Hedging is necessary evilwe all see the swings in gas prices year to year, they can be enormous. hedges are simply meant to even those swings out so to protect a portion of revenues to allow for a given certainty of a drilling program. if ya had no hedges there would be time where the gas price tanked and no longer would they have the cash flow to drill
all companies have hedges, it is imoptant, sure when gas prices rise you missed some revenue all right, you even take a charge, sometimes a large charge on the profit statement.
not to worry, becuzz a company takes a multi million dollar charge, it is meaningless as the company still recieves the agreed revenue, they just do not participate in the higher commodity price for the agreed time line.
Not too many ceo's go gamblin and opting to lock in these higher prices for a larger portion of the production, unless the banks force upon them.. but ceo's have seen the changes over time to prices so would know not to gambe, just stick to the plan they have to hedge maybe half maybe 25% whatever, do not change on the plan just cuzz you wake up some morning to much higher gas price