CEU Electronic Theses and Dissertations, 2015
| Author | Andó, Bálint |
|---|---|
| Title | Determinants of Commodity Hedging Behavior of North American Independent Oil and Gas Production Companies |
| Summary | The thesis analyzes the patterns of commodity hedging behavior among publically listed North American independent oil and gas producers during the shale revolution boom period between 2005 and 2014. The main aim is to identify company and market specific characteristics of some companies in the sector hedging a larger fraction of their annual production while others let prices impact their revenues and bottom lines more intensively. The database consists of 49 publically listed independent oil and gas producers from the U.S. and Canada and investigates the relationship six explanatory variables and commodity hedging. The thesis finds that the operationally and financially most stable companies in the sample tend to hedge a larger fraction of their production than their less healthy competitors. This stability is implied by the firms’ higher market valuation, larger reserves portfolio, lower leverage and higher liquidity. However the analysis fails to identify any significant statistical relationship between commodity hedging in the sample and single continuous variables of firm size and liquidity and also the shape of the crude oil forward curve. The result that commodity hedging is most important for the less stable corporations in the oil and gas industry has some policy implications for North American regulators aiming to limit the risk taking behavior of major investment banks. Regulatory actors need to take into consideration the indirect effects of their actions on risk management clients of financial institutions as well. |
| Supervisor | Mantegna, Rosario |
| Department | Economics MA |
| Full text | https://www.etd.ceu.edu/2015/ando_balint.pdf |
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