Energy Investing 101: What Hedging Can Tell Us About a Company and Oil Prices

Many casual followers of the energy space fear the words "hedging" and "energy company" thanks to Enron. In reality, hedging oil and gas production can be a very effective tool for a company, and can be a way that investors like you and I can analyze the future. Different types of companies can employ different hedging strategies, which is why you see LINN Energy (NASDAQ: LINE  )  and BreitBurn Energy Partners (NASDAQ: BBEP  ) -- both exploration and production MLPs -- hedge a very large part of their production while Big Oil doesn't. 

Even more interesting, though, is that we can use a company's hedging strategy to get a feel for oil and gas prices in the future. Tune into the video below and you can find out why Ultra Petroleum's (NYSE: UPL  ) decision to move away from gas hedging is a telling sign for the future of gas prices. 

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