year basis, the one year forward curves for WTI, Brent, LLS and Dubai have declined by 49.96%, 49.03%, 48.54% and 49.30%, respectively.

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