Good video embedded in article
https://www.bloomberg.com/news/articles ... ce=twitter
hedges
Re: hedges
From an article late July on hedges
"NatGas (and all shale) producers are now disciplined and live on cash flow... yet they're still very hedged and so they can't produce more now at a much much higher prices environment because they don't have the cash flow.... all their cash is gone in hedges and strapped in higher margin calls..... which means no more production = higher prices = higher margin calls !!
These guys keep shooting themselves on the foot. If you're going to stop growing and live on cash flow, lift your hedges and enjoy life!!! I expect producers to start getting investor pressure to lift hedges and give them exposure to the commodity. If not, hedge funds like us will keep buying the back-dated gas from them instead of buying their stock"
To me It's not a question to hedge or not to hedge:
Its a question on how much to hedge and how and when they do it
Every one of these guys fell in love with cashless hedges ie swaps. That's fools gold
Buy puts, yes it costs up front money but you see there is a financial cost of buying the puts and you think harder in understanding what you are doing. Collars are a variation of same theme. I favor layering them in, like dollar cost averaging. And i wouldn't do more than 50 %
"NatGas (and all shale) producers are now disciplined and live on cash flow... yet they're still very hedged and so they can't produce more now at a much much higher prices environment because they don't have the cash flow.... all their cash is gone in hedges and strapped in higher margin calls..... which means no more production = higher prices = higher margin calls !!
These guys keep shooting themselves on the foot. If you're going to stop growing and live on cash flow, lift your hedges and enjoy life!!! I expect producers to start getting investor pressure to lift hedges and give them exposure to the commodity. If not, hedge funds like us will keep buying the back-dated gas from them instead of buying their stock"
To me It's not a question to hedge or not to hedge:
Its a question on how much to hedge and how and when they do it
Every one of these guys fell in love with cashless hedges ie swaps. That's fools gold
Buy puts, yes it costs up front money but you see there is a financial cost of buying the puts and you think harder in understanding what you are doing. Collars are a variation of same theme. I favor layering them in, like dollar cost averaging. And i wouldn't do more than 50 %