Analysis by IHS shows that energy company size matters when it comes to the hedging protections in place for North American exploration and production (E&P) companies.

Most of the 44 companies studied have minimal hedging protection against low commodity prices beyond 2015, according to the analysis.

Collectively, the companies IHS analyzed have hedged 21% of total 2015 production volumes, including 19% of oil at a median price of $87.51 per barrel and 27% of natural gas at $4.09 per thousand cubic feet. (Read more at the IHS Unconventional Energy Blog.)

The small- and mid-sized North American E&P peer groups (with reserve sizes of less than 400 million barrels of oil equivalent, and 400 million BOE to 1 billion BOE, respectively) have a "significantly greater" percentage of production hedged for fourth-quarter 2014 and full-year 2015, compared with the large North American peer group (proved reserves of greater than 1 billion BOE), which have 17% of 2015 production hedged, according to IHS.

“We realized that strong hedge books mean that we don’t expect fourth-quarter 2014 financial results will offer a true reflection of the impact from lower commodity prices” says Paul O’Donnell, principal equity analyst at IHS Energy and author of the hedging analysis.

IHS analysis also showed that the small North American E&Ps have the most highly leveraged balance sheets. O'Donnell says this could leave many of them in a "precarious position if we have sustained low prices beyond 2015, since the group has hedged just 16% of 2016 production.”

According to O’Donnell, the small North American E&Ps have a worrisome median debt-to-appraised worth of assets ratio of 51%. Few small E&Ps have any significant hedging for 2016, so liquidity issues may arise for many in this group of companies, should prices remain depressed beyond 2015.

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