Lost a fortune on crappy hedges at $45 and even forced to sell valuable Bakken assets in a rush for $30K per flowing as total debts jumped to $7.6b. It is now more leveraged than many small-junior highly levereged producers. The only difference - FANG has sold more than enough bonds proactively and has just barely drawn credit line of $2b. So they have no financing problems many others have.
Of course they said they sold non-core. Just look how fast buyers have grabbed such non-core.
Just to understand the hedge issue, they have the same crap for entire year...and even smaller for next year H1.
Without those hedges FANG could simply own same Bakken assets and get less debts by the end of 2021 by simply paying down from high FCF.
But no...they wanted drill-drill-drill when WTI was selling at $40 and were in a rush to sell most 2021 production at $45...and even some in 2022.
Idiots? Can't predict future?
They don't have to. Just sit down and drill minimum with no killing hedges until prices rise to respective levels...simple.
Absolute prices make a huge difference. It is one thing to lose money at $65-70 hedges (if prices continue to rise) while making really large FCF, the other - at $45 at tiny FCF.
Some know and implement such strategy, but some want growth at any costs.
No wonder traders were selling FANG aggressively today.