Zero Hedge -- December 30, 2017 -- Wow, Talk About Great Timing (I Guess)

I don't know if things have changed, but a year ago or so, CLR broke ranks with many of the other shale oil operators and went "naked" -- stopped all hedging. Yes, here it is -- back in late 2014 over at Reuters.

WILLISTON N.D. (Reuters) - Harold Hamm, the chief executive of North Dakota oil producer Continental Resources Inc, has stunned a bearish crude market by scrapping all of the company’s hedges - a bold bet that prices will recover soon after sliding some 25 percent.

In so doing, Hamm, who last month called OPEC a “toothless tiger”, appears to be bracing for a price war with the world’s biggest exporter, Saudi Arabia. The OPEC-leader and other key members of the oil exporter group have so far shown no real sign of moving to cut production to lift prices.

Conventional wisdom among oil analysts is that Saudi Arabia, frustrated by a global supply glut caused by soaring output in the United States, is prepared to let prices fall to squeeze U.S. shale oil producers out of the market.

“We have elected to monetize nearly all of our outstanding oil hedges, allowing us to fully participate in what we anticipate will be an oil price recovery,” Hamm said in a statement on Wednesday when the company posted third-quarter results.

The price war with OPEC began in November, 2014, when Saudi Arabia announced it would flood the market with oil, in a not-too-weil-veiled attempt to crush US shale operators.

This week, from Bloomberg: as oil rises, shale drillers with few or no hedges stand to gain.

As the price of oil rises, heavily-hedged shale drillers may find it harder to meet investor demands for payback, boosting the value of producers that haven’t locked in returns for future production.

When West Texas Intermediate breached $60 a barrel, it was good news generally for U.S. shale producers. But the higher the price, the less gain will come to companies that hedged their production as crude held below $55 for 10 months of the year.

At least 60 percent of next year’s crude output has been hedged, more than in previous years, according to RBC Capital Markets LLC. The result: Rising crude prices will boost the profile of companies with fewer hedges, according to a report by Cowen & Co. Among the winners:  EOG Resources Inc., Anadarko Petroleum Corp.,  and Continental Resources Inc.

Disclaimer: this is not an investment site. Do not make any investment, financial, job, travel, or relationship decisions based on what you read here or think you may have read here.

By the way, google "Continental Resources" naked ends all hedges to see all the nay-sayers with regard to CLR's decision back in 2014 - 2015.

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Zacks On NOG

Why Northern Oil and Gas (NOG) Could Be Positioned for a Surge 

See disclaimer above. From Zacks:

Northern Oil and Gas, Inc. NOG is an exploration and production company that could be an interesting play for investors. That is because, not only does the stock have decent short-term momentum, but it is seeing solid activity on the earnings estimate revision front as well.

These positive earnings estimate revisions suggest that analysts are becoming more optimistic on NOG’s earnings for the coming quarter and year. In fact, consensus estimates have moved sharply higher for both of these time frames over the past four weeks, suggesting that Northern Oil and Gascould be a solid choice for investors.

In the past 30 days, one estimate has gone higher for Northern Oil and Gas while none have gone lower in the same time period. The trend has been pretty favorable too, with estimates increasing from 1 penny a share 30 days ago, to 2 cents today, a move of 100%.

Current Year Estimates for NOG Meanwhile, Northern Oil and Gas’ current year figures are also looking quite promising, with one estimate moving higher in the past month, compared to none lower. The consensus estimate trend has also seen a boost for this time frame, increasing from 4 cents per share 30 days ago to 5 cents per share today, an increase of 25%.

All I can say is this: if one is a trader (not an investor) in oil and gas, one must be very, very nimble and prepared for significant volatility.