Energy Prospectus

I have found it difficult on the gas companies respective websites to figure out percentage of production hedged in 2022? The Barron's article that was added to the forum suggested that Coterra did NOT have a significant percentage hedged. Thoughts?

3 spots you can look:

1 Quarterly earnings report, most companies have a slide on hedge position.
2. 10q reports filed with the sec, links are on companies website.
3. Dan's excel sheet on the names you are interested in. He has the hedges on it

Do you have a specific company in mind?

10Q is the best place to look. Just note that my forecast/valuations are net of forecast cash settlements on their hedges.

At the bottom of each forecast model I show a table of their hedges.

Another thing to remember is that if commodity prices flatten out or go negative the company's mark-to-market adjustments on hedges will reverse and increase their reported net income. My advice is to ignore reported net income and focus on operating cash flow.

I am also frequently confused by gas hedging in the financials. They usually list production as MMBtu/d but then hedging is listed in units of volume rather than energy. And I don't think the conversion is obvious since methane is not the only gas being produced... I know some transparent and shareholder friendly companies like ESTE will give you better detail in the IR deck, but some of the most egregious hedgers won't even mention hedging in their slides.

That is why EPG forecast/valuation models are so helpful. I include an estimate of the impact of hedges in every model. Spend time understanding the models. The best way is to download them to Excel. Click on each cell in the forecast to see how the revenue or expense is calculated in the 4th quarter.