Kemp: Rising Oil Prices Throw Lifeline to Shale Producers

In early 2015, many producers missed the opportunity to lock in higher prices when spot prices rallied between January and May to more than $65 per barrel and then suffered grievously when prices retreated to fresh lows.

Given the fragility of market rebalancing, and the financial exhaustion of many U.S. onshore oil producers, the safer course now is to start locking in at current prices, even at the risk of giving away some upside.

Many shale producers have already begun to lock in a large share of their 2017 projected production, according to recent earnings updates and investor presentations.

Hedging should enable at least the stronger and better capitalised companies to protect their core operations through the uncertain period until the cycle enters a proper upswing.

(Editing by David Evans)