Price rise = price risk

Rising commodity prices mean companies have had to pay more for acquisitions in the energy sector. This has led to an increase in large-scale strategic hedging as firms look to put in place downside protection. Duncan Wood reports

Energy consumers are not the only people to have been hit by high oil and gas prices – energy producers have also had to pay a higher price for new investments and acquisitions. Rather than using long-run historical averages as a way of valuing energy reserves, companies are using the current forward price curve, which foresees oil and gas remaining expensive relative to historical levels. As a