Hands-on Hedging

By Chris Croom, ARM President

Higher prices for natural gas during the past four years have obviously been a welcome boon to the E&P sector. But these new conditions have caused many E&P companies to take another look at their hedging practices. Previously, the gas market traded in a somewhat narrow band, with some price spikes but overall lower volatility, so there was less perceived need for price-risk management. The higher price environment has spurred a surge of gas-production growth not only through the drill bit but also through acquisitions, and of course, increasing development costs have accompanied this trend.

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