Bloomberg with an article on the importance of oil price hedges to shale oil producers ... and how that hedge insurance is diminishing
- The insurance that producers bought before the collapse in oil -- much of which guaranteed minimum prices of $90 a barrel or more -- is expiring
- "A year ago, you could hedge at $85 to $90, and now it's in the low $60s ... Next year it's really going to come to a head."
- The hedges staved off an acute shortage of cash for shale companies ... helped keep lenders from cutting credit lines, many of which are up for renewal in October
- Payments from hedges accounted for at least 15 percent of first-quarter revenue at 30 of the 62 oil and gas companies in the Bloomberg Intelligence North America Exploration and Production Index
- Revenue, already down 37 percent in the last year, will fall further as drillers cash out contracts that paid $90 a barrel even when oil fell below $44
