The Phaserl


What 9 Company Hedge Books Are Revealing about the Natural Gas Market

by Keith Schaefer, Oil Price:

You can see it clear as day in their hedging strategies…

Natural gas producers are increasingly bearish on prices for their sector.

The numbers tell the tale. Canadian gas producers surveyed for the Oil and Gas Investments Bulletin hedged AECO-sold production at $5.27 in 2011. Hedge prices have dropped steadily for gas sold since—to $4.27 in 2012, and to $3.29 for currently-hedged production in 2013.

Why the falling hedge price? Because it made sense – Natural gas prices fell steadily from the beginning of 2010 through to early 2012. Faced with two years of declines, producers looked to stave off further price risk by forward-selling (hedging) their output.

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