Hedges also are in place that limit the company’s exposure to the Midland to Cushing differential to only about 40 percent of its estimated oil production in 2013. Energen Resources has hedged the WTS Midland to WTI Cushing (sour oil) differential for 3.6 million barrels of oil production at an average price of $3.03 per barrel and the WTI Midland to WTI Cushing differential for 2.8 million barrels at an average price of $1.01 per barrel.

Energen’s 2013 guidance includes assumed prices applicable to Energen Resources’ unhedged oil basis differentials; on an annualized basis, these are $3.35 per barrel (sour) and $2.90 per barrel (WTI Midland to WTI Cushing). Energen estimates that 64 percent of its oil production in 2013 will be sweet.
 

The company’s current hedge position for 2013 is as follows:
 

Commodity
   

Hedge Volumes
   

Estimated Production
   

Hedge %
   

NYMEX Price

Oil
   

8.9 MMBO
   

10.6 MMBO
   

84%
   

$ 90.95 per barrel

NGL

44.5 MMgal

143.4 MMgal

31%

$ 1.02 per gallon

Natural Gas
   

50.0 Bcf
   

72.7 Bcf
   

69%
   

$ 4.63 per Mcf*
 
*  

Basin-specific contract prices for natural gas have been converted for comparability purposes to a NYMEX-equivalent price by adding to them Energen Resources’ assumed San Juan and Permian basis differentials of $0.15 per Mcf.
 

Average realized oil and gas prices for Energen Resources’ production associated with NYMEX contracts as well as for unhedged production will reflect the impact of basis differentials; average realized oil prices also will reflect oil transportation charges of approximately $2.50 per barrel in 2013; and average realized NGL prices will be net of transportation and fractionation fees that are estimated to average $0.11-$0.16 per gallon in 2013. The company also has basin-specific natural gas contracts whereby Energen Resources will receive the contracted hedge price.

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