Pioneer Natural Resources Co. (NYSE: PXD) on Oct. 24 warned investors that it expected a $135 million hit to earnings during the third quarter due to losses on oil hedges, according to a filing with the U.S. Securities and Exchange Commission.
Many shale producers have faced losses on hedges this year after oil prices climbed above previously anticipated levels. Benchmark U.S. crude futures traded over $70 a barrel during the third quarter versus under $50 for much of the same quarter a year ago.
Some producers took out hedges in recent months to lock in profits as oil prices climbed, but those positions exposed them to potential losses if prices went too high, too quickly.
EOG Resources Inc. (NYSE: EOG) earlier this month told investors it was anticipating $52.1 million non-cash loss on derivative contracts during the quarter. Range Resources Corp. (NYSE: RRC) this week reported a $34.6 million loss on hedges due to "increases in future commodity prices."
Losses on oil hedging contracts are anticipated to be heavy this quarter, Ben Montalbano, co-founder of Denver-based analytics firm PetroNerds said earlier this month. Many of the companies PetroNerds tracks have swaps and collars under $60 a barrel, he said.
Recommended Reading
E&P Highlights: April 8, 2024
2024-04-08 - Here’s a roundup of the latest E&P headlines, including new contract awards and a product launch.
Well Logging Could Get a Makeover
2024-02-27 - Aramco’s KASHF robot, expected to deploy in 2025, will be able to operate in both vertical and horizontal segments of wellbores.
Remotely Controlled Well Completion Carried Out at SNEPCo’s Bonga Field
2024-02-27 - Optime Subsea, which supplied the operation’s remotely operated controls system, says its technology reduces equipment from transportation lists and reduces operation time.
CNOOC’s Suizhong 36-1/Luda 5-2 Starts Production Offshore China
2024-02-05 - CNOOC plans 118 development wells in the shallow water project in the Bohai Sea — the largest secondary development and adjustment project offshore China.
McDermott Consortia Scoops Up Two Ruya Project Contracts
2024-02-01 - The EPCIC contracts support the expansion of the offshore Al-Shaheen Field, Qatar’s largest oil field.