Hedges are a true forward looking indicator and are critical to forecasting the future activity levels and financial health of the oil and gas industry. They allow E&Ps to lock in a fixed price or varying levels of price protection, depending upon strategy, for their future production volumes. Hedges not only provide potential financial gain (or loss), but also create a more stable, predictable price path around which E&Ps can plan future activity. Without a proper understanding of hedging programs and the underlying financial incentives driving company behavior, market analysts and participants will struggle to properly anticipate future activity and events.
No two companies’ hedging programs are alike – each company sees the price of oil and gas differently and will react differently to changes in commodity prices depending upon their hedging program. Outstanding hedging positions must be interpreted individually for each company.
Due to their inherent complexity, the role of hedges is often minimized in conventional market forecasting and analysis. Hedges are multi-dimensional and cannot be properly captured by static charts and tables. For example, each hedge encompasses three dates: the date it was put into place, its start date and its end date. Furthermore, each includes at least a price and volume, if not a floor and ceiling or option spreads. Hedges require a flexible, robust medium for proper analysis.
Our Solution: HedgeAware – Interactive Hedging Intelligence for the Oil and Gas Industry
To deal with the complexity and multitude of variables contained within dozens of unique hedging programs, PetroNerds created HedgeAware, an interactive platform for tracking the hedging activity of 40 leading oil and gas producers in the United States. It equips E&Ps, service companies, and analysts with detailed knowledge of one of the most important forward looking indicators in the oil and gas industry: hedges!
The platform enables users to explore multi-dimensional financial data to gain insights into upstream hedging activity, past hedging performance, and the financial health of dozens of E&Ps. HedgeAware spans over 3 mm b/d of oil production and more than 25 bcf/d of natural gas production.
Through an intricate combination of hedging, operational, and financial data-sets, HedgeAware offers a suite of intelligent and flexible dashboards that cannot be matched by static charts or PDF reports. Drill-down through active and historical hedges across a number of variables, including product type (oil, gas, or NGLs), company, hedge type (e.g., swap, collar, option, basis), effective dates, and much more. View hedges as a share of a companies’ production volumes or within the context of key financial metrics. See realized price data with and without the impact of hedging to understand how certain companies’ hedges are performing against the market. Group companies with similar asset portfolios together to help predict future activity levels in a specific play.
In addition to the HedgeAware dashboard suite (shown in the video below), HedgeAware subscribers will receive an email newsletter featuring analysis of hedging disclosures every quarter during earnings season.
Data is updated frequently during each earnings season so that you can identify trends as they emerge, not after the fact.
HedgeAware is built upon Microsoft’s Power BI service, which means you can access your dashboards from your computer, tablet, or smartphone (Android and iOS).
|Commodity Types Covered||Oil, Natural Gas, and NGLs|
|Hedge Types||Fixed Price Swaps, Collars, Options, Basis Swaps|
|Companies Covered||See List Below|
|Production Data||Each company’s reported oil, gas, and ngl production volumes, both US and international|
|Pricing Data||Reported realized sales prices for all commodities, with and without the impact of hedging. Differentials to WTI, Brent, and Henry Hub.|
|Financial Data||Key financial metrics, such as revenue, CAPEX, free cash flow, and much more. CFTC futures swap position data|
|Date Range||Data is backdated to Q1 2016 for historical comparison. All outstanding, future hedges are captured each quarter.|
|Update Frequency||Data will be updated regularly during each earning’s season so that you can identify trends as they emerge.|
|Availability||Desktop web-browsers, iOS and Android devices via the Microsoft Power BI app|
|Email Alerts and Analysis||As we pore through financial disclosures each quarter, PetroNerds will regularly provide analysis and commentary on relevant findings to subscribers.|
|Compare your hedging program to that of your peers. Gain insights into new strategies and learn from past mistakes.|
|Gauge the future activity levels of your peers to help you forecast everything from oil prices to service costs.|
|Stay ahead of the competition and run your business more efficiently by anticipating your clients’ demand for services.|
|Gain a deep understanding of their past capital and operational spending habits as well as their future financial health.|
|Analysts (financial, market, government):|
|Identify which companies are well hedged and which are not. Spot plays or regions that are likely to see changes in drilling activity as a result.|
|Anticipate the financial impact of a company’s hedging program on their earnings.|
Understand the delta between the price of oil and gas and the price at which the industry is hedged. Forecast the impact this delta will have on company decision making, financial performance, and how it will alter global markets while other analysts rely on the spot price.
BBG (Bill Barrett)
EOG (EOG Resources)
EP (EP Energy)
NFX (Newfield Exploration)
PDCE (PDC Energy)
PVAC (Penn Virginia)
QEP (QEP Resources )
RRC (Range Resources)
RSPP (RSP Permian)
SM (SM Energy)
WPX (WPX Energy)