Jeff Nichols in Law360: Hedging Contango In The Energy Sector

03/30/2015

Plunging commodity prices have sent industry participants scrambling to anticipate secondary and tertiary impacts to oil and gas companies and the lenders that finance them. Hedging is an area that often eludes the attention it deserves.

Hedging is usually thought of in terms of cash-settled derivatives offered by lenders as part of a broader financial relationship tied together by a credit agreement and perhaps collateral documents. But many other transactions blend hedging and finance attributes. Focus on these different transactions becomes acute during times of financial stress, which drives concerns about enforcing remedies…

One thing is clear from all these discussions: 2015 will be an interesting year for commodity finance.

Excerpted from Law360. To read the full article, click here (subscription required).

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