Aggressive oil hedging enables Plains E&P’s big deepwater play
Plains Exploration & Production, a mid-sized independent E&P firm that had previously been known as an onshore US natural gas developer, made a dramatic move into deepwater oil last week by clinching a $6.1 billion deal to acquire assets from BP and Royal Dutch Shell in the Gulf of Mexico. In order to secure financing for the acquisition, the Houston-based firm vowed to hedge up to 90% of its oil production through to 2015, an unusually large coverage ratio for an E&P company.
The hedges were
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