At least 60% of next year’s crude oil production has been hedged against fears of falling prices, more than in previous years, meaning that rising crude prices would boost the profile of companies with fewer hedges, according to Cowen analysts.
“If crude were to move higher, we would expect to see more E&Ps lag as collar ceilings are reached,” says Cowen's energy team, which names Anadarko Petroleum (NYSE:APC), EOG Resources (NYSE:EOG) and Continental Resources (NYSE:CLR) as potential winners and Concho Resources (NYSE:CXO), Lonestar Resources (NASDAQ:LONE), Oasis Petroleum (NYSE:OAS) and QEP Resources (NYSE:QEP) as possible laggards.
“We think U.S. production hasn’t been growing quite as prolifically as what others have originally estimated," an EOG exec said at the company's earnings call last month when asked about hedging. “We’ve been disciplined since 2015, and we’ve been waiting for this turn. So we’re going to continue to watch here going into 2018."
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