Hedging is the biggest double edge sword in the energy business. A hedge program can save your company, or destroy it. 'Destroy' may be a bit dramatic, but it nearly happened to a small Canadian producer a few years ago that locked in too much production at a low price, only to have to pay government royalties at an astronomical rate when natural gas prices skyrocketed. From one perspective, hedging means you will always be wrong; if prices go down, not enough was hedged, and if they go up, [Read more]
$400+ billion in global capital spending cuts will hurt (someday)
Energy in the media tends to have several broad themes. One in particular, is how the 'shale revolution' has redefined the global oil and gas marketplace. It’s an accepted truth that we are in a new era of cheap oil (the futures price for oil doesn’t hit $60 until 2022 or thereabouts, depending on the day) as well as with natural gas. Maybe it’s just the size and ferocity of the North American media business, but in some ways the shale revolution needs to be kept in context. The whole shale [Read more]
Paris Climate Conference: Bureaucrats gone wild? Yes. Dubious science? Maybe. Should you be scoffing? Absolutely not
Those of us who work in the oil & gas industry generally understand the sources of energy that power our way of life – where it comes from and what it takes to get to market. It's a specialized field, and broad understanding takes years. We also have developed an understanding of how cheap energy has enabled the dynamic way of life we take for granted. Oil patch observers tend to watch the Paris climate talks unfold with, let's say, something less than admiration, because that group [Read more]
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