U.S. energy company Apache says change in gas hedging strategy led to profit

2 minutes

16 April- United States energy company Apache Corp said a change in Texas and central United States natural gas hedging strategy before the February freeze hit was reported by the board of directors and resulted in a$ 147 million second quarter gain.

Apache, which is a subsidiary of APA Corp, said that its marketing team generally seeks to maintain a balance between 'first of month' and 'gas daily pricing' for its U.S. natural gas portfolio through a combination of physical and financial contracts.

Apache said the marketing team entered financial contracts in late January that reduced the exposure to gas daily prices and increased the exposure to first of month prices for the month of February.

Traders said this means Apache increased the exposure to the spot or cash market, with one trader noting that if you took a cash position into February you ended up very happy.

Spot electricity and gas prices froze in mid February to several highs at several hubs across Texas and Central America as extreme weather caused heating demand to soar at the same time wind turbines, gas wells and pipelines spiked. This caused several power plants to shut and the state power grid operator to install rotating outages that left millions of customers without electricity for days.

Analysts at Cowen Co boosted their earnings estimates for Apache due to better realigned pricing, notably in gas that reflect greater exposure to daily pricing compared to bid week.

Apache also said it incurred a loss on gas and petroleum that was primarily attributable to transport, fuel and physical gas purchases and sales in the month of February to meet oil takeaway obligations.

The shares of Apache were down 1.3% to$ 17.83 in afternoon trading.

  • Comments
Loading comments...