Continental Resources Inc. could have made $1 billion more this year by doing nothing.
Instead, the company’s executives were so bullish on oil a year ago that they cashed out the insurance they’d bought to protect the company from a crash. Then crude prices plummeted, meaning Continental is missing out on an average of $2.8 million a day this year, according to calculations by Bloomberg.
The lost opportunity was calculated using the public disclosures Continental made about its trades, the average price when they liquidated the contracts in October 2014, and the price of crude so far in 2015. While there’s no doubt Continental is losing out on significant hedge gains, the exact amount may be higher or lower depending on the specific pricing and timing of its trades.