Hedging: where is the value?

Hedging strategies: of our peer group of 32 of the largest upstream companies with active hedging programmes, half have added derivatives since end-Q3 2015. The new hedges increased the volume of hedged oil by 22% and hedged gas by 45% in 2016, mitigating the impact from continued price falls in Q1 2016. We calculate that derivative gains for the peer group will offset 31% of the US$32 billion reduction in gross upstream revenue that strip prices in 2016 imply, relative to 2015.