US oil and gas companies reevaluate hedge strategies

Rising oil and gas prices and hurricane-related production disruptions have forced many US independent producers to report third-quarter accounting charges related to hedging.Producers say that virtually any company with a hedge strategy in place at the start of this year has watched oil and gas prices exceed hedge price levels. When that happens, accounting standards require earnings adjustments reflecting the forgone value.Hedging is a risk-management tool that uses financial instruments such as futures and options contracts to protect the value of future production against declines in the prices of oil and gas.It enables producers to, in effect, lock in oil and gas prices at set levels...

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