RE:Upcoming Hedging losses in 2022?We will find out soon enough, but I think the NG basis swaps are okay post-Q4 2021, but reliable AECO pricing is hard to find without paying instituitional rates.
NYMEX-AECO basis closed pretty hard in December, so I expect that to hit the bottom line as a loss when realized. We also have to remember oil dipped to $65-70 in December.
The differential might have hit par, in which case would result in corporate price headwind adjusted for hedges. For Q4 2021, I would imagine oil hedges produce gain as the prices fell and NG produces a loss for an overall net loss.
In terms of Q1 2022, the -$1.13 NYMEX-AECO basis swap should offset some of the oil losses (at least I THINK). Don't quote me on this, but I believe the differential went as low as -$2.00 in 2022 Q1, which is bullish for the NG basis swaps.
Realistically, I'd personally rather have the hedges realize a loss as production is majority unhedged Q1 22 anyways. It's all about a matter of perspective. Don't read too much into the hedging and miss the bigger picture.
TLDR: Don't be surprised/spooked when Q4 posts a hedging loss because Q1 will hopefully offset the hedging loss and the end result works out into a net gain. As production is mostly unhedged and hedging essentially forces a ceiling on prices, it is a headwind for SDE.