Friday, January 8, 2010

Devon Hedging at $6.18

I was a little disappointed to see an article noting that Devon Energy has hedged 42% of its estimated 2010 natural gas production at $6.18/MMBtu.  While that's a heck of a lot better than prices in the $3 range that we saw in 2009, it indicates that the company doesn't see terribly much upside above the $6.18 level for the next year. 

Devon isn't the only company that has made this move - don't get me wrong, it's a good business decision - but I like to believe that there's more upside in the price of natural gas.

1 comment:

Anonymous said...

I agree with you. In my opinion, for the end of January the surplus of stocks will have disappeared (expectation for next week : - 220 Bcf). And temperatures colder than the normal are forecasted for February and March. Add a small improvement of the industrial consumption and the price of the gas is going to rise strongly towards 8 dollars. The decline to 6dollars MMBtu will not appear before May / June; but it is only my humble opinion, I have no crystal ball.