America’s largest shale producer is so convinced oil prices will continue to rise that it just dropped almost all hedging


The leading shale producer in the United States is betting that crude oil prices will continue to rise and has abandoned almost all of its remaining hedges for 2022.

Pioneer Natural Resources said the move will cost $ 328 million, which will be spread over the year, according to a Wednesday filing that Bloomberg first reported.

The Permian basin giant also announced that it bought back $ 250 million of its own shares in the last quarter of 2021.

Shale drillers like Pioneer typically use financial instruments to enter into sales contracts at certain prices and to hedge against the potential increase in oil and gas production costs.

But last year saw a massive rise in crude oil prices as the economy rebounded from the pandemic. Brent crude and West Texas Intermediate both rose more than 50% in 2021.

Pioneer hedges caused more than $ 2 billion in losses last year, and the company phased out some hedges last fall.

After a strong 2021, crude oil prices have already received a boost in early 2022. On Tuesday, OPEC + agreed to continue to modestly increase oil production in February, as planned. Brent crude is now back above $ 80 a barrel.

But Pioneer doesn’t want the oil level to rise too high. CEO Scott Sheffield told a Goldman Sachs energy conference on Wednesday that he expects prices between $ 75 and $ 100 a barrel and hopes they will stay there, warning “110 $, $ 120 of oil or more, like what Europe sees, is not going to help our industry ”, according to Bloomberg.


Steve R. Hansen