Shale Giants Dump Oil Hedges as Losses Spiral Toward $42 Billion
U.S. drillers facing billion in hedging losses pay big bucks to close out positions and cash in on high oil prices.
A pump jack operates near Stratford, Texas, U.S., on Saturday, Sept. 26, 2020.
Photographer: Angus Mordant/BloombergU.S. shale giants stung by billions of dollars in hedging losses are spending big bucks to ditch their positions in a risky bet that prices stay high.
Companies including Pioneer Natural Resources Co. and EOG Resources Inc. are poised to post historic profits when they report earnings this week. But those windfall earnings would be even higher if it weren’t for massive accounting losses from hedges that protect against falling prices while limiting upside potential. Producers in the aggregate are looking at about $42 billion in oil and gas hedging losses through 2023, according to BloombergNEF calculations of data from last year.