Conservative hedging bruises US shale

Operator balance sheets are benefitting from the uplift in oil prices, but many could miss out as the bulk of their production is locked into more muted pricing

Results season painted a cheerier picture for much of the US shale patch in Q1, with revenues rebounding as WTI comfortably surpassed $50/bl. But while many operators boasted stronger cash flow and debt reduction during the quarter, cautious hedging could see the sector miss out on billions of dollars. Around 41pc of forecast US E&P production has so far been hedged in 2021, estimates consultancy Rystad Energy. And the average floor price of $42/bl is significantly less than the $65/bl WTI average in April. Houston-based consultancy Opportune surveyed the 30 largest public oil and gas companies operating across the US shale patch. Of the 27 that disclosed hedging, average crude swap pric