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FX Hedging at Hunting PLC

by Christopher Berris, Assistant Group Treasurer

Hunting PLC is an international energy services provider to the world’s leading oil and gas concerns in the upstream sector. Established in 1874, it is a fully listed public company traded on the London Stock Exchange. Global “upstream” activity is co-ordinated through Hunting Energy Services. With a large presence in North America, Europe and Asia, this has spawned a small but consistently successful E&P division in the USA. 

Treasury Activities

Hunting PLC’s group treasury department is based in London, UK and provides treasury services across the group which spans the Americas, Asia, Middle East and Europe. As a GBP-based company, but with revenues in USD, one of treasury’s major activities is to translate USD revenues back into GBP, for which we use FX spot and forward transactions. In addition, we have a number of option-based products, such as average rate options to hedge P&L and instruments known as FX forward extra or forward plus. These are similar to a barrier option, but give us the potential to add some additional value to the transaction. They are zero cost and give us the right to buy GBP and sell USD at a fixed rate. This right becomes an obligation when cable reaches a certain limit rate. We also use FX swaps for cash management purposes swapping GBP into USD to fund short term USD deficits.

As a GBP based company, but with revenues in USD, one of treasury's major activities is to translate USD revenues back into GBP, for which we use FX spot and forward transactions.