Finance & Investing | Hedging | Capital Markets
Energen Takes Advantage of Price Increase; Add Hedges
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They say a bird in the hand is worth two in the bushes. Energen is certainly not taking any chances, the company has seen oil price steadily increase (breaking through the $50/bbl WTI) steadly.
The company is reporting it has recently added swaps for 1.6 million barrels of its 2017 oil production at a average NYMEX of $50.55 per barrel. To provide some upside protection the company also entered into three way collars for $3.0 million barrels of its 2017 oil production at a average call price of $61.03 per barrel, average put price of $45 per barrel and average short put price of $35 per barrel.
The company also has added 7.2 Bcf of Permian Basin-specific contracts to its 2017 natural gas hedge position at an average contract price of $2.85 per Mcf. This brings Energen's total natural gas hedge position in 2017 to 10.8 Bcf of basin-specific gas at an average contract price of $2.82 per Mcf. Assuming a $0.15 per Mcf differential, the company's NYMEX-equivalent price for its 2017 natural gas hedges is $2.97 per Mcf.
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