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Title : Zero Hedge -- December 30, 2017 -- Wow, Talk About Great Timing (I Guess)
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Zero Hedge -- December 30, 2017 -- Wow, Talk About Great Timing (I Guess)

I don't know if things have changed, but a year ago or so, CLR broke ranks with many of the other shale oil operators and went "naked" -- stopped all hedging. Yes, here it is -- back in late 2014 over at Reuters.

WILLISTON N.D. (Reuters) - Harold Hamm, the chief executive of North Dakota oil producer Continental Resources Inc, has stunned a bearish crude market by scrapping all of the company’s hedges - a bold bet that prices will recover soon after sliding some 25 percent.

In so doing, Hamm, who last month called OPEC a “toothless tiger”, appears to be bracing for a price war with the world’s biggest exporter, Saudi Arabia. The OPEC-leader and other key members of the oil exporter group have so far shown no real sign of moving to cut production to lift prices.

Conventional wisdom among oil analysts is that Saudi Arabia, frustrated by a global supply glut caused by soaring output in the United States, is prepared to let prices fall to squeeze U.S. shale oil producers out of the market.

“We have elected to monetize nearly all of our outstanding oil hedges, allowing us to fully participate in what we anticipate will be an oil price recovery,” Hamm said in a statement on Wednesday when the company posted third-quarter results.

The price war with OPEC began in November, 2014, when Saudi Arabia announced it would flood the market with oil, in a not-too-weil-veiled attempt to crush US shale operators.

This week, from Bloomberg: as oil rises, shale drillers with few or no hedges stand to gain.

As the price of oil rises, heavily-hedged shale drillers may find it harder to meet investor demands for payback, boosting the value of producers that haven’t locked in returns for future production.

When West Texas Intermediate breached $60 a barrel, it was good news generally for U.S. shale producers. But the higher the price, the less gain will come to companies that hedged their production as crude held below $55 for 10 months of the year.

At least 60 percent of next year’s crude output has been hedged, more than in previous years, according to RBC Capital Markets LLC. The result: Rising crude prices will boost the profile of companies with fewer hedges, according to a report by Cowen & Co. Among the winners:  EOG Resources Inc., Anadarko Petroleum Corp.,  and Continental Resources Inc.

Disclaimer: this is not an investment site. Do not make any investment, financial, job, travel, or relationship decisions based on what you read here or think you may have read here.

By the way, google "Continental Resources" naked ends all hedges to see all the nay-sayers with regard to CLR's decision back in 2014 - 2015.

http://ift.tt/2dZyQXu

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