NEW YORK: OPEC’s sudden disarray would seem to be an opportunity for US shale producers to lock in profits, with oil prices near multi-year-highs, but sources at those companies say they are not taking chances with the market’s volatility.
Shale producers are famous for boosting output whenever oil prices surge. However, the shale industry has been notably restrained so far this year even as oil surged past $70 a barrel. They have maintained a lower level of production after vowing to investors that they would hold the line on spending to boost returns.
Oil prices are above $73 a barrel, near three-year-highs. On Monday, the Organization of the Petroleum Exporting Countries and allies, known as OPEC+, were unable to reach an agreement on returning supply to the market. That could push oil higher, though on Tuesday prices fell with investors worried that without an agreement, OPEC+ members could open the taps, which would pressure prices.
Shale companies have been actively hedging this year, to lock in prices that protect profits if prices slump.
Yet hedges can be costly, prompting writedowns if oil prices rally past levels producers have locked in. A group of 53 oil producers tracked by consultancy Wood Mackenzie have combined losses of $3.2 billion in the first quarter on hedge contracts.
Just 12 of 40 operators with 2021 oil hedges had an average hedge price above $50 a barrel, according to the firm.
“With every bank saying that oil will be at $90-$100, no one is going to put hedges on right now,” said an executive at a shale oil producer, who agreed to speak on the condition of anonymity.
The group tracked by WoodMac has hedged about 32 percent of expected 2021 production volumes, less than at the same time a year ago. WoodMac said producers were more likely to keep their remaining 2021 production unhedged, sell at the current prices, and focus their hedges on 2022 instead. Shale firms also have pledged to keep production flat, boosting investor returns rather than pumping more crude.
“I don’t see any signals from any of these producers that they are going to grow production anytime soon ... you could be adding hedges but it doesn’t necessarily mean that you’re going to grow production next year,” said Alex Beeker, a principal analyst at Wood Mackenzie.
Shareholder pressure to increase returns make this cycle different, analysts said.
Hedging provides a way for producers to avoid risk, but “that is not what shareholders want,” said oil analyst Paul Sankey. Investors who are putting money into producers want exposure to higher oil prices, he said.
Companies would first need to get investors on board with the plan before hedging more since they have pledged not to expand production, an executive at another shale producer said. Hedging can provide the financial wherewithal to increase output.
“For us public producers, everything takes time,” he said.
US shale firms hesitate to pump — or hedge — more, despite oil high prices
https://arab.news/mtrxb
US shale firms hesitate to pump — or hedge — more, despite oil high prices
- Oil prices are above $73 a barrel, near three-year-highs
- Shale producers are famous for boosting output whenever oil prices surge
PIF-backed AviLease achieves revenue of $664m and 19% growth in 2025
RIYADH: Saudi Arabia’s Public Investment Fund-backed AviLease achieved exceptional performance and sustainable business growth during 2025, supported by the strategic expansion of its global platform.
According to its financial results for 2025, AviLease recorded total revenues of $664 million, an annual increase of 19 percent, driven by disciplined growth in its asset portfolio and strong performance in aircraft remarketing amid sustained global demand for modern, fuel-efficient aircraft, the Saudi Press Agency reported.
Profit before tax doubled compared to the previous year, reaching $122 million. The year witnessed an expansion in AviLease’s portfolio, reaching 202 owned and managed aircraft, leased to over 50 airline companies in more than 30 countries.
The total value of the company’s assets stabilized at $9.3 billion. AviLease maintained a 100 percent fleet utilization rate, reflecting the resilience of its business model, the efficiency of its asset management, and the strength of its strategic relationships with airlines around the world.
AviLease concluded purchase agreements for aircraft from Airbus, including the A320neo family and A350F, and Boeing 737 aircraft, aiming to enhance its future asset portfolio with modern, fuel-efficient aircraft. This step will contribute to supporting future growth and meeting increasing customer demand for the latest aircraft, aligning with the Kingdom’s ambitions to become a leading global aviation hub.
AviLease strengthened its prestigious credit standing by obtaining a strong Baa2 credit ratings from Moody’s and BBB from Fitch, reflecting its financial solidity, managerial discipline, and efficiency in managing leverage. The company also successfully issued senior unsecured bonds worth $850 million last November under Regulation 144A/RegS. This issuance contributed to diversifying its funding sources and enhancing its financial flexibility.
Commenting on the results, AviLease CEO Edward O’Byrne said: “This exceptional performance reflects the quality of the company’s investment portfolio, the strength of its partnerships with airlines, and its strategic focus on responsibly deploying capital into highly sought-after, efficient, modern aircraft assets.”
He added: “As aviation markets continue to grow, AviLease is strategically positioned to continue its expansion plans and deliver sustainable long-term value for shareholders, contributing to the Kingdom’s ambitions.”
Throughout 2025, AviLease continued to play a pivotal role in the Kingdom’s growing aviation sector and contributed directly to the launch and scaling of the new national carrier, Riyadh Air, by completing a sale and leaseback transaction for a Boeing 787-9 aircraft, which thereby became the first aircraft to join the airline’s fleet.
AviLease also established a strategic partnership with Hassana Investment Co. This partnership aims to provide an opportunity for local and international investors to enter the aircraft financing asset class and benefit from AviLease’s technical expertise and operational capabilities to support partnership growth and enhance performance.
Hassana Investment Co. has agreed to acquire an initial portfolio of 10 modern aircraft from AviLease.
