Numbers to use for the problem:

We dont have detailed day to day data about HESS Corps hedging. However, we will make some assumptions to get the big picture.

Assume:

1. Average Forward Price for HESS hedge is $55 and the size of each contract is 200,000 barrel per day (article mentions them!)

2. We will think of the hedge period from March-01 to April-30, two months period.

3. We will also think of production of 60 days and thus 60 days of hedging.

4. When we look at the data and graph price changes in two months, we observe big price swings from -$2.72 on to April 20 to $46.78 on March 5.

5. Lets take $25 as average price of oil at the maturity of the contract on a daily basis. (Recall: we call it price of underlying asset at maturity in our lectures)

6. Up to this point, we have the following information: Forward price, Average Price of oil at Maturity, Size of each contract per day, and daily contract for two-month period.

7. Prepare a table in which you will show average hedge position of HESS on the basis of oil prices between $0 to $50 in increments of $2 similar to Kroger one.

8. Then, graph your hedge position based on information I provided above. Keep in mind that you will have a table and a graph representing daily average position.