We're winding down week one of 2Q2021 earnings reports and thus far losses on oil and natural gas hedges and cash settlements on derivative contracts is nothing short of spectacular. Well over $3.9 billion already and we're just getting started. Pioneer's hedging losses in 2021 so far are staggering: https://www.oilystuffblog.com/forum/forum-stuff/pxd-s-cash-payments-to-settle-derivative-contracts-2q21-tight-oil-gas-earnings-reports-thread. This is money that could have been used to pay down debt, put more people back to work, and replace reserves.
The spin on earnings reports is unbelievable; "free cash flow" is the hot topic of the week, nobody is talking about all the money the reporting company could have made had it not had is head up its ass about hedges. The morons in charge of these hedges, remember, are managing our nations long term energy security. We are NOT likely in good hands with Allstate.
When you are in the oil business and deeply in debt, with declining assets that hardly cover all the money you had to borrow to create those assets, lenders own you. You are a dog on a short leash tied to a tree. If they want a floor under prices to protect their loans, you ask how high when they say jump. If I had time I am pretty sure I could prove the tight oil sector has lost more money in bad hedges than it has made in the way of profit the past decade.
Lastly, don't forget to follow this fella on Twitter; he's priceless. https://www.oilystuffblog.com/forum/forum-stuff/follow-this-dude-on-twitter