Occidental Scrapping Oil Hedging Next Year on Rally, CFO Says

(Bloomberg) -- Occidental Petroleum Corp., one of the Permian Basin’s biggest producers, will all but end hedging next year due to the run-up in oil and gas prices, Chief Financial Officer Rob Peterson said on a call with analysts.

“Our current oil and gas hedges will expire by the end of this year, and we have not added any new hedges for future periods,” he said. 

Rival Pioneer Natural Resources Co. also pledged to end hedging earlier this week. U.S. shale producers have typically been highly active in hedging production to cover capital spending and debt repayments. But as both outlays have dropped since Covid-19 and cash flows have increased due to surging oil prices, there’s less need to use financial instruments for downside protection. 

READ: Pioneer CEO to End Hedging on Bullish Crude-Price Outlook (2)

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