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Top Permian Basin oil producer Pioneer Natural Resources (PXD.N) will minimize its hedging next year, Chief Executive Officer Scott Sheffield said on Thursday, anticipating oil prices between $80 and $100 a barrel over the next several years.
Pioneer’s hedging losses have tallied over $2 billion so far this year, as oil prices rose above levels where it and some other producers had locked in sales contracts through hedges.
The company said it has no plans to add to hedges now, noting it was bullish on oil prices and there was more room for energy prices to move up than down.Oil producers use hedges as a form of insurance against sharp price reductions.
“I do think that we’re getting in a very, very tighter market over the next several years. Unused capacity in OPEC+ is going to be used up in the next two years,” Sheffield said on a conference call.
On Thursday, OPEC and its allies said they would remain on course to raise output by 400,000 barrels per day from December, even as the United States has called for more supply to help reduce prices.
Pioneer this week sold its Delaware Basin assets to rival Continental Resources (CLR.N) for $3.25 billion. read more
Shares of Pioneer were down about 2.6% at midday to $184.89 each, while Continental Resources was down 4.5% to $44.84.
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