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 (LINEQ) and BreitBurn Energy Partners (BBEPQ)-- 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 (UPL) decision to move away from gas hedging is a telling sign for the future of gas prices.
