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Related Business Survival Strategies in the United States under low oil prices

The global financial crisis has not been in the past since 2008, in 2014 crude oil and other commodity prices plummeted without collective about, and the risk make the United States oil & gas companies and financial consortia decidedly different.

"Firewall" can’t stop the impact of oil price slump.

Despite the high degree marketing level, many entitiy oil and gas companies can’t operate simultaneously exquisite "tactical pricing" and "strategic pricing" model of management, the former refers to the management with existing contracts and orders, the latter need to have Forward-looking asset allocation capabilities.

Although the United States has developed trading commodities and other financial instruments and markets, but in the hedging operation, only some companies are concerned about the risk of all products, and the other part of the business only consider manage their exposure to the top three products, and part of companies are at the state of callous, and then show it is "hedging instruments and risk exposures" mismatch.

Some oil and gas companies establish in markets such as NYMEX of crude oil or refined oil hedge positions, but with the passage of time and oil prices continued to fall, some positions have expired, so that enterprises operating income is fully exposed to the risk of exposure to oil prices directly under the impact, with "hedging instruments and risk exposures" mismatch, some entities to accelerate oil and gas companies are being drawn into the vortex of losses. Therefore, rebuild hedging positions, hedging barrier configuration has become one of the most important tasks of the current oil and gas companies.

Among them, Continental Resources Inc. and small oil companies such as American Eagle Energy company are eager to have in place to hedge positions to take profits, cash profit of positions in response to lower oil prices to hedge against future oil production, rather than to wait until price protection positions exhausted; but according to EOG Resources Inc., Anadarko Petroleum, Devon Energy Corporation, Noble Energy Company and other enterprise model based on oil prices estimates, buying a call option is similar to a combination of trading tools, again for $ 90 a barrel or higher prices to hedge part of the 2015 output. EOG Resources Inc., Devon Energy Corporation and other companies in addition to maintain the original configuration of the hedge positions, are planning the larger restructuring hedge positions, to further optimize the portfolio of "hedging instruments and risk exposures".

Transfer the collapse breach risk to the financial system.

It’s unlucky for those corporations with a common but riskier corporate hedging strategies. They had tried to get paid premium prices by selling put options to hedge the risk of rising oil prices after the purchase, such as the use of similar "costless collar" and other trading tools. But these trading tools originally used to hedge funds has eaten part of the proceeds over Delta Airlines and Southwest Airlines and other major US airlines in fuel prices brought about. In 2012, Delta bought a refinery near Philadelphia, wanted to become a tool to reduce the risk of oil prices, but the wrong financial hedging instruments and exposures between feature eliminates the benefits brought by the acquisition of the refinery. However, Delta spokesman Trebor Banstetter still said the company is not unexpected decline in oil prices, and is ready to fulfill financial obligations when necessary.

Due to falling oil prices, operating cash flow is gradually depleted, lenders are forced to cut off funding chain, which makes some of the tens of millions of dollars of debt the only oil company WBH Energy LP and partners can choose to file for bankruptcy protection. As these companies do not do enough to prepare for the downstream oil, appeared "Investment and Financing" mismatch, its balance sheet is very bad. Especially small and medium Shale oil and gas developers, without adequate capacity for risk management group with assets in the commodity markets, exposure directly exposed. Therefore, Morgan Stanley reported that amoung the 18 United States shale oil producing, only four areas of shale oil company can barely keep from loss. "Investment and Financing" mismatch made the small shale oil and gas developers collapse trend to climax.

From the non-compliance, to the week of January 6, 2015, including refineries, crude oil extraction equipment suppliers, etc., industrial capital to expect the oil price reduction get the peak of the 3-year. Reduce or terminate the investment has become a trend, some companies prefer to pay a penalty to end the equipment leasing contracts in advance, crude oil extraction and equipment rental company in the amount of idle equipment hit a new high since 1991, continuing the fight against the financial leasing providers, and is the conducting risk to the banking system. In the period, Baker Hughes began from October 2014 was forced to have sealed the rig, in the next four months has been idle for nearly 130 oil rigs (accounting for 8% of the total).

"Giant" muddy water tumbling take advantage of the chaos.

Some financial consortium should have exited the oil and gas business entity tightening final "dinner" opportunity, contrarian expand market share in the commodities sector, especially Citigroup, not only did not execute, "Dodd - Frank Act ", but also acquired the metal, oil and power business of Deutsche Bank in the summer of 2014, and will acquire the base metals, precious metals, coal, iron ore, freight, crude oil and oil business of Credit Suisse including the United States and Europe gas business in the fourth quarter. It result the Citigroup rapidly to become a financial "giant." in the commodities sector. This is a class in the market to take advantage of the chaos.

Visible, oil prices slump and two asset mismatch make US companies have different circumstances.


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