Oil Hedges Worth A Third Of Denbury’s Market Cap

Some E&P companies have a lot of their net worth tied up in oil hedges, and they’ll need to put those assets to good use to survive a difficult couple of years

Denbury Resources’ 2015/2016 oil hedges are now worth a third of its much reduced market cap, and while that’s the largest from among major exploration & production (E&P) companies, many of its peers have hedges worth more than 10% of their market cap as well. Now the question is how these valuable hedges can best be put to use.

“There are many possibilities, including partial monetizations, and the rational for the ‘why’ is simple: E&Ps face an increasingly bleak near-term future and may need to consider unorthodox liquidity levers...