Poor hedging burns profit in the shale patch

[TomTom + 183]

Hedges that many operators have taken out in search of stability are now eroding profits in the shale patch. 

''WPX Energy, for example, reported an adjusted net loss of $30 million in Q1 of this year because of $69 million in losses they say they took on hedges due to higher oil prices.'' 

Who are the best and who are the worst hedgers out there? 

[J Owens + 45]

Would be interested to see the numbers on this - will have a look.

Hindsight is 20/20 of course, there is a large element of luck in all of this. Those companies with the most bullish outlook will have done best this time but I would be interested to see their success over the last decade or so. I imagine there is a happy medium of well-managed companies that are losing out now but were relatively successful in riding out the crash.

[CMOP + 227]

Andurand Capital and BBL Commodities, suffered double-digit percentage losses. They were betting oil could skyrocket to $150 a barrel thanks in part to the potential loss of Iranian supply.That's quite a big statement. 

Both firms were extremely bullish in July and they were caught on the other side of the oil slip.

Goes to show even the biggest get caught on the wrong side. 

[dowmike + 37]

Great post, @TomTom

But at the end of the first quarter, 14 shale companies had hedged against 100 million barrels of 2019's production in West Texas, compared with just 40 million barrels at the end of the fourth quarter, according to a Reuters analysis of U.S. regulatory filings.

Rystad Energy identified seven companies that would take the biggest hit from hedging losses: Concho Resources, Encana, Diamondback Energy, Devon Energy, Pioneer Natural Resources, QEP Resources and WPX Energy.