Despite the low price environment, Hess Corporation was able to lock in US$43.26 a barrel for Guyana’s oil due to hedging. Excluding Hedging, the price would have been USA$36.79. For three months ended on March 31, 2020, it received 15,000 barrels of Guyana’s sweet, light crude. (Source: Hess Corporation’s 10-Q Form)
(Tip: When businesses plan to hedge, they try to protect their investments against a negative event such as a sudden drop in oil prices. If business A, for example, sells future production to business B at a particular price, say US$40, business A is a winner if prices on the market drop to US$10. But this comes at a risk as Business A can lose if the prices increase to US$100 on the market. Hedging, therefore, has its pros and cons, as does everything in life.)
