Hedging has long been a way for U.S. oil and gas producers to protect against the volatility of commodity prices.

A recent survey from Opportune LLP notes that while natural gas prices were relatively flat in 2018, crude prices rose from $60 per barrel (/bbl) to nearly $75/bbl during the first three quarters. Then, in the fourth quarter, natural gas spiked briefly while crude fell from $75 to $45. The fourth-quarter drop was the most severe decline in crude prices since 2014, according to Opportune’s derivative valuation and commodity risk management advisory group.

The Houston-based firm surveyed the hedging positions of 30 of the largest public oil and gas producers as disclosed in their Dec. 31, 2018, 10-K filings. The results show that swaps continue to be the preferred instrument for both natural gas and crude oil; however, the use of swaps decreased from the prior year while purchased puts were on the rise for public companies.

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